BPH Migas proposes gas pipeline construction without tender

In a bid to help accelerate the development of crucial gas pipeline facilities in the country, downstream oil and gas regulator BPH Migas has suggested for pipeline construction to be held without tender process.

BPH Migas Chairman Andy Sommeng was quoted by Investor Daily Wednesday as saying that the existing tender process takes quite a long time to complete as it would require the government to first carry out a feasibility study for a particular pipeline project, which may take up to a year to complete, and with an additional risk that the project location may not necessarily lure investors.

Andy said that as an alternative mechanism, investors or companies make their own pipeline project proposal, which will then be reviewed by BPH Migas, experts, local governments, lawmakers, and the public.

?As such, they (the investors) will compete to look for potential market and gas sources, so that the construction of gas infrastructure can be accelerated,? Andy said.

He, however, added that this change can not be implemented immediately as the existing Government Regulation No 36/2004, which requires tender process for pipeline construction, must be revised first.

Andy said that the tender mechanism was suitable for past condition when the number of players in the gas pipeline development was still limited, prompting the government to play dominant role.

BPH Migas has previously set a target to develop 16,000 km of gas pipeline until 2025 to help facility gas demand in the country as set in the government?s 2025 energy mix policy, which envisages domestic gas consumption to account for 30 percent of the total energy consumption.

So far, nearly 8,000 km gas pipeline has been developed, and another 1,700 km currently under construction. (*)