Govt takes over project for oil, gas office
Govt takes over project for oil, gas office
JAKARTA (JP): The government has taken over a project to build an oil and gas business center at the Thamrin thoroughfare and canceled its build-operate-transfer contract with the project's developer, PT Petrobuild Indonesia.
The secretary-general of the Ministry of Mines and Energy, Umar Said, announced yesterday that the developer had failed to meet the May 1 deadline for putting up the required equity financing for the project.
"We decided to terminate the BOT contract with Petrobuild because the developer failed to come up with the required equity financing by the deadline on Monday," reported Umar.
He added that the building project, called Migas Center, at the former site of the oil and natural gas directorate general would be retendered.
Only last Thursday, Petrobuild's President Syarief Tando, showed reporters the progress of piling works at the project site and said that the 32-story building would be completed in 1997 as scheduled.
Tando signed the BOT contract with Oil and Natural Gas Director General Suyitno Patmosukismo on Feb.20, 1993, which stipulated 42 months to complete the building project, starting from July 1, 1993.
Umar said the developer would not be compensated for the spendings it had thus far invested in the project, including the temporary rental of an office building for the directorate general's personnel.
Tando told The Jakarta Post last night that the takeover was unfair and that the BOT contract could be canceled only through a civil court proceeding.
"I have spent more than US$10 million on the project and I have secured $45 million in equity financing from Arifin Panigoro, Chairman of PT Meta Epsi Duta Corp., and Aburizal Bakrie, Chairman of the Bakrie Brothers Group," Tando added.
He contended that such a move on the part of the government should have been based on a civil court decision to ensure an objective assessment.
Bad precedent
"If the government can so easily take over a project and cancel a BOT agreement, that could become a bad precedent that might discourage new private investors," Tando said. He declined, however, to specify what course of action he would take regarding the government's move.
The idea of developing a representative oil and gas business center to house the offices of oil companies and the oil and gas directorate general had been conceived in the 1980s.
But the idea was developed into a concrete project only in early 1993 with the full support of the then Minister of Mines and Energy, Ginandjar Kartasasmita, who also signed the BOT contract as the witness.
The building project was estimated to cost $150 million, of which $100 million would be financed with loan funds to be arranged by a bank syndication led by the state-owned Development Bank of Indonesia (Bapindo).
Bapindo's board of directors notified Umar Said last August that the bank was arranging a $100 million loan syndication with two other state banks -- Bank Rakyat Indonesia and Bank Ekspor Impor Indonesia -- and two private banks, Nusa Bank and Panin Bank.
Tando contended that despite some difficulties in securing all the necessary permits for the building project, his company would be able to complete the project on schedule.(vin)