Nusamba to sell stake in Tugu Pratama

Nusamba to sell stake in Tugu Pratama

JAKARTA (JP): Widely-diversified business group PT Nusantara
Ampera Bhakti (Nusamba), which is controlled by former president
Soeharto's foundations and golfing partner Mohammad "Bob" Hasan,
has put its 35 percent stake in the country's largest insurance
company PT Tugu Pratama up for sale.

Pertamina president Martiono Hadianto said on Wednesday that
Pertamina, which holds the remaining 65 percent stake in Tugu,
might buy out Nusamba if the price was right.

"However, the Nusamba equity shares have yet to be valued,"
Martiono told reporters on the sidelines of the hearing between
Minister of Mines and Energy Kuntoro Mangkusubroto with the House
of Representatives' Commission V for finance, state budget,
science and technology.

Martiono said Nusamba decided on its divestment of Tugu during
the company's shareholders meeting in November 1998.

Several House members raised questions regarding Tugu's
operation and Pertamina's action to root out traces of collusion,
corruption and nepotism in the company.

Martiono said that although Pertamina had the majority stake
in Tugu, the company's operation was under the control of Nusamba
during the Soeharto era.

Three Soeharto-linked foundations, Dakab, Dharmais and
Supersemar, respectively have 30 percent, 25 percent and 25
percent of Nusamba. Soeharto's son Sigit Hardjojudanto and Bob
Hasan share the remaining 20 percent equally.

The company, founded in 1981, has become the country's largest
insurance company owing mainly to its monopoly of indemnity
insurance for the oil and gas industry for more than one decade.

Pertamina's former president Soegianto earlier said that
Pertamina would not automatically extend its insurance contracts
with Tugu but would open them to competitive tender.

However, Martiono said, Pertamina would not put its insurance
contracts up for open bidding for fear that foreign insurance
companies would most likely edge out their local counterparts
which lack expertise in oil and gas indemnity insurance.

Thus far, only Tugu has the technical skills in indemnity
insurance for the oil and gas industry, he added.

"The country's existing insurance law states that we have to
empower any local insurance company," Martiono said.

However, Martiono lamented the fact that Tugu had up to the
present excessively marked up the premium rate it charged
Pertamina. That being the case, he would pressure the company
into cutting its rate as much as possible.

"Tugu has proposed cutting its current premium rate by 20
percent, but I have demanded a bigger cut," Martiono said.

Pertamina paid Tugu US$120 million in premiums last year to
cover the country's $50 billion oil and gas assets.

According to Martiono, the company shared 85 percent of the
premiums with reinsurance companies.

Kuntoro also said during the hearing that the government had
received Rp 1.422 trillion (US$167 million) in revenues from PT
Freeport Indonesia in 1998, compared with Rp 653.93 billion in
1997.

The significant increase in revenues from the subsidiary of
the New Orleans-based Freeport-McMoRan Copper and Gold Inc. which
is mining a huge copper and gold reserve in the Grasberg area in
Irian Jaya, was generated by expansion of the company's
production during the period, he said.

In 1998, Freeport Indonesia produced 91.04 metric tons of
gold, up from 57.67 tons in 1997. Its copper production during
the same period also jumped to 809,577 tons from 548,278 tons a
year earlier.

The company also produced 163,324 tons of silver, compared
with 95,608 tons in 1997. (jsk)