Sumber Cipta set to lose LPG valve monopoly
JAKARTA (JP): Minister of Mines and Energy Kuntoro Mangkusubroto said yesterday he had asked state oil and gas company Pertamina to end the monopoly enjoyed by a company linked to former president Soeharto on the supply of valves for liquefied petroleum gas (LPG) containers.
"I have instructed Pertamina to hold an open tender for the purchase of the valves in the fourth quarter of the year," Kuntoro told a weekly news conference.
He said the tender would be open to international suppliers and that the current supplier of the valves, PT Sumber Cipta Karya Bakti, would be allowed to take part in the bidding.
Indonesian Corruption Watch recently called on the minister to end the exclusive rights given to Sumber Cipta to supply LPG container valves to Pertamina.
The anticorruption group said the company -- reportedly owned by PT Dana Karya Abadi Bhakti (Dakab), a foundation set up by Soeharto -- had enjoyed the monopoly since 1987.
The group sent a letter to Kuntoro last week saying that Dakab owned 60 percent of the company and Pertamina held the remaining 40 percent of its shares.
The group also charged that Sumber Cipta set the price for the valves three to four times higher than the market price.
Kuntoro denied the group's allegation concerning the company's ownership, saying it was 60 percent owned by Zahid Hussein and 40 percent owned by Soeroso Soemaprawiro.
Zahid holds several important positions in Soeharto-linked foundations.
Kuntoro said the company was given the exclusive right to supply Pertamina with the valves in 1988 by the State Secretariat, but that the price was set at levels favorable for Pertamina.
Each valve, he said, was sold to Pertamina for Rp 12,685 in the first years. The price was raised to Rp 19,700 in the middle of last year due to the monetary crisis, he added.
Pertamina president Soegianto said the price was lower than the region's market prices and that Pertamina had a contract to buy valves from the company through June 1999.
"We are going to terminate the contract before it expires because the press has charged that the contract smacks of collusion, corruption and nepotism," Soegianto said.
Gas
Kuntoro also said at the news conference that the development plans for America's Atlantic Richfield Company's (Arco) Tangguh natural gas discovery in Wiriagar and Vorwata, Irian Jaya, would not be delayed as the Natuna D-Alpha gas project was.
"Arco's project is much more efficient to develop compared to the Natuna project... (and) is, of course, more competitive in price," Kuntoro said.
The contractors of the giant gas field are still marketing Tangguh gas in order to start the physical development of the field, Kuntoro said.
Faisal Abda'oe, chairman of the Natuna D-Alpha gas field development, earlier announced that the development of the Natuna field had been delayed to 2007 because a sales arrangement with Thailand had fallen through.
The Natuna gas field, located in the Southeast China Sea and operated by Exxon Corp., reportedly contains 42 trillion cubic feet (tcf) of natural gas. It is owned by Pertamina and Esso and Mobil, both of the United States.
The Wiriagar and Vorwata gas fields, operated by Arco and British Gas Plc., are estimated to hold proven and probable reserves of 12 tcf to 13 tcf and possible additional reserves of six tcf to seven tcf.
Companies involved in the Tangguh project -- including Arco, British Gas, Japan's Kanematsu Corp. and Pertamina -- plan to begin liquefied natural gas (LNG) sales in 2003 or 2004. Pertamina has had initial talks on sales from Tangguh with LNG buyers in Japan and South Korea.
Pertamina shifted its LNG marketing effort to the Tangguh project from Natuna D-Alpha last year, seeking to sell the latter's gas reserves instead of selling via pipeline to Thailand and proposed power plants in Java. (jsk)