Pertamina to ax insurance ties with Tugu Pratama

JAKARTA (JP): State oil and gas company Pertamina will not renew its insurance contracts with its affiliated insurance company PT Tugu Pratama Indonesia as part of its commitment to rid its business of corruption, collusion and nepotism.

Pertamina's president Soegianto said all the maturing insurance deals with Tugu Pertama, which at present underwrites all Pertamina's insurance contracts, would not be extended.

Tugu Pratama, established in 1981, is 35 percent owned by PT Nusantara Ampera Bhakti (Nusamba), which is headed by former president Soeharto's close associate Mohamad "Bob" Hasan. Pertamina owns 45 percent of the company, with the remaining 20 percent held by Pertamina's pension fund.

"Actually, in our opinion, Tugu Pratama charges us a competitive premium. But, we have decided not to extend the contract with the company because Nusamba has stakes there," Soegianto said.

He said the indemnity insurance contract with Tugu Pratama is valid for one year, but the contract was routinely extended in the past.

The tender for the indemnity insurance will be held as soon as the current contracts expire, Soegianto said, but he did not reveal a schedule.

The contracts would be then offered to local insurance companies under an open tender, he said.

Seventy percent of Tugu Pratama's insurance ventures involve the country's oil and gas industry. It also insures other industries like aviation and marine transportation.

The company insures Pertamina against loss during exploration, exploitation, storage and transportation.

One of the country's leading insurance firms and one of the most profitable subsidiaries of Pertamina, it booked a net profit of Rp 137 billion (US$13.7 million) last year, almost three times as much as its 1996 profit of Rp 50 billion.

It has been expanding services to other industrial sectors and overseas oil and gas industries, to lessen its dependency on the country's oil and gas industries.

Soegianto did not mention if Tugu Pratama would be allowed to participate in the future tender or reveal if it would end its joint venture with Nusamba.

Pertamina has scrapped monopoly rights of PT Permindo and PT Perta, which are owned by Pertamina and Soeharto's children and cronies, on fuel and crude oil imports. (jsk)