Natuna gas project management
Commission V of the House of Representatives (DPR) has recommended that the government cancel PT McDermott's contract to construct the Natuna gas pipeline, worth US$335 million, as reported in Bisnis Indonesia and Media Indonesia on Aug 27.
This recommendation must be considered, yet at the same time it must be taken into account that the project must be implemented according to the schedule and technical specifications already stipulated and at the lowest cost. The wrong choice must not be made because we are too sensitive to the ghosts of corruption, collusion and nepotism as this could cause losses of $388.6 million for Pertamina and the government, according to the report of Foreign Contractors Management Body (BPPKA) head Gatot Karl Djoso Wiroyudo in Media Indonesia on Aug. 27.
Another $14.7 million would be lost in payment for the work already done by McDermott as well as the cancellation fee. An additional amount of $38 million would be added because the most economic second bid totaled $373 million by PT Saspem Indonesia. This would cause the additional loss of $52.7 million so that the total losses, if the McDermott contract is canceled, would total $421.3 million (approximately Rp 3.160 billion or six times bigger than the amount involved in the Bank Bali scandal).
If these figures are correct and if, with reference to the provisions in the contract and the general rules internationally applicable, it is rather unlikely that Pertamina would sustain these losses. If making an overall analysis it would seem that Pertamina would be better off staying with the initial decision of appointing PT McDermott as the winner of the contract. If not, the financial losses may indirectly burden the Indonesian people.
Bob Hasan's 18.5 percent share of PT McDermott should be separately discussed to make sure that the project does not have a vestige of corruption, collusion and nepotism. In this way the implementation of the project could go forward.
The DPR and Pertamina must take into account the counter argument levied by the area manager of PT McDermott Indonesia, Howard J. Cleave, regarding the irregularities exposed by the DPR. According to Media Indonesia and Bisnis Indonesia on Aug. 30, Cleave has suggested the involvement of an independent auditor to assess the validity of the tender.
For this time (and the last time) we should give a concession to the possibility of corruption, collusion and nepotism in order to save Indonesia's people Rp 3.160 billion. In addition, we would also be able to keep our promises to the foreign gas buyers (through Singapore) so that Pertamina can continue to enjoy foreign trust.
H. WISDARMANTO GS
Jakarta