KPPU to probe Pertamina tanker sale
The Jakarta Post, Jakarta
The Business Competition Supervisory Committee (KPPU) will carry out an initial inquiry into possible violations of the business competition law by state oil and gas firm Pertamina in the controversial sale of two supertankers.
"The KPPU has decided to follow up on the case because there is an indication of violations to the business competition (law)," KPPU chairman Sutrisno Iwantono said on Friday.
"The inquiry will focus on the tender process and whether it was in line with Law No. 5/1999 on monopoly practices and healthy competition," he said.
Article 22 of the law states that companies and businesspeople are not allowed to conspire with other parties to arrange a winner for a tender, a practice that leads to unhealthy business competition.
Pertamina and other parties involved in the tender process will be summoned for questioning, the KPPU said.
The committee will decide whether to drop or continue the investigation after the 30-day initial inquiry is completed.
"If the inquiry shows strong indications of violations, we will have a full investigation of the case," Iwantono said.
He said the tanker sale could be annulled if the tender process did violate the business competition law.
He added that anyone found guilty of violating the law risked a fine of between Rp 1 billion and Rp 25 billion.
Pertamina sold two supertankers in June to Norway's Frontline Shipping Ltd. for US$184 million, despite protests by the company's workers union and a recommendation from the House of Representatives that the company should hold on to the tankers for their long-term benefit.
The company argued that the money from the sale would be used to help resolve its cash flow problems, and that leasing tankers from third parties was more cost effective than owning its own tankers.
Activists and the Pertamina labor union have alleged that the tender for the tankers was marred by collusion.
They said the consultant Goldman Sachs, which acted as a financial adviser to the tender, owns a minority share in Frontline, pointing to a conflict of interest.
Pertamina has brushed aside these allegations, saying the tender was transparent. They insist that Frontline won the tender fairly because other bidders could not offer a 20 percent down payment and a bid bond of $5 million for each of the vessels.
Pertamina handed over one of the tankers, which can transport up to two million barrels of crude, to Frontline in June. The second vessel, which is still being built by South Korean shipbuilder Hyundai Heavy Industries, will be delivered in September.