The Indonesia regulator said in a statement that it had found indications of unfair business practices in the project to digitize more than 5,500 of Pertamina’s public fueling stations, out of a total of around 7,000 stations across the country.
Indonesia's state-owned oil and gas company Pertamina is facing an antitrust investigation over alleged discriminatory practices after it directly appointed another state-owned company to handle a 3.6 trillion rupiah ($221 million) fuel station digitization project.
The Indonesia Competition Commission, or KPPU, said in a statement over the weekend that it had found indications of unfair business practices in the project to digitize more than 5,500 of Pertamina’s public fueling stations, out of a total of around 7,000 stations across the country.
The project involves procuring a system for near real-time monitoring of subsidized diesel distribution and sales.
KPPU investigators are examining whether Pertamina's decision to directly award the contract to another state-owned enterprise without a competitive tender process violates Article 19 of Indonesia's competition law, which prohibits discriminatory practices.
The regulator did not name the appointed company, but local media reports identified it as Telekomunikasi Indonesia, or Telkom, the country's largest telecommunications provider.
“KPPU considers this digitization project to be of significant value and directly linked to state spending on subsidized fuel,” the commission said in its statement. “Therefore, Pertamina should have first opened the opportunity to all capable businesses in Indonesia to implement the project in order to secure the best possible price and quality.”
The watchdog also questioned Pertamina’s justification of “state-owned synergy,” noting it has previously urged the government to review the policy, citing risks of inefficiency and reduced competition.
“Alternative procurement based on regions, using an open tender mechanism, should be a solution so that performance and efficiency can be measured and business competition maintained by reducing entry barriers in the industry,” the commission said.
According to the regulator, several other companies had previously expressed interest in participating in similar projects but were not given a chance to compete.
The KPPU also pointed to a past violation, noting that in 2006 it fined Pertamina 1 million rupiah for directly appointing communications consultant Landor to design a new company logo.
Pertamina has not yet issued a statement in response to the investigation.
Source: MLex
