Last hurdle cleared in Tangguh talks
Last hurdle cleared in Tangguh talks
Fabiola Desy Unidjaja, The Jakarta Post, Jakarta
A BP Plc.-led consortium has finally dropped its demand to
include regental administrations in the "government acts" clause
of the Tangguh construction contract, over concern that in future
there would be the possibility of wider autonomy being given to
regencies, an official says.
"The consortium agrees that we do not include the regental
administration in the government act clause as previously
demanded," Ministry of Energy and Mineral Resources director
general of oil and gas Iin Arifin Takhyan told The Jakarta Post
on Sunday.
He claimed that in the latest negotiation last week, BP was
satisfied with the government's explanation that the revised
Autonomy Law had given some power back to the governors.
Previously, the energy and mineral resources ministry had
negotiated with the finance ministry for a possible financial
risk guarantee for BP, should there be a change in government
policies that prevent the plant from fulfilling its supply
commitments.
The Tangguh project construction -- to be conducted by a
consortium comprising of BP, Kellog Brown & Root, JGC Corporation
and PT Pertafenikki Engineering -- hit a snag in the ongoing
debate on the "government act" clause.
The request was due to various problems faced by foreign
investors since the implementation of regional autonomy, which
gave more power to the regencies since 2001.
Revised Law No. 32/2004 on regional autonomy has provided
wider authority to governors to oversee decisions made at the
regental and municipality levels and limits the power of regents
and mayors.
The ongoing debate was brought to President Susilo Bambang
Yudhoyono late last month before the consortium finally agreed to
drop the request.
However, there is another problem to be settled before both
parties can close the deal. Iin said the two parties still had
differences over BP's request that the government pay the
interest resulting from claims paid by BP to buyers should the
firm suffer financial losses.
"We are still working on their demand for interest resulting
from the time difference between BP's payment of claims to buyers
and the government's reimbursement to BP," Iin said.
He said he hoped this problem would be the last.
"We want the project to move forward and negotiations are
expected to finish as soon as possible."
Tangguh, located in Papua, is Indonesia's third LNG plant
after Arun in Aceh and Bontang in East Kalimantan. Tangguh is
expected to make up for the country's declining gas projects.
The consortium is to cover some US$2 billion of the total $5
billion estimated cost of the project, while the rest will come
from lenders.