Sumber Cipta set to lose LPG valve monopoly

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)