Laksamana insists Frontline top bidder
Tony Hotland, Jakarta
State Minister for State Enterprises Laksamana Sukardi has insisted that Frontline Ltd. was the top bidder for two huge tankers sold by state-owned oil and gas company PT Pertamina.
He was responding to earlier reports suggesting that another company was the top bidder, adding additional confusion to the controversial transaction.
"It is not true. You can check and see all the documents. I have also checked with the board of directors and they have confirmed this," Laksamana, who is also the chief commissioner of Pertamina, said on Friday.
"I also told them that if it turns out not to be true, I will fire them. If necessary, I will even ask the ICW or GOWA to scrutinize the documents to make things clear," he said, referring to two corruption watchdogs.
Previous reports (including one that appeared in this paper) quoted a Pertamina tender document showing that the Bermuda-based Frontline was not the top bidder for the tankers. Instead, the document indicated that the Mumbai-based Indonian Essar Shipping Ltd. was the top bidder.
The document did not disclose the bid figures, but reports have said that Frontline won the tender with a bid of US$184 million.
Laksamana also dismissed the possibility of collusion in the transaction, although Goldman Sachs (Pertamina's adviser in the sale of the tankers) has shares in Frontline, the world's largest tanker operator.
"Well, Frontline is a huge public company. Anyone, including Goldman Funds Management, could have purchased shares in the company. But Goldman is not the majority shareholder," he said.
Frontline says on its website that its shareholders include Goldman Sachs Intern Equity Nontreaty Cus and Goldman, which have a 0.95 percent and 0.92 percent share in the firm, respectively.
The minister also defended the sale of the tankers, saying it was a corporate decision and therefore no permission from the Minister of Finance was required.
"Please also note that we are not selling assets here, but erasing debts. With Pertamina's troubled cash flow, it would be better to use the loans for oil exploration," he said.
The former management of Pertamina purchased the two Very Large Crude Carriers (VLCCs) in 2002 as part of efforts to reduce its dependence on leased tankers from the tanker cartel, which for years had charged overly high prices. But the current management decided to sell the tankers, arguing it was cheaper to lease tankers than own them. It also said the sale would help resolve the company's cash flow problems.
Former Pertamina president Baihaki Hakim had said the purchase would not affect the company's cash flow as it could obtain soft loans from a Korean bank and issue obligations.
The two tankers are now being constructed by South Korea's Hyundai Heavy Industries. Pertamina will have to begin paying for the tankers as soon as the construction is completed.
Laksamana said Pertamina should focus on its core business, which is oil and gas, instead of attempting to act as a shipping company.