Pertamina terminates Balaraja contract

The Jakarta Post, Jakarta

State oil and gas company Pertamina has decided to terminate a contract with local firm PT Pandan Wangi Sekartaji for the construction of a fuel depot in Balaraja, Banten, a senior official at the company said on Tuesday.

Pertamina alleged that the contract's value had been considerably marked up.

"The contract will be officially terminated on Wednesday (today)," Achmad Faisal, Pertamina's general manager for marketing operations in Greater Jakarta, West Java and Banten, said.

Pandan Wangi was awarded with a contract to build a fuel depot in Balaraja, which will be used as a main terminal for the distribution of fuel in the three areas. The project is 30 percent complete, said Achmad.

Under the contract, the project is valued at US$99.9 million, while Pertamina has estimated the value at $37.5 million.

According to Kompas, Pandan Wangi is owned by former president Soeharto's sons Bambang Trihatmodjo and Sigit Harjoyudanto and their partner Johannes Kotjo.

It is not clear when the contract was signed, but many contracts signed by Pertamina and Soeharto's family members and cronies during the New Order era contained marked-up prices.

Following the termination of the contract, Achmad said Pertamina would pay Pandan Wangi $10 million in compensation for the expenses incurred by the latter for the purchase of a 12- hectare plot for the depot and the uncompleted construction work.