Kuntoro has authority to cancel two marked-up GITET projects
Tuesday, October 24 2000 - 04:00 AM WIB
The president of state electricity company PT PLN, Kuntoro Mangku Subroto has the authority to cancel two marked up high voltage electricity relay station (GITET) projects in Kediri, East Java, and Tasikmalaya, West Java, according to the Central Board of the PLN Labors Union.
PLN Labor Union chairman Hasrin Hutabarat said the problems of the two marked-up projects would not expand if Kuntoro barred the signing of export credits for the two problem-ridden projects.
"We question Pak Kuntoro's credibility," Hasrin said.
He contended that Kuntoro could easily cancel the projects, as the requirements for the projects could be executed were not fulfilled yet. The requirements included the government's approval for the financing of the two projects, supports from insurance coverage and letters of credit for importing equipment must be opened by the central bank.
"Out of all the requirements, only one has been fulfilled, namely the signing of the loan agreement that has bee approved by the government, while other requirements have not yet fulfilled effectively, and therefore, the projects could still be canceled," he said.
Kuntoro earlier revealed that the value of both Kediri and Tasikmalaya projects was marked up by more than 200 percent, compared to the value of similar project, Depok relay station. The contracts for Kediri and Tasikmalaya projects were signed in 1998 when P LN was led by Djiteng Marsudi, while Depok project was tendered in July.
Hasrin said that it would be best for Kuntoro to cancel the two relay station projects because they had not yet caused any financial losses for PLN.
Hasrin also called on Kuntoro to focus his attention on private electricity projects that would continue to burden PLN if this matter was not addressed quickly.
He noted that interim agreement with PT Paiton Energy Company (PEC) for instance requires PLN to pay PEC US$115 million for a period of May until the end of this year. In addition, PLN had to pay additional variable costs of US$474 million. Hasrin questioned Kuntoro's handling of Paiton project because under Adhy Satria's leadership, PLN did not pay such variable costs. (*)