Soeharto grandson loses briquette deal
JAKARTA (JP): State coal mining company PT Tambang Batubara Bukit Asam has terminated a contract with Ari Sigit Hardjodjudanto -- a grandson of former president Soeharto -- for the construction of five coal briquette factories in Java.
Director General of Mining at the Ministry of Mines and Energy Rozik Boedioro Soetjipto said on Thursday the firm took the action after receiving the government's approval.
The measure is part of the national efforts to scrap business deals landed through corruption, collusion and nepotism.
Bukit Asam signed a build-and-transfer agreement with PT Ario Seto Wijoyo, controlled by Ari Sigit, to build five coal briquette plants. One each were planned for Serang, West Java; Cilacap, Central Java; and Semarang, Central Java, plus two plants in Gresik, East Java.
The plants, each with production capacity of 120,000 tons of briquettes per annum, required total investment of Rp 80 billion (US9.4 million).
Soeharto dedicated the first plant in Gresik upon its completion last year.
The Rp 8.4 billion plant has only been running on 20 percent of its designed capacity due to the poor quality of the machinery installed by Ario Seto.
Rozik said Bukit Asam had filed complaints with Ario Seto over the shoddy performance and was seeking to recover part of the fund reimbursement to the company for the plant's construction.
"Fortunately, only one of the five plants has been built (by Ario Seto)," Rozik said on the sidelines of a seminar on mining and industrial investment.
Bukit Asam currently produces 14,500 tons of briquettes at four production facilities, which also include one each at Tanjung Enim, South Sumatra, and Tarahan, Lampung.
It plans to increase its coal briquette output to one million tons in 2000 to anticipate an increase in demand for alternative fuels.
The government is promoting the use of briquettes in several industries as a substitute for kerosene to ease the government's subsidy on oil products.
They are considered an excellent alternative due to the country's abundant coal deposits, currently in excess of 36 billion tons. (jsk)