Donggi-Senoro Projects Loan by Mitsubishi is Unfair

Donggi-Senoro Projects Loan by Mitsubishi is Unfair – KPPU

Posted on Jan 07, 2011

The Indonesian Business Competition Supervisory Commission (KPPU) has ordered PT Pertamina to pay a USD 1 million in fine for conspiring with private entities to create an unfair competition in the Donggi-Senoro project.

The commission has accused the state owned Oil and Gas Company conspired with PT Medco Energi International, PT Medco E & P Tomori Sulawesi, and Mitsubishi Corporation.

Pertamina

In a verdict that was read today the Commission Chairman Nawir Messi states that the conspiracy have created an unfair competition. In its consideration, the Commission stated that an unfair advantage was given to Mitsubishi compare to the treatment received by other competitor in the project such as Mitsui and LNG EU.

The preferential treatment received by Mitsubishi by allowing Mitsubishi to conduct discussions with Pertamina and Medco Energi International ahead of everyone else on February 24, March 16, and September 4th 2006.

By September 4th 2006, the Commission stated, Mitsubishi has already made a presentation in front of Pertamina and Medco Energi International board of directors in relation to the substance of the project. This opportunity has provided Mitsubishi with huge benefits to in preparing its proposals. “It’s discriminatory because other participants were not given similar opportunity,” said Messi.

Not only that, the Commission also stated that the proposals scoring system and the terms of reference of the limited tender was never properly explained

Based on that finding, the Commission has decided that Pertamina, Medco Energi International, Medco E & P, and Mitsubishi together are in violation of Article 22 and 23 of Law No. 5 of 1999 regarding Prohibition of Monopolistic Practices and Unfair Business Competition.

The Commission has also ordered Medco Energi International to pay USD 500 thousand, Medco E&P to pay USD 100 thousand and Mitsubishi the highest with USD 1.5 million.

The Commission also provides recommendations to the Government to encourage optimum utilization of gas reserves through the use of technology appropriate to the relatively small reserves character of the gas fields.

Related to this, Lukman Mahfoedz, Medco Corporate Project Director says that they have not made any decision regarding this verdict. “The appeal possibility is wide open” he said.