Fair tender urged for pipeline suppliers

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)