JP/13/Telkom

JP/13/Telkom

House questions Telkom's $1.8b mega project

Rendi A. Witular
The Jakarta Post
Jakarta

The House of Representatives grilled state-owned
telecommunication company PT Telkom on Wednesday over its US$1.8
billion projects amid rumors about collusive practices in the
tendering process for the projects.

During a hearing with House Commission IV, which oversees
telecommunication, infrastructure and transportation, legislator
Akhmad Muqowam warned Telkom that the tender process should be
conducted fairly and transparently.

"Telkom must be professional in carrying out the tender
process, considering the huge amount of money involved in the
project," said Akhmad, who chairs the telecommunication
subcommission.

In an effort to enhance its telecommunication infrastructure,
Telkom launched a groundbreaking project called T-21 in November,
2001. The T-21 actually comprises three projects: developing 1.6
million telephone lines for fixed wireless Code Division Multiple
Access (CDMA; a cellular technology system which offers clearer
sound, wider coverage, smoother transmission and multimedia
facilities); upgrading the switching system, regional junction
and access networks; and developing a fiber-optic transmission
network. The projects are scheduled to commence in 2002 and
finish in 2005.

After the hearing, Akhmad told The Jakarta Post that he had
heard several rumors about irregularities during the tendering
process for the projects, but refused to elaborate further.

Under Telkom's schedule, the tender process for all the
projects was to have been completed in August this year. However,
the company delayed the tender plan due to "technical problems,"
and has thus been able to complete the bidding process for only
part of the CDMA project, which was won by South Korean firm
Samsung Electronics Co.

Rumor has it that the delay was caused by people in President
Megawati Soekarnoputri's inner circle, who allegedly intervened
in the tender process and backed one bidder.

Telkom spokesman Bambang Edi Praptono has denied that the
company was under pressure from any particular party in selecting
bidders.

"There was no intervention; the delay was merely due to
technical problems," said Bambang, adding that the victorious
bidders would be announced in November or December of this year.

Bidders for the project include some of the world's giant
telecommunication companies, such as Ericsson Consortium, Hyundai
Corporation, Motorola Inc., Alcatel Consortium, Siemens
Consortium, NEC Consortium, LT Consortium (Lucent), Samsung
Electronics, ZTE Corporation and Huawei Consortium.

Considering the huge investment and the complexity of the
projects, Telkom has divided the projects into six "packages",
with each of the three projects -- CDMA, Switching, and
Transmission -- comprising two packages each.

CDMA Package 1, which is worth US$251.4 million, covers the
areas of Sumatra and Greater Jakarta; while CDMA Package 2, worth
US$317.6 million and won by Samsung, covers Central Java,
Yogyakarta, East Java, Kalimantan, Bali, Nusa Tenggara, Sulawesi
and other islands located in eastern Indonesia.

Switching Package 1 is worth US$296.5 million and covers
Sumatra and Greater Jakarta; while Switching Package 2 is worth
US$381.2 million covers East Java, Kalimantan and eastern
Indonesia.

Transmission Package 1, worth US$283.6 million, will link the
provincial capitals of Banjarmasin, South Kalimantan, and
Samarinda, East Kalimantan; and Transmission Package 2, worth
US$363 million, will link the provincial capitals of Makassar,
South Sulawesi, and Palu, Central Sulawesi.