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OJSC “TsUP “Stroyneft” that handled centralized sourcing and procurement for subsidiaries of AK “Transneft” has been closed down. The shutdown of an organization that was so strong under the supervision of the former president of AK “Transneft” Semen Vainshtok testifies to drastic changes in the natural monopoly’s procurement system. OJSC “TsUP “Stroyneft” played the same role in Transneft as Gazkomplektimpeks plays in OJSC “Gazprom” or Roszheldorsnab - in OJSC “Russian Railways”. The current procurement system of AK “Transneft” is not completely formed. Some issues are handled by the tenders department of AK “Transneft”. The Transneft procurement system under Semen Vainshtok was changing all the time. Initially, it was controlled by Transneft Trading House, then Stroyneft took over these functions.

The feature peculiar to the Transneft procurement system is the “voluntary-compulsory” certification through NISEST Company. Only organizations certified by this firm are admitted to tenders for construction, renovation and overhaul of AK Transneft facilities in 2008. According to experts, this contradicts to Article 5 of the RSFSR law #948-1 from 22.03.91 “On competition and antimonopoly restrictions in commodity markets”. The law prohibits activities of a business entity occupying the dominant position that prevent or may prevent, restrict or eliminate competition and (or) infringe the interest of other businesses, including activities such as creating conditions for access to the commodity market, exchange, consumption, production and sale that put one or several business entities in a position of inequality as compared to other business entities (discriminatory conditions).

AK “Transneft” obliged all equipment suppliers to certify their products via the optional certification system “Transsert”, and made such certificate a mandatory condition for participation in competitive tenders for contracts to supply equipment to the company. Therefore, dominating the market of equipment, pipes, materials, and installation, startup, engineering, diagnostic and other services, AK “Transneft” commits acts aimed at elimination of competition and infringement of interests of business entities.

To address a similar problem, the Russian Antimonopoly Service issued a decree from 30.12.2004 in respect of OJSC “RAO “EES of Russia” that obliged its suppliers to be certified through Ensertiko system. The decree was communicated to the management of RAO “”EES of Russia” by chairman of FAS Commission A. Golomolzon (letter # AG/11355 from 30.12.2004). The Association of Oil and Gas Equipment Manufacturers called the attention of FAS of Russia to this problem and asked to issue instructions to AK “Transneft” regarding prevention of actions posing a threat of antimonopoly law violation.

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