Pertamina terminates contract with Elnusa

The state oil company, Pertamina, has since Nov 3 terminated its contract with its subsidiary, PT Elnusa Petro Teknik, for the maintenance of refineries, citing its inability to make available the needed materials on time.

"We accept the decision because as a subsidiary, we only support the activities of the holding company," Elnusa president director, Aswad Dipo, said on Thursday.

Aswad added however that he was surprised at the decision since many world-class oil companies have begun to entrust the maintenance of refineries to their subsidiaries.

He also disagreed with Pertamina's reason for terminating its contracts with Elnusa.

"In fact, Elnusa has met seven conditions for the procurement of goods. The delay was particularly caused by lack of working capital that must be paid up by Pertamina," he said.

To cover maintenance costs, Elnusa had used equities and loans from financial bodies, thus affecting its cash flow, he said.

Earlier, Pertamina also decided to postpone its plan to inject fresh funds to Elnusa before the latter disposed of the 48.5 percent stake of PT Tri Daya Esta (TDE) owned by Bambang Trihatmodjo, son of former president Soeharto.

Aswad said he found it difficult to dispose of TDE`s stakes because it acquired the shares through legal procedures by making a paid-up capital of Rp 282.5 billion in March and October 1997.

"At that time Elnusa intended to go public, and later TDE bought its shares. So it is difficult to dispose of the company's stakes. What Pertamina can do is to buy the shares," he said.

He suggested that Pertamina make approaches to mutual fund management, PT Danareksa, to enable it to take over TDE shares because TDE still owed Danareksa.

Elnusa reportedly suffered a loss of Rp 246.19 billion in 1999 after the company bought commercial bonds worth Rp 266.2 billion from PT Margaraya Jawa Bali. (*)