Local firms ask KPPU to annul Repsol-YPF policy

JAKARTA (JP): Local companies asked on Friday the Business Competition Supervisory Commission (KPPU), the country's anti- monopoly watchdog, to force Spanish-Argentinean oil company Repsol-YPF to drop certain requirements that inhibit them from supplying goods and services to the company.

Chairman of the goods and services suppliers communications forum Sumantoro Radjiman said that the stringent requirements set by Repsol-YPF, a production-sharing contractor of state-owned oil and gas company Pertamina, was tantamount to unfair business practice because it would only allow big companies to win business from Repsol-YPF.

"We ask the KPPU to revoke the (Repsol-YPF) ruling. Otherwise, around 500 local suppliers will be edged toward closure," Sumantoro told reporters after lodging the complaint to the KPPU.

He said that among the stringent requirements introduced in June this year was a stipulation that would-be suppliers must possess minimum capital of US$40 million to be able to join the Repsol-YPF tender process.

He said that such a requirement was impossible for local companies, most of which were small and medium-sized enterprises (SMEs).

He said that the tough requirements would only favor large foreign suppliers with a strong capital base.

Sumantoro said that if KPPU declined to take action against Repsol-YPF, the group would hold "class action."

"But it will be our last resort," he said.

He said that if Repsol-YPF, which operates the Southeast Sumatra oil block, could get away with imposing such stringent requirements, he feared that other Pertamina oil and gas contractors would follow suit, sending many SMEs into bankruptcy.

He said that there were currently around 1,500 local SMEs supplying goods and services to Pertamina contractors.

"Some of them have already planned to lay off staff following the Repsol-YPF ruling," he said.

KPPU has yet to give comments.

The anti-monopoly watchdog was established in 1999 to ensure fair competition in the country's business world.

According to the antimonopoly law, the commission has the authority to issue penalties or sanctions to business players that violate the law through unfair business practices, which includes inhibiting other players from entering a certain business or industry.

Sumantoro said that Pertamina had approved Repsol-YPF's new requirements, although the state company also ruled that 50 percent of products or goods used by its oil and gas contractors must be purchased from the domestic market.

But he said that in reality, the Pertamina "local content" ruling was difficult to monitor.

Sources said that Repsol-YPF introduced the requirements in a bid to minimize costs and improve efficiency by only dealing with one big supplier, compared to around 500 small suppliers previously.(dmr)