Pertamina import 'irregularities' examined

Indonesia's Pertamina, already a candidate for government scrutiny over corruption in the upstream sector, is facing charges by legislators of "irregularities" in its importation of crude oil and products.

Eric Watkins
Senior Correspondent

LOS ANGELES, July 22 -- Indonesia's state-owned PT Pertamina, already a candidate for government scrutiny over corruption in the upstream sector, is facing charges by legislators of "irregularities" in its importation of crude oil and products.

"Pertamina's imports of gasoline and diesel are always more expensive than those of…Singapore," said Tjatur Saptoedy, a member of the House of Representatives' inquiry committee.

Tjatur said that based on Pertamina's calculation, from January to May this year the company spent 1.18 trillion rupiah ($128 million) more than similar transactions would have cost in Singapore.

In 2007, he said, Pertamina imported 321,000 b/d of crude and 300,000-350,000 b/d of fuel to help meet domestic need of 1 million b/d in fuel. The country's six refineries could produce only 652,000 b/d.

Several factors have been cited for the high cost of imports, including a lack of transparency in the import process and the company's partnership with oil brokers that have insufficient capacity.

While Pertamina claims to have 42 brokers for importing crude and 50 for fuel products, Tjatur said just 5-7 brokers regularly win tenders for the import procurements.

"I am really wondering why these companies frequently win the bidding. Some of them don't even have the products or the refineries," he said, adding that some bidders apparently have inside information, enabling them to bid on tenders more quickly than others.

"Only those who had obtained information beforehand would win the tenders,' said Tjatur, noting that one tender opened on July 14 and closed on July 18, leaving interested parties "next to no time" to prepare for the bid.

Pertamina Pres. Ari H. Soemarno defended his company's purchasing practices, saying, "We always take efficiency and reliability into consideration when carrying out procurements."

Tjatur's remarks came ahead of formal investigations into the country's oil and gas industry that are due to begin soon.

The House has set up an inquiry committee aimed primarily at investigating the causes of inefficiency in the country's energy sector. The committee's investigations are scheduled to start in mid-August.

In addition to the parliamentarians' investigation, recent reports say Indonesia's Corruption Eradication Commission as well as its upstream oil and gas supervisory agency, BPMigas, also are creating a team to evaluate the monitoring mechanisms in the upstream oil and gas industry.

Contact Eric Watkins at hippalus@yahoo.com.

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