Krakatau Steel not pays fully gas supplies from Pertamina
Tuesday, October 24 2000 - 04:00 AM WIB
State steel producer PT Krakatau Steel (KS) has not yet paid in full state-owned oil and gas firm Pertamina for gas supplies KS consumed for the last two years, with a total debt value of Rp 300 billion as of the end of July 2000, according to informed sources.
The sources said that the yet unpaid gas debt was mainly resulted from the ending of the 1996-1998 gas supply contract between KS and Pertamina, in which the gas price was set at US$1.325 per Million British Thermal Unit (MMBTU). Therefore, the new gas supply contract between KS and Pertamina has been applied since January 1999, with gas price set at US$2.00 per MMBTU. However, KS only paid Pertamina $1.50 per MMBTU of gas it consumed since January 1999.
"Consequently, because of the price difference of US$0.40 per MMBTU, KS booked a debt of Rp 300 billion to Pertamina," the source said.
KS president Sutrisno confirmed about the company's due debt to Pertamina, but he noted that the amount did not reach Rp 300 billion. He noted that KS's debt to Pertamina did not even reach Rp 150 billion.
Sutrisno noted that KS paid Pertamina $1.50 per MMBTU of gas it consumed based on a letter from the minister of mines and energy that allowed KS to pay the gas at $1.50 per MMBTU. Such a letter was made possible following suggestions from then president B.J. Habibie.
"So, we paid $1.50 not because we did not have the money, but because of the minister of mines and energy's letter. Yes we owed Pertamina, but the amount did not even reach Rp 150 billion," he said.
According to data collected by Bisnis, KS's gas debt to Pertamina reached Rp 143.27 billion.
However, the head of Pertamina's storage and domestic marketing unit III Jakarta, Tuty Anggrahini, insisted that KS must pay Pertamina fully based on the gas price set in the contract, not based on a letter from the minister of mines and energy.
"So, we are not wrong if we demand payment based on the gas price set in the contract because we must refer to the price set in the contract," Tuty said.
She noted that if there was a revision on the gas price, it must also be put in the contract.
According to informed sources, KS paid Pertamina at $1.5 per MMBTU of gas it consumed. But in its report, KS wrote $2.00 per MMBTU in its production cost.
"This matter will become a time bomb if it is not settled quickly by all related parties. If Pertamina is in trouble, it can demand full payment from KS anytime. And this will endanger KS' cash flow," the source said. (*)