Kuntoro to probe alleged fraud at Balongan refinery
Kuntoro to probe alleged fraud at Balongan refinery
JAKARTA (JP): Minister of Mines and Energy Kuntoro
Mangkusubroto said yesterday he would investigate allegations of
corruption at the US$2billion Balongan refinery in West Java,
which is owned by state oil and gas company Pertamina.
"I learned about the (alleged) scandal from press reports
today (yesterday). I will instruct Pertamina's directors to
formally explain whether the press reports are true," Kuntoro
said.
He promised to thoroughly investigate the case and said he
would not hesitate to punish any wrong-doers.
A Pertamina official who wished to remain anonymous said
earlier that the Balongan refinery might have been built using
poor quality construction materials so that Pertamina officials
supervising the project could rake in illegal cost savings.
As a result, the facilities have often experienced troubles
since production started in March 1995, the official said.
The refinery was forced to cease operations again on Tuesday
because of technical problems.
Unlike the Balangon plant, older refineries developed by other
companies, including those in Balikpapan and Cilacap, rarely
experienced troubles, he said.
The Balongan refinery was developed by Pertamina and a number
of foreign contractors, including Japan's JGC Corporation, Foster
Wheeler of the United States and the Far East Trading Corp., a
Pertamina affiliate company.
Financing for the project was provided by a consortium which
grouped Mitsui Corp., Marubeni Corp., Sumitomo, Itochu and 20
Japanese banks.
The refinery has a crude oil processing capacity of 125,000
billion barrels per day (bpd), with fuel products including
liquid natural gas (LNG), propylene, aviation fuel, automotive
diesel oil, industrial diesel oil and gasoline.
Pertamina's inspectorate general recently fired several
members of staff at the refinery for colluding with a supplier to
embezzle Rp 1 billion through buying low quality equipment at
marked-up prices. (jsk)