Potential state losses reach US$1.4 billion from KKKS: BPK

The outcome of an audit by the Finance Control Agency (BPK) on lifting and cost recovery in five of the 43 oil and gas contractors (KKKS) for the period of 2004 and first semester of 2005 has shown that potential state losses reached at least US$1.473 billion or about Rp13.3 trillion, Kompas reported Saturday.

The five oil and gas contractors subject to the audit are PT Chevron Pacific Indonesia (CPI), ConocoPhillips-Grissik, (COPI-Grissik), PetroChina International Jabung Ltd (PIJL), PT Medco E&P Rimau and BOB Pertamina Hulu-PT Bumi Siak Pusako (BSP)

BPK?s head Anwar Nasution discloses the audit result on lifting and cost recovery in five oil and gas contractors which he sent to the House of Representatives on Friday.

Anwar said that the potential state losses was resulting from the availability contracts by the five contractors with third parties. The contracts include gas exchange contract between COPI-Grissik and CPI worth US$5.467 and power supply contract between BSP and CPI worth US$20.04 million.

Besides that CPI made a power supply deal with PT Mandau Cipta Nusantara (MCTN) worth US$210 million and US$1.233 billion. CPI also made another contract on the Duri oil and gas exchange with COPI-Grissik worth 4.22 million.

BPK?s auditor Arief Handoko said that the agency plans to audit another 11 oil and gas contractors.

?The audit on several of them is expected to be completed in March 2007. They (companies subjected to the audit) are Total, Inpex, CNOOC, Unocal East Kaltim, Vico, ExxonMobil, Conoco South Natuna. Upstream oil and gas regulator (BPMigas) will also be subject to the audit,? he said.

According to Arief, all costs on power supply facility are included into the cost recovery even though it is not classified into an operating cost. The contractors are apt to use its affiliated firm so that it was difficult to find the real amount of power the company used.

?All of the costs are included in the cost recovery because in the contract with the government, cost recovery is not subject to taxation,? he said.

BPK?s senior auditor J. Widodo H Mumpuni said that the agency will ask the BP Migas to review the entire points in the contract with oil and gas contractors as part of its effort to prevent further state losses. (*)