Pertamina sticks to its guns on McDermott tender
Pertamina sticks to its guns on McDermott tender
JAKARTA (JP): State-owned oil and gas company Pertamina will not cancel PT McDermott Indonesia's contract for the gas pipeline project in the South China Sea despite protests from the House of Representatives, Minister of Mines and Energy Kuntoro Mangkusubroto said on Friday.
"First, I am not handling the case... What I have heard is that (Pertamina) will go ahead with McDermott," Kuntoro said during a weekly media conference.
The House of Representatives sent a letter to Kuntoro dated Aug. 31 to protest the decision to award the contract to McDermott, citing irregularities in the tender of the project.
The House charged McDermott with using insider information to beat out competitors Saipem from Italy, French company ETPM and Japanese company Nippon Steel in the tender in March of this year.
The House demanded the government transfer the contract to the McDermot competitor which offered the lowest bid.
McDermott, a subsidiary of American construction firm J. Ray McDermott SA, maintains it won the project in an open and transparent tender.
The 560-kilometer underwater pipeline will be constructed for the transportation of natural gas from the fields west of the Natuna islands to Singapore. The gas fields are being developed by three of Pertamina's production sharing contractors -- Conoco Corp. of the United States, Premier Oil of Britain and Gulf Resources of Canada.
Pertamina has clinched a deal to supply gas to Singapore's Sembawang Gas for 22 years beginning in 2001.
Kuntoro and Pertamina have yet to officially reply to the House's letter.
Pertamina president Martiono Hadianto sent a letter on Aug. 20 to President B.J. Habibie, through his aide, secretary for development operation control Sintong Pandjaitan, seeking advice on how to respond to the House's demand.
Pandjaitan's reply to the letter caused much confusion and led to conflicting interpretations among legislators of the President's stand on the issue.
"We hereby inform that by the instruction of the President ... the West Natuna gas project should continue on schedule as determined in an open and transparent tender so that the winner of the tender is free from corruption, collusion and nepotism," Pandjaitan said in a letter dated Aug. 30 sent to Kuntoro, Minister/State Secretary Muladi and Minister of Finance Bambang Subianto.
Pertamina said the letter indicated Habibie supported the selection of McDermott for the project.
Legislators, however, took the letter as a call for Pertamina to retender the project to root out elements of corruption, collusion and nepotism.
Kuntoro said Pandjaitan told him the legislators' interpretation was wrong.
Legislator HA Walid said the House still believed the government would heed the House's recommendation, warning of a crisis in the relationship between the government and the House if the recommendation was rejected.
"Under the country's Constitution, the government should listen to the House," Walid told The Jakarta Post.
Several analysts say the controversy over McDermott's contract will gradually wane because the sitting legislators end their term later this month.
However, several legislators who are critical of McDermott's selection have been reelected for the next term, and have promised to continue fighting for the cancellation of the company's contract.
"I will keep fighting for that," legislator Priyo Budi Santoso, who has been reelected for the next term, said. (jsk)