Mega to decide on Pertamina tanker sale
Fitri Wulandari, The Jakarta Post, Jakarta
The House of Representatives said it would let the government decide whether state oil and gas firm PT Pertamina could proceed with a controversial plan to sell two giant tankers.
Meanwhile, a tanker expert said that it would be more beneficial for Pertamina to retain the tankers, given the shortage of Very Large Crude Carriers (VLCCs) in the near future.
"We recommend that the tanker sale be canceled, but we shall leave it to the President to decide," House Speaker Akbar Tandjung said on Tuesday following a meeting with a number of legislators who had just returned from a visit to Hong Kong and South Korea. They had gone there to gather information about the sale plan from investment bank Goldman Sachs (consultant in the sale process) and Hyundai Heavy Industries, the manufacturer of the tankers, which are currently still under construction.
Pertamina former president Baihaki Hakim decided in 2002 to purchase the tankers for US$130 million. The purchase was approved by the government under Presidential Decree No. 18/2000.
However, the current management under Ariffi Nawawi decided to sell the tankers, citing the company's cash flow problems and that leasing them would be a cheaper way to transport oil. Hidden motives are suspected to be behind the sale plan, including that Pertamina wishes to continue enjoying commission from tanker owners.
Deputy head of House Commission VIII on mining and energy Agusman Effendi said that owning the tanker was crucial to maintaining security and continuity of supplies.
On Monday, Frontline Ltd, in its media release, announced it had won the tender in Pertamina's tanker sale and agreed to buy two giant tankers for a total of US$184 million.
Frontline's unit, Ship Finance International Ltd., was scheduled to take over the vessels within six months and lease the tankers to its parent company.
Pertamina declined to comment on the matter.
"We have yet to make an official statement -- it will be made in due course," Pertamina spokesman Hanung Budya Yukyanta said.
Hanung said the divestment process had yet to be completed because no payment had yet been made by the tender winner.
Meanwhile, tanker expert Raja Oloan Saut Gurning said owning the vessels would be more profitable for Pertamina than leasing, given the state of the tanker market in future.
"Pertamina will have to spend US$12.6 million per annum on leasing, while it could save $3.6 million if it owned the vessels. The money could be used to pay for the vessels," Saut, who is a lecturer at the Institute of Technology 10 November Surabaya told The Jakarta Post.
Saut said that if the sale plan were realized, Pertamina might end up leasing the vessels from Frontline because they were specially designed to transport crude oil from the Middle East to Asia.
He added that Frontline might be eyeing the profitable Middle East to Cilacap, Central Java, route, where Pertamina has a large refinery facility.
"Frontline still dominates the Middle East and Asia route," he said.