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)