CERI Questions Bidders' Competence On The Olefin TPPI Project In Tuban

Illustration. (Photo: Pertamina)

JAKARTA - Executive Director of the Center of Energy and Resource Indonesia (CERI), Yusri Usman highlighted the competence and track record of bidders who passed the olefin project development tender process at PT Trans Pacific Petrochemical Indotama (TPPI) in Tuban. Yusri assessed that inefficiency would occur if the Rp50 trillion project was undertaken by an incompetent party.

PT Pertamina (Persero) is currently in the tender process which was opened since February 2020 and recently received two of the best tender participants, namely the JO Hyundai Engineering Consortium and the Technip Consortium.

The tender for this project was previously attended by four consortiums, namely the Daelim Industrial Consortium-PT Wijaya Karya-McDermott Indonesia; The JO Hyundai Engineering Co. consortium Ltd-Saipem SpA-PT Rekayasa Industri-PT Enviromate Technology International; GS E & C Consortium-PT Adhi Karya-Technimont SpA; and the Technip Consortium-PT Tripatra-Samsung Engineering.

"In the prequalification document (PQ) it is stated that one must be experienced and have a track record. Technip is better, has more track records," said Yusri in a statement received on Monday, September 28 referring to the two best bidders who passed the recent tender process .

Based on its track record, one of the bidders who passed the tender process, namely Hyundai Engineering, has a poor track record in the Balikpapan Refinery Refinery Development Master Plan (RDMP) project.

The appointment of an EPC that does not have a good track record at the Balikpapan RDMP refinery has made Pertamina lose the confidence of investors who originally intended to invest in this project.

Therefore, the EPC selection process must be completely transparent and guaranteed to get an EPC with the best technology, experience and price mastery. The experience and track record of the EPC will greatly determine the success of Pertamina's development and investment in national strategic projects, namely the Grass Root Refinery (GRR), RDMP and Olefin Plant.

Yusri also quoted a statement from the President Commissioner of PT Pertamina Basuki Tjahaja Purnama (Ahok) who had recently gone viral regarding the construction of a refinery. Ahok likened the construction of a refinery to a Formula 1 car and questioned how it was possible for a kart driver to build a refinery.

In comparison, the other bidders that did not pass the tender process had better experience and track records. A source from the GS E&P Consortium, who did not want to be identified, stated that GS E&P has experienced building 14 olefin plants in 8 countries in the world.

On this basis, Yusri emphasized that the olefin complex development project at TPPI Tuban must pay attention to the track records and competencies of the tender participants. Because if not, Yusri assessed that there would be inefficiencies both during the construction process and down to the price of the product.

"If it is done by an incompetent party, the price of petrochemical products will not be competitive and production volume is not optimal," said Yusri.

The Tuban TPPI Olefin project will produce 700,000 tons of high density polyethylene (HDPE) per year, 300,000 tons of low density polyethylene (LDPE) per year, and 600,000 tons of polypropylene (PP) per year.

The project construction process is estimated to take 3 years, starting from December 2021 to March 2024. Yusri also mentioned several other impacts that would be caused if this project was carried out by incompetent parties.

"The quality and production target may not reach 100 percent and during the construction process change orders can occur," said Yusri.

Besides highlighting the competence and track record of bidders in the TPPI olefin project, Yusri also questioned the irregularities that occurred during the tender pre-qualification process.

"Pertamina must conduct a forensic audit of the tender team's communications. If necessary, hire an independent foreign forensic auditor," he said.