Pertamina will retender contracts linked to Soeharto
Pertamina will retender contracts linked to Soeharto
JAKARTA (JP): Minister of Mines and Energy Kuntoro
Mangkusubroto has ordered state oil and gas company Pertamina to
retender contracts awarded to former President Soeharto's family
and cronies.
Kuntoro said the contracts which would be retendered included
those for the procurement of fuel, goods and materials for the
company, and the shipment of Pertamina products.
"The bidding process is aimed at weeding out companies which
charge Pertamina excessively high costs," Kuntoro said, adding
that the bidding would be opened to all interested parties even
though the existing contracts have not yet expired.
Companies which currently hold the contracts should cut their
prices below the level proposed in the new call for tenders if
they wanted to continue their operations, Kuntoro said.
If they refuse to do so the contracts will be transferred to
companies which offer more competitive prices, he added.
"The retendering process does not mean that existing contracts
have been annulled. Companies which currently work with Pertamina
are being offered the chance to continue working with the
company, provided they lower their prices," Kuntoro said,
reiterating his earlier commitment to honoring all contracts
already awarded to private companies.
Kuntoro said Pertamina would retender the US$46 million a year
contract to procure catalysts and chemicals for the production of
fuel oil in the Balongan refinery in West Java. Bids will be
welcomed by the company from next week.
An informed source said the contract was currently held by PT
Catalyst Indopratama, a company partly owned by former president
Soeharto's son Hutomo Mandala Putra, who is better known as
Tommy.
According to the source, the company charges Pertamina $2,500
per ton of catalyst, compared to a price proposal of less than
$2,000 per ton submitted by two rival companies during the
initial bidding process.
He said Pertamina would also reopen competitive bidding for
the import of fuel next month. Fuel imports have for decades been
monopolized by PT Permindo, a company controlled by the Bimantara
Group led by Soeharto's second son Bambang Trihatmodjo.
Permindo would be allowed to participate in the bidding
process if it wanted to attempt to win the contract based on its
own merits alone, Kuntoro said.
The import of crude oil, which was for decades monopolized by
Perta Oil Marketing Ltd, controlled by Tommy and Soeharto's crony
Mohammad "Bob" Hassan, would be taken under the wing of
Pertamina's own trading division from next month, Kuntoro added.
Pertamina said earlier that between 120 and 149 companies
which do business with the company were owned by Soeharto's
family and cronies.
Soeharto's family dominates the shipping of liquefied natural
gas (LNG), crude oil and fuel, gas pipeline network development,
geothermal power and the development of refineries and many other
aspects of the hydrocarbon sector.
Analysts said the companies obtained contracts from Pertamina
through special appointment or quasi-tenders. The terms offered
by the companies were frequently uncompetitive but the contracts
were nevertheless awarded because of their close relations with
the former president.
The House of Representatives said last week that they
supported Kuntoro's plan to ask the Attorney General's Office and
the Development and Finance Comptroller (BPKP) to audit the legal
and financial content of the contracts awarded to the companies.
Legislators believe the companies marked up prices for
contracts to work with Pertamina as a matter of course.
Kuntoro also noted yesterday that contracts which would be
retendered were only those which had been awarded to the
companies through a competitive bidding process.
"Contracts which were awarded without any bidding procedure
will be annulled," he said. (jsk)