Caltex to terminate contract with Citra Tubindo

Caltex to terminate 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)