Caltex cuts contract with Citra Tubindo for breaching law

JP/12/Caltex

Caltex to terminate rigged contract with Citra Tubindo

JAKARTA (JP): American oil firm PT Caltex Pacific Indonesia has decided to terminate its welded steel pipe procurement contract with PT Citra Tubindo two years ahead of plan to comply with a ruling issued by the antimonopoly commission.

Caltex's corporate communications manager Harry Bustaman said on Wednesday that the company had sent a letter to Citra last Thursday to notify the latter of its decision.

The termination of the steel pipe purchasing contract with Citra Tubindo would take affect 30 days after the issuance of the letter, he said

"We are grateful to the KPPU (the antimonopoly commission) for having uncovered the conspiracy behind the tender, and even without the verdict Caltex would have immediately terminated the contract because it runs contrary to business ethics," he told The Jakarta Post.

Harry said Caltex saw no reason to launch a counter investigation as the investigation conducted by the commission had been in line with approved business procedures.

"Even though under the existing contract we have the right to audit (Citra), this has already been done by the KPPU employing the same methods and principles as Caltex would have used," he asserted.

The antimonopoly commission, formally known as the Business Competition Supervisory Commission (KPPU), last month ordered Caltex to terminate its welded steel pipe procurement contract worth $12.35 million over three years after the commission found evidence of a conspiracy to rig the outcome of the tender.

The commission found evidence that three of the tender's four bidders -- PT Citra Tubindo, PT Purna Bina Nusa and PT Patraindo Nusa Pertiwi -- had met in Batam to compare bids so as to enable Citra to win the contract.

The other tender participant was PT Seamless Pipe Indonesia Jaya.

The commission had given Caltex 14 days to file an appeal or to comply with the commission's ruling.

Although the termination of the purchase contract would become effective on June 10, Citra was still obliged to provide four months of pipe supplies to Caltex, he said.

Under the purchase agreement, which should have lasted until 2003, Citra must guarantee four months of supplies in advance.

Harry said Caltex was currently consulting with state-owned oil and gas company Pertamina over how to proceed with the new tender.

The retender would be carried out using the existing tender procedures, he asserted, explaining that since the commission had found nothing wrong with the procedures themselves, there was no reason for Caltex to change them.

"We would like to get a new contract in place by early September at the earliest and, maybe, by January 2002 at the latest," Harry said. (tnt)

JAKARTA (JP): American oil and gas firm PT Caltex Pacific Indonesia decided to terminate its procurement contract with PT Citra Tubindo following the findings of

Business Competition Oversight Commission (KPPU) of unfair business practices.