Pertamina told to rexamine Natuna pipeline tender
JAKARTA (JP): Minister of Mines and Energy Kuntoro Mangkusubroto has ordered the state oil and gas company investigate alleged irregularities in the bidding process for the construction of a 650-kilometer underwater pipeline to supply natural gas from west of the Natuna island group to Singapore.
"We have instructed Pertamina to examine the bidding process. We are awaiting the reports of the probe," Kuntoro said.
He said he would call for the project to be retendered if he found irregularities in the bidding process. Deadline for the tender was last week with PT McDermott Indonesia, a unit of American contractor McDermott Corp., tipped most likely to succeed.
Although a final result for the tender is yet to be announced, some legislators protested the bidding citing the alleged affiliation of McDermott with conglomerate Mohammad "Bob" Hassan, the golfing partner of former president Soeharto.
"If the bidding was conducted in conflict with the existing regulation on tenders, we shall annul (the result). It's very easy (to do)," Kuntoro said.
The West Natuna gas consortium comprising U.S.-based Conoco, Britain's Premier Oil and Canada's Gulf Resources announced that McDermott proposed the lowest bid at US$335 million for the project, making it most likely to win the tender.
Also bidding were ETPM of France, Japan's Nippon Steel and Saipam of Italy, which submitted proposals of $382 million, $415 million and $372 million respectively.
Singapore's SembGas will buy the gas for 22 years from 2001.
The consortium said it would select its preferred candidate soon and submit its recommendation to Pertamina for a final decision.
The bidding process sparked controversy following the failure of Allseas of the Netherlands and Hyundai Heavy Industries of South Korea to pass the technical evaluation phase.
Several members of the House of Representatives Commission V for industry and mining accused the consortium of unfairly pushing the companies aside by engineering the bidding terms.
They called on the government and Pertamina to order the consortium to eliminate the terms and allow the two companies to take part in the bidding.
Secretary-General of oil and gas at the Ministry of Mines and Energy Soepraptono Soelaiman, in several hearings with the House, promised to respond to the demands.
The consortium responded by relaxing several terms, but refused to change the requirement that bidders have experience in building 2.5 kilometers of pipeline per day, experience Hyundai lacked.
Commission vice chairman Muhsin Bafadal, said the government should annul the tender results since the process was unreliable and in conflict with the agreement between the government and the House.
Kuntoro said he would consult the commission regarding the tender result.
"What exactly does the commission want? Do they want the project to be retendered or the bidding terms relaxed, or something else? We shall explore all the (options)," Kuntoro told Antara. (jsk)