Minister, PLN urged to cancel shady deals
Wednesday, October 18 2000 - 04:00 AM WIB
The Indonesian Corruption Watch (ICW), Tuesday, demanded that Finance Minister Prijadi Prapto Suhardjo and state utility company Perusahaan Listrik Negara (PLN) cancel a number of shady deals and reopen tenders for the projects.
"The three previous finance ministers - Fuad Bawazier, Bambang Subianto and Bambang Sudibyo - refused to sign loan agreements for the projects. I don't know why Prijadi did it.
"If these projects go on, the state is expected to incur losses totaling US$400 million, or two-thirds of the total value of the projects," ICW coordinator Teten Masduki told reporters in Jakarta.
The appointment this year of Prijadi as finance minister sent the financial markets reeling as he had been reported to have flunked the 'fit and proper test' by the central bank, and was accused of corruption when he was still a director at the state-owned Bank Rakyat Indonesia.
Masduki said based on ICW's investigation, Prijadi on August 25, 2000 signed a loan agreement with BNP Paribas Credit Agricole Indosuez worth US$41.16 million and on August 30 with Kreditanstal Furwiederaufbau Frankfurt Am Main worth US$34.97 million.
The credits will go to a number of consortiums who will develop switching gear and other transmission facilities for PLN.
Behind some of the consortiums are family members and cronies of ex-president Soeharto, who was forced down in May 1998 after 32 years in power and is accused of massive corruption and power abuse.
ICW said Soeharto's one-time golfing buddy, Moh. 'Bob' Hasan won a tender through PT Ikabina, a family company of Ginandjar Kartasasmita through PT Agumar, Soeharto's son Hutomo 'Tommy' Mandala Putra through PT Pecatu Graha, while another son Bambang Trihatmodjo participatyed through PT Elektrindo Nusantara.
ICW also said it is inefficient to finance such projects with bilateral export credits.
ICW said there's also a strong possibility that these projects avoided multilateral financing, which made it easier for PLN to 'arrange' the auction process as well as the winners of the tenders.
"Most of the tender winners do not have the technical expertise and were very close to the [previous] power holder," Masduki said.
Masduki also said that most of the projects have been marked up by 300%.
"The development of Lot 3 in Kediri, for instance, is estimated to cost US$41 million, compared to US$15 million needed to develop a similar project in Depok, which was carried out through an open tender," he said.
"These tenders must be canceled, and the government and PLN must reopen the tenders using standard International Competitive Bidding," Masduki added.
PLN must bear the burden of about US$133 billion for the next three decades due to unfavorable deals with independent power producers, and which were signed during the corrupt Soeharto regime. (*)