Pertamina abolishes Tugu Pratama's monopoly over oil and gas insurance

State oil and gas firm Pertamina is abolishing insurance monopoly rights granted to insurance firm PT Tugu Pratama Indonesia (TPI) over providing insurance coverage for Pertamina's oil and gas projects.

Pertamina's finance director Ainun Na'im said Pertamina could not maintain TPI's insurance monopoly following the implementation of the anti-monopoly law.

He noted that that there would be a consortium of insurance companies that would deal with Pertamina projects. He added that Pertamina was still deliberating a new mechanism following the dismantling of TPI's insurance monopoly.

Ainun said that Pertamina aimed to create a fair competition among insurance companies, and therefore reduce the country's deficit in the insurance sector.

Meanwhile, the head of financial and economics division at Pertamina's Foreign Contractor Management Agency (BPPKA), Sutadi Pudjo Utomo, disclosed that TPI now controled about 40 percent of Pertamina's insurance markets that covered also projects owned by Pertamina's contractors.

"Now the market share of TPI stands only at 40 percent (of the oil and gas insurance market), while the other 60 percent has been given to other insurance companies," Sutadi said.

TPI was formerly controlled by timber tycoon Mohamad "Bob" Hasan, a golfing buddy of former President Soeharto. However, Pertamina said that it had taken over Bob Hasan's ownership in TPI because Bob never submitted any fund for the shares in TPI.

Meanwhile, the chairman of the Indonesian Insurance Brokers Association (ABAI), Rubiyanto, welcomed Pertamina's move to abolish TPI's monopoly.

He noted that granting 60 percent of oil and gas insurance businesses to other insurance companies was a good step in the part of Pertamina and would benefit other insurance companies. (godang)