Pertamina chief vows to step up graft probe

JAKARTA (JP): The new president of state oil and gas company Pertamina, seeking to quiet public distrust about his commitment to fighting graft, has ordered an investigation into all the firm's contracts worth more than Rp 10 billion (US$1.17 million).

Martiono Hadianto said on Tuesday he instructed his staff to determine whether the contracts were awarded in compliance with proper procedures and if fees charged by contract holders to Pertamina were "reasonable"

"Proper procedure is not enough. All the contracts should also quote reasonable prices," Martiono said in his first news conference since his installment early last month.

He did not divulge what actions would be taken for contracts failing to meet requirements.

Martiono, a former assistant to President B.J Habibie, replaced Soegianto.

His installment raised speculation he was assigned to shield top Habibie administration officials from his predecessor's aggressive campaign to stamp out corruption, collusion and nepotism, known locally by the acronym KKN.

Many government officials are suspected of indulging in rampant KKN practices during Soeharto's New Order regime.

Acknowledging public doubts about his commitment to fighting graft, Martiono declared he was determined to root out KKN.

Soegianto announced last year that Pertamina awarded 159 contracts to Soeharto's family and cronies during his rule.

Soegianto annulled, retendered or renegotiated most of the contracts.

Martiono said Habibie had instructed him to transform Pertamina into a world-class company.

He pledged to continue the corporate restructuring program initiated by his predecessors to make all the business units of Pertamina independent and profitable.

He said he launched a program to create a better corporate image for Pertamina and to make it a transparent and profit- oriented company.

He called on the government to allow Pertamina to develop the Coastal Plains Pekanbaru (CPP) block in Riau after the contract of oil company PT Caltex Pacific Indonesia expires in 2001.

By transferring the development of the block to Pertamina, he said, the government would help strengthen Pertamina's bid to be a world-class firm.

"Give Pertamina a chance to show its ability. If Pertamina does not perform well...," Martiono said.

An interministerial task force has recommended the government allow Caltex and Pertamina to jointly develop the block as a solution to the dispute between both companies over the right to develop the block by itself.

It has also recommended the government to increase its share in the block's oil wells -- which are developed with primary technology and secondary enhanced oil recovery technology -- from its present 85 percent.

House of Representatives' Commission V for mines and energy, industry and trade has demanded a say in selecting the developer of the block.

Pertamina will be able to increase its oil output to about 140,000 barrels per day if it is allowed to develop the CPP block which currently produces 77,000 barrels per day (bpd), he said.

Martiono said Pertamina improved its efficiency over the past several years and it would continue the efficiency program.

He promised not to lay off any of company's 28,800 workers given the economic suffering already affecting the majority of the people. (jsk)