Caltex to go ahead with existing tender procedure

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)