House backs Saipem for pipeline project<\/p>\n
JAKARTA (JP): House of Representatives' Commission V has
\nrecommended that Italian firm Saipem receive priority to take
\nover the natural gas pipeline project in the South China Sea from
\nthe Indonesian unit of American construction company J. Ray
\nMcDermott SA.<\/p>\n
The head of the commission, Marzuki Achmad, told The Jakarta
\nPost on Friday that it recommended state oil and gas company
\nPertamina cancel McDermott's selection for the project after
\nevidence was found that the company engaged in corrupt practices
\nto win the tender. The commission's scope of supervision includes
\nmines and energy.<\/p>\n
Marzuki said Saipem, which placed second in the bidding for
\nthe project, should be given priority to take over the project,
\nbased on stipulations in presidential decrees No. 16 1994 and No.
\n7 1999 concerning tenders for government projects.<\/p>\n
"If Saipem is not ready to take over the project, ETPM (of
\nFrance), which placed third, may take over the project," Marzuki
\nsaid.<\/p>\n
"If ETPM is not ready to take over the project, the project
\nshould be given to Nippon Steel, which placed fourth."<\/p>\n
McDermott won the project with the lowest bid of US$335
\nmillion, followed by Saipem ($373 million), ETPM ($383 million)
\nand Nippon Steel ($484 million).<\/p>\n
The project entails construction of a 560-kilometer underwater
\npipeline for the transportation of natural gas from the gas
\nfields, owned by Pertamina's production sharing contractors
\ngrouped in the West Natuna Gas Consortium, to Singapore.<\/p>\n
The consortium comprises Premier Oil of Britain, Conoco Inc.
\nof the United States and Gulf Resources of Canada.<\/p>\n
Pertamina reached a deal early last year to supply natural gas
\nto Sembawang Gas of Singapore for 22 years starting in April
\n2001.<\/p>\n
Pertamina has come under fire for approving the selection of
\nMcDermott by the tendering team formed by the consortium.<\/p>\n
Several legislators said McDermott Indonesia was unsuitable to
\nhandle the project due the involvement of tycoon Mohamad "Bob"
\nHasan, a close associate of former president Soeharto.<\/p>\n
A special team formed by the commission to study the tendering
\nprocess determined that McDermott benefited from insider
\ninformation on the project, which was reportedly leaked by
\nemployees who formerly worked with Conoco.<\/p>\n
The information enabled McDermott to offer lower costs than
\nthose offered by competing bidders, the investigation found.<\/p>\n
It also found documents showing that Conoco asked Pertamina to
\naward the project to McDermott without competitive bidding, but
\nit quickly withdrew the request after Soeharto resigned in May
\nlast year.<\/p>\n
The special team recommended the government and Pertamina
\nnullify the selection of McDermott.<\/p>\n
Marzuki said the commission approved the recommendation and
\nsubmitted its final approval to the House's leadership board on
\nFriday.<\/p>\n
"House leaders will submit the recommendation to the
\ngovernment," Marzuki said.<\/p>\n
He said some commission members wanted Pertamina to retender
\nthe project, but most members proposed that the projects be
\ntransferred to McDermott's competitors in the bidding.<\/p>\n
"It may take four months to retender the project that there is
\na possibility that the construction of the pipeline will not be
\nfinished on schedule," Marzuki said.<\/p>\n
"As such, the recommendation explicitly says that the projects
\nshould be transferred to McDermott's competitors, with those
\noffering the lowest bid given the first chance to take over the
\nproject."<\/p>\n
Pertamina earlier said McDermott might demand compensation for
\nthe losses caused by the cancellation of its contract.<\/p>\n
Marzuki and head of the special team Rahardi Sayoga said both
\nthe special team and the commission anticipated the worst
\npossible consequences of the annulment of the contract.<\/p>\n
"The contract does not clearly state the consequences of the
\ncancellation of the contract.<\/p>\n
"Furthermore, the most important thing for us is that we are
\ngoing to uphold correct ways of business in this era of reform,"
\nRahardi told Post. (jsk)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/house-backs-saipem-for-pipeline-project-1447893297",
"image": ""
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"sponsor_url": "https:\/\/okusiassociates.com"
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