Fair tender urged for pipeline suppliers
JAKARTA (JP): A local pipemaker called on PT McDermott Indonesia on Wednesday to hold a fair tender in the procurement of steel pipes for the construction of the planned pipeline linking the west of Natuna island to Singapore.
Director of PT KHI Pipe Industries, a subsidiary of state steel-making company PT Krakatau Steel, Moerbiantoro Soemantoro, said the local pipemakers were ready to compete with any foreign pipe producers in the tender as long as all bidders conduct fair play and McDermott also treats them fairly.
"What we -- the local pipemakers -- are concerned about now is that our main competitors from Japan could sell their pipes at dumping prices to win the tender," Moerbiantoro, who is also second chairman of the Association of Indonesian Steel Pipe Producers (Gapipa), told The Jakarta Post.
McDermott, a subsidiary of American marine construction company J Ray McDermott SA, has yet to announce the schedule for the tender for the pipe supplies.
But, Moerbiantoro said they learned the Japanese pipemakers had been offering McDermott with longitudinal pipe at about $540 per ton, compared with the price of similar pipe in Japan at more than $800 per ton.
PT Southeast Asia Pipe Industries (SEAPI), which is the only local producer of longitudinal pipe, could not afford selling its pipe at the same price level as the one set by the Japanese, he said.
SEAPI, based in Lampung, is a subsidiary of the local conglomerate Bakrie Brothers.
"It is impossible for SEAPI to compete with the Japanese since the price offered by them is similar to the payment made by the company for the import of raw material from Japan for the making of the pipe.
"The Japanese must be practicing dumping to offer such a low price," Moerbiantoro said.
He also said he would lobby state oil and gas company Pertamina and Minister of Mines and Energy Kuntoro Mangkusubroto to push McDermott to accept spiral pipe -- the type of pipe produced by most local pipe producers -- for the construction of the pipeline.
Report
McDermott won the tender for the construction of a 650- kilometer underwater pipeline to channel natural gas from west of Natuna island to Singapore.
Under the bidding document, McDermott is obliged to build the US$335 million pipeline using longitudinal pipe.
The contract was awarded to McDermott by a consortium comprising Conoco of the United States, Britain's Premier Oil and Canada's Gulf Resources which develop gas fields in Southeast China Sea.
Pertamina's president Martiono Hadianto has approved the selection of McDermott after the latter bowed to the pressure from several top officials to end its ties with former president Soeharto's close friend Mohammad Bob Hasan.
Pertamina's move has however infuriated legislators including Priyo Budi Santoso of the ruling party Golkar.
"Pertamina has caught legislators off guard by approving McDermott's selection while all political parties are busy with campaigning ahead of the general election," Priyo said on Wednesday, calling Pertamina to withdraw its approval.
He said although the existing law did not oblige Pertamina to consult with the House before making the final decision on the project, it was "morally" obliged to do so given the high value of the project.
Separately, Minister of Mines and Energy Kuntoro Mangkusubroto said on Wednesday he had not yet received a report from Pertamina regarding the project.
"I got the information that the project has been approved from the newspapers," Kuntoro said.
Kuntoro admitted that under the existing regulation, Pertamina was not obliged to report to him on the result of the tender.
But, he said:"Pertamina should have given a report to the government since it has become a subject of discussion at the House of Representatives." (jsk)