Indonesian energy minister questioned in graft probe

JAKARTA Sun Dec 1, 2013 11:51pm EST

JAKARTA Dec 2 (Reuters) - Indonesia's anti-graft agency questioned the energy minister on Monday over a corruption scandal that has ensnared top oil officials and threatened to tarnish President Susilo Bambang Yudhoyono's final year in office.

Minister Jero Wacik, a member of the president's ruling Democratic party, was called in as a witness by the Corruption Eradication Commission (KPK) as part of a probe into bribery charges against the head of the energy regulator SKKMigas.

Along with the risk of political damage, the scandal could undermine attempts to attract more investment from international energy firms, several of which have threatened to scale back operations due to uncertainty about the investment environment.

Wacik has denied any involvement in the SKKMigas case.

"I am here to fulfill a KPK summons today to provide an explanation about a case that is currently being processed," Wacik told reporters after arriving at the agency's headquarters in Jakarta.

The regulator was thrown into disarray in August when Rudi Rubiandini, who has since been suspended as chairman, was arrested on suspicion of accepting a bribe from an employee of Singapore-based firm Kernel Oil.

The energy ministry's secretary general along with three other top officials from SKKMigas have been banned from overseas travel by KPK due to their links to the investigation.

The scandal, the first to reach the top levels of the energy ministry, has added to investor concerns over Indonesia's energy policies, which have been criticised as being unclear and nationalistic.

Indonesia has struggled to stop its decline in oil production at a time when energy demand, driven by rapid economic growth, has been surging, driving a widening current account deficit.

The oil and gas sector is politically crucial, accounting for about a fifth of Indonesia's government revenue.

Indonesia was once self-sufficient in oil and gas but has been struggling for years to attract investment to halt declining output from a peak of around 1.6 million barrels per day (bpd) in 1995. Indonesia has said it expects to produce 826,000 bpd this year and 870,000 bpd in 2014.

Wacik is the latest top official to be summoned for questioning by the KPK. At the weekend, the agency questioned Vice President Boediono over a case related to a bank rescue in 2009 when he headed the central bank.

The graft cases and investigations undermine Yudhoyono's claims that during his two terms as president he has successfully tackled the corruption that has long been a routine part of doing business in Southeast Asia's largest economy.

Yudhoyono's party has seen its popularity slide ahead of next year's parliamentary and presidential elections. (Reporting by Fergus Jensen; Writing by Randy Fabi; Editing by Ed Davies)

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