Pertamina to scrap 159 dubious deals

Pertamina to scrap 159 dubious deals

JAKARTA (JP): State oil and gas company Pertamina said on
Friday it would scrap 159 deals made with former President
Soeharto's family, cronies and high-ranking officials.

The company said it would save US$64.7 million in dollar-
denominated expenses and Rp 313.3 billion ($34.8 million) in
rupiah-denominated expenses from discarding the deals, which it
claimed were made under corrupt practices.

Pertamina's exploration director, Priyambodo Mulyosudirdjo,
said the company had terminated some of the deals and sought to
renegotiate others in an effort to stamp out elements of
corruption, collusion and nepotism that had tarnished its image
for decades.

"Pertamina is continuing to investigate other projects and
contracts. So, the final figure could be higher than this,"
Priyambodo told a news conference.

Present at the conference were Ministry of Mines and Energy
Secretary-General Djoko Darmono and the secretary-general of
Pertamina's board of commissioners, Rachmat Sudibyo.

Rachmat said Pertamina had submitted preliminary results of
its analysis into all of its deals to the government.

Coordinating Minister for Development and Supervision/State
Administrative Reforms Hartarto Sastrosoenarto has given all
state firms and government offices until this week to report all
deals smacking of corruption, collusion and nepotism.

Priyambodo said the 159 deals covered a wide range of oil and
gas activities, including oil exploration, fuel and crude oil
imports, gas purchasing, the provision of gasoline chemicals and
catalysts for Pertamina's refineries, liquefied natural gas (LNG)
plant development and LNG shipping.

He said Pertamina had terminated several contracts for crude
oil and fuel imports as well as the provision of chemical
products for refineries.

The affected parties include PT Permindo Oil Trading, owned by
Bimantara -- a business group founded by Soeharto's second eldest
son Bambang Trihatmodjo -- and PT Perta Oil Marketing, which has
links with Soeharto's youngest son, Hutomo Mandala Putra.

Priyambodo said the company would also renegotiate or put back
into tender a number of contracts awarded to Soeharto's family
and cronies without competitive bidding.

"We will abolish the privileges and bring back the standard
procedures and rules, that is through a tender," he said.

He said Pertamina had in the past been forced to grant
production sharing contracts (PSCs) and technical assistance
contracts (TACs) in the exploration sector to Soeharto's family
and associates without putting them to tender.

Priyambodo said Pertamina had also appealed to foreign oil
companies operating here to take over shares owned by Soeharto's
family and cronies in their joint projects.

There are currently eight PSCs and six TACs involving
Soeharto's family or allies.

One of the PSCs is the onshore and offshore Kangean block in
East Java, which is operated by ARCO of the United States in a
joint venture with Bimantara.

Unocal of the United States has also been called on to take
over the shares of PT Nusamba Kaltim Pratama, controlled by
Muhammad "Bob" Hasan -- Soeharto's long-time golfing buddy -- in
the offshore Rapak, Makasar Straits block in East Kalimantan.

Priyambodo also said Pertamina had canceled plans to cooperate
with companies controlled by Soeharto's family and associates in
the proposed construction of private refineries.

PT Asia Pasific Petroleum, controlled by Trihatmodjo, and PT
Buana Ganda Perkasa, controlled by Soeharto's half-brother
Probosutedjo, had both planned to build refineries with a
300,000-barrel-per-day (bpd) capacity in East Java in cooperation
with Pertamina.

Priyambodo also said the state comptroller (BPKP) was
investigating alleged corruption and collusion in the development
of the country's eighth LNG plant project in Bontang, East
Kalimantan. The plant is currently being constructed by PT Inti
Karya Persada, controlled by Bob Hasan. (jsk)