McDermott tender audited
McDermott tender audited
JAKARTA (JP): The tender of a contract for the construction of
a natural gas pipeline between West Natuna and Singapore, which
was awarded to PT McDermott Indonesia, is currently under a
special audit to investigate possible irregularities in the
assessment of bids.
President of state-owned Pertamina, Martiono Hadianto, said on
Wednesday that the special audit was being made by the
Development Finance Comptroller (BPKP) at the instruction of
Coordinating Minister for Development Supervision/State
Administrative Reforms Hartarto Sastrosoenarto.
There was confusion over the status of the McDermott contract
following a letter regarding a review of the tender process from
President B.J. Habibie's aide Sintong Pandjaitan, the secretary
for development operation control (Sesdalopbang).
House of Representative members have interpreted the content
of the letter as support toward a retendering of the project and
the cancellation of McDermott as its selection.
"The letter from Sesdalopbang states that the contract should
be continued if the procedures for tender are proven correct,"
Martiono said.
He said the results of the audit, which were expected to be
completed later this year, would determine the final status of
the McDermott contract.
"We will just wait and see until the audit process is
completed," he said.
Martiono said a consortium, consisting of Premier Oil of
Britain, Gulf Resources of Canada and Conoco Inc. of the United
States, also asked PriceWaterhouseCoopers to make an independent
audit of the tender process.
"These two auditing processes are separate from each other,"
he said.
However, preparations for the 560-kilometer submarine pipeline
project are continuing due to a tight schedule, he said.
"We have to take the schedule into consideration. If the
project is awarded to another firm, the consequences have to be
anticipated," he said.
He hoped the tender reassessment would not affect the
completion of the pipeline project so that Pertamina would be
able to make gas delivery to Singapore by 2001 under a 22-year
contract with Sembawang Gas.
McDermott, a subsidiary of American firm J Ray McDermott SA,
was alleged to have colluded with Pertamina officials by using
inside information to beat out other bidders in March.
The company won the tender with the lowest bid of US$335
million against other bidders, including Italian firm Saipem,
French firm ETPM and Japanese firm Nippon Steel.
The House of Representatives Commission V for mining has
demanded that the government transfer the pipeline contract from
McDermott to other bidders which offered the next lowest bid.
McDermott has insisted, however, that it won the contract
through a competitive bidding process.
The company's area manager, Howard J. Cleave, said recently
his company won the contract through a lengthy, open and
transparent bid process.
Cleave said that McDermott's experience over the last 27 years
in Indonesia enabled it to cut project costs and offer the lowest
bid.(02)