Legislators say 'no' to Pertamina tanker sale
Fitri Wulandari, The Jakarta Post, Jakarta
Legislators insisted on Monday they would not approve plans by state oil and gas firm PT Pertamina to sell two oil tankers, saying the tankers had long-term benefits for the company.
Irwan Prayitno, a member of House of Representatives Commission VIII for energy and mining, said that based on information gathered during a recent visit to Hong Kong and South Korea, he and other commission members had concluded that it was best for Pertamina to keep the two Very Large Crude Carriers (VLCC).
"We disagree with the plan to sell the tankers because owning them is profitable not only for Pertamina but also for the country," Irwan of the Justice Party told The Jakarta Post.
Djusril Djusan, another commission member who took part in the controversial visit to Hong Kong and South Korea, voiced a similar opinion.
"Under the existing law, the sale of state assets must be approved by the House of Representatives. The commission is against the sale," Djusril said.
Both legislators made their statements amid public suspicion that Pertamina had tried to get the commission's approval of the sale by sending commission members, along with their spouses, on a trip to Hong Kong and South Korea. Pertamina has denied that it financed the trip.
Irwan said 15 legislators took part in the junket, during which they met with officials from tanker maker Hyundai Heavy Industries and spoke with consultants Goldman Sachs and World Tanker about the tanker market.
"The tankers will be useful for transporting fuel products for the domestic market and transporting crude from the Middle East," Irwan said.
He said leasing VLCCs such as the doubled-hulled ones being built by Hyundai for Pertamina would be more expensive in the future because of a new rule on maritime pollution, or Marpol, which will ban the use of single-hulled oil tankers to prevent oil spills.
The rule will take effect next month for oil tankers bound for the United States, Europe and Australia.
Once Marpol takes effect, the tanker supply will drop by up to 40 percent globally.
"These types of tankers will be very rare and much needed in the future," Irwan said.
Meanwhile, Frontline Ltd., the world's biggest oil-tanker owner, announced on Monday it had agreed to buy Pertamina's two giant tankers for a total of US$184 million.
Bloomberg reported on Monday that Frontline's Ship Finance International Ltd. unit was slated to take over the vessels within six months and lease the tankers to its parent company. It remains unclear if it has signed a deal with Pertamina and what impact the House's opposition would have on the deal.
Djusril said the price being offered by Frontline was too low compared to the market price, which is hovering around $165 million for one VLCC.
He said the House commission would reach a decision on the matter on Tuesday.
The tankers, each of which can transport up to two million barrels of crude, were bought by Pertamina's previous management under president director Baihaki Hakim for a total of US$130 million in 2002. The company at that time argued that owning tankers would save it up to $7 million in crude transportation per annum.
However, the current management under president director Ariffi Nawawi has said it wants to sell the tankers, citing cash flow problems while arguing that it is cheaper to transport fuel and crude using leased tankers.