Caltex to go ahead with existing tender procedure

JAKARTA (JP): American oil and gas company PT Caltex Pacific Indonesia will go ahead with its existing tender procedure, despite the charge that the system has encouraged unfair business practices.

Caltex's senior vice president in Jakarta W. Yudiana Ardiwinata said on Thursday that the Business Competition Oversight Commission (KPPU) had found nothing wrong with the tender procedure itself.

"The KPPU did not find anything wrong with the procedure, it was the collusive actions of the three tender participants that the commission was concerned about," he said during a press conference at his office.

KPPU ordered Caltex last week to terminate its existing steel pipe procurement contract, worth US$12.35 million for three years, which the commission found to be the result of unfair business practices.

Three tender participants, publicly listed PT Citra Tubindo, PT Purna Bina Nusa and PT Patraindo Nusa Pertiwi, were found guilty of conspiring in the preparation of their bids, to the advantage of Citra which finally won the contract.

A member of the commission, Soy M. Pardede, earlier said that if CPI wants to retender the contract, its tender procedure had to be revised in order to prevent the same unfair practices from reoccurring.

"There is nothing in KPPU's written verdict that suggests our tender procedure is violating the law (on antimonopoly and unfair business practices)," Yudiana asserted.

He explained that the tender procedure was the result of an agreement between state-owned oil and gas company PT Pertamina and its partners under the production sharing contract.

Consultant PricewaterhouseCoopers (PwC) had earlier disclosed in an audit that there were major inefficiencies in the previous procurement system, Yudiana said.

"PwC found that there were just too many chains in the process," he said.

The new tender procedure, introduced in May last year, enabled the company to save about $3 million a year, Yudiana explained, adding that the efficiency would also mean the government, as the owner of Pertamina, could save money.

The controversial tender procedure, for the procurement of low and high-grade steel pipes, required companies to supply both grades of pipes in one package, which until recently had been tendered separately.

Smaller companies, which can generally only provide low-grade pipes, were allowed to join the tender only if they could guarantee the provision of high-grade pipes.

Regarding KPPU's verdict, Yudiana said that the company was still studying the written documents, which he received on April 23.

"We still have 11 days to decide whether or not we will appeal," he said.

"Under the new contract, Caltex no longer needs to stock extra pipes in our warehouses. Whenever we need more pipes we just call our partner who will stock them for us," he said, explaining that the company will experience production problems if the contract is terminated.

However, the potential loss that would occur as a result of the contract's termination was still being calculated, Yudiana added. (tnt)