House members blast lobbysts for power projects<\/p>\n
JAKARTA (JP): Amidst the lingering controversy over the March
\nawarding of three power plant projects to foreign contractors,
\nlegislators have attacked the lobbyists and brokers who they say
\ninflated the prices of the projects and undermined Indonesia's
\nability to lure more foreign investment.<\/p>\n
Legislator Aberson Marle Sihaloho of the Indonesian Democratic
\nParty (PDI) said that local brokers, who are usually politically
\nconnected, demand high commissions from domestic and foreign
\ncontractors.<\/p>\n
\"Foreign contractors cannot escape brokers. Worse than that,
\nforeign firms compete to give higher fees to win job contracts,\"
\nAberson said.<\/p>\n
He was commenting on the statement by the State Electricity
\nCompany (PLN) in a hearing with the House of Representatives
\n(DPR) early last week that brokers had intervened into the
\nassessment of the contracts for the power projects.<\/p>\n
The intervention had forced the foreign contractors to set
\nunusually high prices to offset the fees they would have to pay
\nto the lobbysts, without him contracts are impossible to get.<\/p>\n
The PLN chief Zuhal declined to identify the lobbysts and
\nbrokers in this particular case.<\/p>\n
The foreign contractors initially asked for a total of US$2.14
\nbillion to build the three plants, located in Grati (East Java),
\nTambak Lorok (Central Java) and Muara Tawar (West Java) but they
\nlater lowered the prices to $1.76 billion.<\/p>\n
Erie Soekardja, vice-chairman of the House's Commission VI
\n(in charge of energy, mines and industry), however, said that the
\n$1.76 billion price is still to high, adding that a further
\nreduction of between between 20 to 30 percent is possible.<\/p>\n
According to Soekardja his commission would again raise the
\nissue on the contracts for the power projects during a hearing
\nwith the Minister of Mines and Energy on July 5.<\/p>\n
The ministry awarded the 521-megawatt Tambak Lorok open-cycle
\nproject to a group including Sumitomo of Japan and America's
\nGeneral Electric, the 868-megawatt Grati combined-cycle power
\nproject to a consortium of Japan's Mitsubishi and the German
\nSiemens and the 1,094-megawatt Muara Tawar combined-cycle power
\nproject to a consortium of Swiss-Swedish Asea Brown Bovery (ABB)
\nand Marubeni of Japan.<\/p>\n
Controversy<\/p>\n
The repeat-order, however, set off a controversy because an
\nAnglo-French company, GEC-Alsthom, claimed it could complete the
\nthree projects for much less.<\/p>\n
Informed sources meanwhile said that the ministry of mines and
\nenergy and PLN had not made final decisions on the contracts.
\nThey would review the contracts after studying the final report
\nof a fact-finding team which last month visited Thailand and
\nMalaysia to conduct price-comparison studies.<\/p>\n
The team concluded that that the contractors charged much
\nhigher prices on the Indonesian projects. Their asking prices for
\nopen-cycle power generation ranged from $529 to $534 per
\nkilowatt, as against $424-510 in Thailand and $395-493 in
\nMalaysia.<\/p>\n
As regards the prices of the combined-cycle power plant
\nprojects, the contractors' asking prices also were much higher,
\nranging from $610 to $701, compared to $489-618 in Thailand and
\n$597-599 in Malaysia.<\/p>\n
\"Brokers, of course, are everywhere and they want some fees.
\nBut I've never found a case like this before,\" Soekardja said.<\/p>\n
Aberson, however, hinted that the brokers and the lobbyists
\nmust be persons with exclusive ties to powerful decision makers
\nand have made a fortune because of the connection.<\/p>\n
\"Old habits die hard,\" he said, adding that the House
\nunfortunately cannot intervene in the decision-making process of
\nsuch projects, which are usually financed with the export credit
\nfacilities, because it can only adjudicate the annual state
\nbudget.<\/p>\n
\"Should Indonesia seriously want to increase its competitive
\nadvantage, it has no other choice but to be efficient and
\nproductive,\" he said, referring to a recent report of the World
\nBank which said that Indonesia's economy remains vulnerable to
\nregional competition and internal weaknesses despite its growth.<\/p>\n
Soekardja said that he hoped the minister of mines and energy
\nwould resolve the problem to safeguard national interests.<\/p>\n
\"As the representatives of the people, we want the people to
\ntake the benefit. Not brokers,\" he said. (09)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/house-members-blast-lobbysts-for-power-projects-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}