The Fair Trade Commission on Wednesday raided seven engineering firms affiliated with major oil distributors and refiners on suspicion of rigging bids for maintenance contracts on national oil storage bases, according to sources familiar with the case.
The seven firms include Nisseki Ryoyu Engineering and Construction Co., a subsidiary of Nippon Mitsubishi Oil Corp.; Idemitsu Engineering Co., a unit of Idemitsu Kosan Co.; and Cosmo Engineering Co., a subsidiary of Cosmo Oil Co., the sources said.
They said the seven firms conspired on who would receive orders for duct work and tank maintenance from the eight semipublic enterprises that operate the nation's 10 oil storage bases.
The eight operators are owned 70 percent by the state-run Japan National Oil Corp., some 20 percent by oil distribution firms and the rest by local governments.
According to the sources, an engineering firm affiliated with an oil company that has a controlling share of an operating firm is likely to receive orders.
They also pointed out that many of the executives at the eight operating firms are retired officials of the former Ministry of International Trade and Industry — now the Ministry of Economy, Trade and Industry — and the Finance Ministry, as well as former executives of major oil distribution firms.
The sources said cronyism is behind the alleged conspiracy.
The national oil storage bases are in Hokkaido, Aomori, Iwate, Akita, Fukui, Ehime, Fukuoka, Nagasaki and Kagoshima prefectures. Kagoshima has two bases.
With 270 billion yen of the national budget set aside annually for the operation and maintenance of the bases, calls for more efficient operations are growing.
The national oil storage system enables the national government to store reserves of oil for emergencies. The government maintains 50 billion liters of oil, which would supply the nation for around 85 days.