Lapindo Brantas Losses
October 18th, 2006, in Business & Economy, by Patung
The company at the heart of the Sidoarjo mudflow disaster in East Java, Lapindo Brantas Inc., faces losses of over $100 million.
Lapindo Brantas Inc., formerly a subsidiary of PT Energi Mega Persada Tbk., whose owner is government minister Aburizal Bakrie, is expected to have lost US$104 million, or about 964 billion rupiah, by the end of 2006, due to expenses and lost production caused by the hot mud flow at its gas field in the Brantas Block near Surabaya. However due to the fact that Lapindo was recently sold, for the princely sum of $2.00, to Lyte Ltd, of Jersey, UK, a company which may exist on paper only (New York Times), the company may in fact avoid facing much of its obligations by filing for bankruptcy. According to Tempo Lyte was founded on 17th January 2006 with starting capital of ten thousand pounds sterling.
An independent examiner, Elliot Association Pte. Ltd. has estimated that the itemised losses will be as follows: $25 million for attempts to stem the mudflow at its source, the well, $10 million for evacuations of refugees, $19 million for damages to buildings and homes, $15 million for the handling and management of the mud flow, and $25 million for the disposal of the mud.
The Director of Energi Mega, Faiz Shahab, in a written submission to the Jakarta stock exchange, said:
The losses will keep increasing.
(Kerugian itu terus bertambah.)
Meanwhile another spokesman for Energi Mega, Herwin Hidayat, said that as of July 2006 the company had expended $4.9 million on the problem and that in September alone $30 million had been spent, money which had been divided between Medco dan Santos, two companies which participated in the development of the Brantas Block gas field.
On the fire sale of Lapindo to Lyte, whose name will shortly be changed to Bakrie Oil and Gas Limited, the National Investment Board, Badan Pengawas Pasar Modal (Bapepam), is reputed to be carrying out investigations. Previously the Board had stated that Energi Mega was obliged to seek a 125 million dollar loan from Merrill Lynch.
