Pertamina drops refinery deal with PT Humpuss
JAKARTA (JP): State oil and gas company Pertamina has dropped a plan to cooperate with PT Humpuss, owned by two of former president Soeharto's sons, to jointly operate its petrochemical refinery in South Sumatra.
Speaking at a hearing yesterday at the House of Representatives, Pertamina president Soegianto said the joint operation plan had been dropped to safeguard the state oil and gas company's interests.
"Pertamina is now preparing steps to retender the project either to domestic or international investors," Soegianto told Commission V for Mines and Energy, Industry and Trade, Manpower, Investment, and Environment.
Company processing director Samto Utomo said Pertamina had reached an initial agreement with Humpuss to jointly operate its purified terepthalic acid (PTA) refinery in Plaju, South Sumatra. Humpuss, under the initial agreement, is required to boost the processing capacity to 225,000 tons from 165,000 tons per annum.
Humpuss is owned by Soeharto's sons Hutomo Mandala Putra alias Tommy and Sigit Harjojudanto.
Samto said Humpuss was willing to invest US$24 million in the project but negotiations had not yet been completed because Pertamina considered Humpuss was demanding "too high a stake" in the refinery in return for the investment.
He said Pertamina had asked Humpuss to lower its demands and had given the company until June 30 to make a decision.
Humpuss requested a two-month extension but Pertamina decided to drop the joint cooperation plan.
"Now, at least three international and local companies have applied to take part in the tender for the project," Samto said.
Soegianto also said Pertamina was considering ending its insurance brokering contract with PT Tugu Reinsurance Broker, which is controlled close business associates of Seoharto.
"We will find a broker company offering lower premiums," he said, adding that Pertamina currently pays a premium of $25 million to the company.
Pertamina is currently insured by PT Tugu Pratama Indonesia which is 45 percent owned by Pertamina, 20 percent by Pertamina's pension fund and 35 percent owned by PT Nusantara Ampera Bakti (Nusamba), while Tugu Reinsurance acts as its broker.
Nusamba is owned by Suharto's close business associate Mohamad "Bob" Hasan, Soeharto-led foundations, and by his eldest son Sigit Harjojudanto.
Tugu Reinsurance is 55 percent owned by Nusamba, 25 percent by Tugu Pratama and 20 percent by Penjuru Ltd.
Soegianto was criticized yesterday for refusing to name the owner of Penjuru, one of the shareholders of Tugu Reinsurance.
"There is nothing to hide in this reformation era. Why don't you just honestly say to us that the company is owned by the son of the former Pertamina president (Faisal Abda'oe)," said legislator Djusril Djusan of the ruling Golkar faction.
Faisal, who headed Pertamina for 10 years until last year, is known to be a close associate of Seoharto.
Pertamina has long been considered the country's worst symbol of nepotism due to the deep involvement of Soeharto's family and cronies in its operations.
The company has pledged to improve its efficiency by rooting out corruption, collusion and nepotism in its operations in the wake of Soeharto's downfall in May. The company has awarded contracts to between 120 and 150 companies linked to Soeharto's family and cronies.
Pertamina is reviewing the contracts and has retendered some of them on the orders of Minister of Mines and Energy Kuntoro Mangkusubroto.
Under the third revision of the International Monetary Fund- sponsored reform program released last week, the government agreed to conduct an international audit of Pertamina and other state entities.
Soegianto said yesterday Pertamina did not have any reservations with any international audit but noted the plan was in conflict with the Pertamina law which stated that only the Supreme Audit Body has the right to audit the company. (jsk)