Pertamina considers canceling agreement with Panutan Selaras
Friday, August 18 2000 - 04:00 AM WIB
The state-owned oil and gas company Pertamina is considering to cancel its agreement with contractor PT Panutan Selaras for the latter to develop a satellite fuel storage facility in Balaraja area in Serang district, West Java.
Pertamina president Baihaki Hakim said that the price charged by Panutan for the facility was too expensive.
Baihaki was quoted as saying by the Neraca daily that Pertamina had enough reasons, legally, to unilaterally cancel the agreement because Panutan had not made any development activity over the past successive 90 days.
But Baihaki said that Pertamina would try to renegotiate first with Panutan to lower the cost, initially estimated at US$85 million.
Panutan is a company owned by Sigit Hardjojudanto, the eldest son of the former authoritarian president Soeharto.
The development of fuel storage facility in Serang is crucial to minimize disruption in fuel distribution in West Java and Jakarta.
Baihaki said that if Pertamina decided to cancel the Panutan project, Pertamina had two options: to expand the storage facility in the Plumpang area in North Jakarta or develop the same facility in the Balongan refinery area in West Java.
He said that the two options would cost less than implementing the Panutan project under the proposed initial price scheme. (*)