Duri cogeneration project violates regulation: Kuntoro
JAKARTA (JP): Minister of Mines and Energy Kuntoro Mangkusubroto accused oil company PT Caltex Pacific Indonesia of violating regulations by awarding the contract for the development of the US$190 million cogeneration plant in Duri, Riau, to its sister company without competitive bidding.
Kuntoro said on Friday that based on the investigation conducted by the ministry and after hearing presentations from Caltex as well as state oil and gas company Pertamina, the ministry judged Caltex to have violated presidential decree No. 16 of 1994.
"The direct appointment scheme is conducted after comparing at least three bidders and conducting negotiations regarding technology and prices to achieve a reasonable price and reliable technology," Kuntoro quoted one chapter of the decree as stating.
"Caltex has not done this," he added.
Caltex awarded the contract for the development of the 300- megawatt cogeneration plant to PT Mandau Cipta Tenaga Nusantara, without competitive bidding, in 1997, when Feisal Abda'oe was president of Pertamina.
The cogeneration plant will support Caltex's oil steamflood project in Duri.
According to Caltex, Mandau Cipta is 95 percent owned by the United States giant energy companies Chevron and Texaco -- which are also joint owners of Caltex -- and the remaining 5 percent stake is owned by PT Nusagalih Nusantara.
Sources said Nusagalih is partly owned by the Serangan Umum 1 Maret foundation, which is chaired by Feisal and linked to former president Soeharto. Caltex has denied this claim.
However, Caltex's president, Baihaki Hakim, acknowledged that Caltex had awarded the contract to Mandau Cipta without competitive bidding, but he said the decision was made with prior approval from Pertamina.
Baihaki said the contract was directly given to Chevron and Texaco in view of their technical competence and lengthy experience in design, construction and operation of cogeneration plants specifically built for high pressure steam flooding.
Kuntoro said under the presidential decree, a company can be directly appointed to take on a project without competition from other bidders only if the company is the sole agent or manufacturer of a product.
"But Mandau Cipta, Chevron and Texaco are not the sole agents and manufacturers of cogeneration plants," Kuntoro said.
He said Caltex had further violated the regulations by not seeking the approval of Coordinating Minister for Development Supervision and Administrative Reforms for the project.
Kuntoro said that under the presidential decree, the coordinating minister has the right to decide on projects worth more than Rp 5 billion (about US$500,000).
Kuntoro said the government could not order Mandau Cipta to stop construction, given the fact that it had completed 16 percent of the total project, and the Duri steamflood oil fields will need electricity and steam in the near future.
However, Kuntoro said, the ministry had to take measures to prevent the government from suffering losses from the project.
He said he had instructed Pertamina to find an independent body to investigate the technical aspects of the project, and the state financial controller (BPKP) would audit the project's finances, Kuntoro said.
BPKP should also investigate the use of locally-made components for the development of the cogeneration plant so that "Caltex will pay reasonable power prices to Mandau Cipta and Mandau Cipta uses a maximum amount of locally-made materials," Kuntoro said.
Cogeneration is a more fuel-efficient and thus more environmentally responsible process to simultaneously produce electricity and steam from natural gas.
Different from a common gas-fired power plant, which can only turn 30 percent of the energy in gas into power, a cogeneration plant can harness most of the wasted energy for heating and cooling needs. (jsk)