Oil procurement ruling will kill local firms<\/p>\n
JAKARTA (JP): A group of local suppliers blasted on Monday a
\nnumber of production-sharing contractors (PSC) of state oil and
\ngas company Pertamina for setting tough requirements for
\ncompanies wishing to be their suppliers.<\/p>\n
Heroe Wiedjatmiko, secretary-general of the Goods and Services
\nSuppliers Communications Forum, said the rulings, which include a
\nrequirement for suppliers to have a minimum capital of US$40
\nmillion, would only favor financially-strong foreign suppliers
\nand \"kill\" local suppliers.<\/p>\n
Heroe said no local suppliers could meet the minimum assets
\nrequirement, as they only had maximum assets of $10 million.<\/p>\n
\"Only giant, foreign suppliers could meet such a requirement,<\/p>\n
\"Thus, if the contractors go ahead with such a minimum assets
\nrequirement, all of the local suppliers will undoubtedly be wiped
\nout in their own country,\" Heroe told reporters at a press
\nconference, adding there are now 1,500 local small and midsize
\ncompanies supplying goods and services to Pertamina contractors.<\/p>\n
Heroe specifically named the unit of American energy firm Vico
\nIndonesia and Spanish-Argentinean firm Repsol-YPF which operate
\nthe Southeast Sumatra block off West Java as the contractors
\nwhich were seeking to introduce such a ruling.<\/p>\n
Repsol-YPF Southeast Sumatra is still better known here as
\nMaxus, an American company, from which Repsol-YPF bought the
\nSoutheast Sumatra block several years ago.<\/p>\n
According to Heroe, \"Maxus\" and Vico unveiled the new ruling
\non supply tenders in June last year.<\/p>\n
With the new ruling, Heroe said, both Pertamina contractors
\nwanted to select one single supplier for their respective
\noperations. Before, there were many suppliers to both
\ncontractors.<\/p>\n
By selecting only one supplier, both contractors hoped to
\nsignificantly reduce their costs.<\/p>\n
Pertamina, however, suspended the companies' plan following
\nprotests from local suppliers and the Indonesian Chamber of
\nCommerce and Industry, which feared the new ruling would lead to
\nlocal suppliers going under and allow foreign suppliers to
\nmonopolize the country's oil and gas industry.<\/p>\n
Maxus insisted on putting the new ruling into effect and
\nPertamina has reportedly given approval for this to be done on
\nJune 5, according to Heroe.<\/p>\n
\"That's why we're now questioning Pertamina's inconsistent
\npolicy on the issue,\" Heroe said.<\/p>\n
Pertamina could not use efficiency as an excuse for allowing
\nits contractors to implement the new rulings at the expense of
\nlocal suppliers, Heroe said, warning the closure of all local
\nsuppliers would leave thousands of workers jobless.<\/p>\n
Heroe said the forum would wage an information campaign
\nagainst the new policy of the Pertamina contractors.<\/p>\n
Heroe gave the Pertamina contractors until the end of this
\nmonth to revoke their new policy.<\/p>\n
\"If Pertamina and the contractors insist on implementing the
\nnew goods and services procurement policy, that's up to them. But
\nwe'll file a complaint with the Business Competition Supervisory
\nCommission (KPPU),\" Heroe said.<\/p>\n
The antimonoply commission would be the last resort for local
\nsuppliers to seek justice, Heroe said.<\/p>\n
The KPPU was established in 1999 to ensure fair competition in
\nthe business world by implementing the provisions of the
\nantimonopoly law. (03)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/oil-procurement-ruling-will-kill-local-firms-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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