Gas Pipeline Project For Domestic Products

Jakarta, Kompas – Domestic pipe production will be utilized in the distribution pipeline network construction project from South Sumatra Province to West Java Province. The commitment to use local pipes is countered by a steel pipe procurement contract (coated pipe) between PT PGN, the project owner and PT KHI Pipe Industries as the producer.

The pipeline procurement contract signed by the President Director of PT PGN, WMP Simandjuntak, and the President Director of KHI Setiawan Surakusumah, Thursday (16/5), is worth Rp 1.22 trillion. KHI, which won the steel pipe procurement tender, is a subsidiary of Krakatau Steel.

According to Simandjuntak, KHI’s attitude shows that local steel pipe companies have the ability to compete with companies abroad. Thus, the future must consider domestic gas pipeline development projects to use local products.

As a steel pipe supplier, KHI acts as the “main partner” of a consortium consisting of PT Indal Steel Pipe, PT Bumi Kaya Steel Industries, and PT Steel Pipe Industry of Indonesia. The consortium will supply steel pipes along 272 kilometers with a diameter of 32 inches.

After the contract is signed, the physical construction of the 694-kilometer natural gas transmission megaproject from South Sumatra to West Java (SSWJ Phase II) will begin immediately. This is because the procurement of steel pipes is the starting point that determines the completion of the project.

Simandjuntak explained, KHI and the consortium will work on about 40 percent of the total length of the SSWJ phase II transmission pipe.

Through a tender process

The direct election of PGN’s Corporate Secretary Widyatmiko Bapang, KHI after winning the tender through a transparent and strict procedure. In fact, the tender process is unbeatable with international competitive biding (ICB).

He, the tender participant was invited by the announcement of the procurement of steel pipes in the mass media, March 2, 2005 in five newspapers, including the English language newspaper.

The bid submission stage for the procurement of steel pipes was held on April 25, 2005. At that time, five companies submitted bids and followed the opening of their bid proposals.

The five companies are PT KHI Pipe Industries and a consortium, China Petroleum Technology and Development Corps, PT Trihata Buana / Salzgitter Mannesman International, Daewoo International Corps, and PT Abadi Kuasa Karya / Welspun SGRL.

The five companies were declared to have met the auction requirements. However, from the evaluation results of the auction committee, it was determined that KHI and the consortium were the winner of the auction and was approved by the board of directors on May 30, 2005.

Businessmen, members of the Indonesian Steel Pipe Factory Association (Gapipa). The government’s proximity to being more serious than domestic industries. In particular, compete fairly in oil and gas projects in Indonesia that are financed by international funds.

Gapipa’s hope, as stated by its chairman Soesamto, is related to the 375-kilometer South Sumatra-West Java Gas Pipeline Project which requires 107,000 metric tons of steel pipes. This amount is equal to 12 percent of the installed capacity of six national steel pipe producers for oil and gas.

Soesamto revealed that the project was funded by an international institution, so it indicated that the main contractor must be a foreign company. Meanwhile, 50 percent of the capital goods needed for the project must also be. The remaining 50 percent is just being tendered internationally. (BOY)

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