Israel's Ministry of National Infrastructures on Sunday called for sanctioning local firms that boycott Israeli companies located in the West Bank, East Jerusalem and the Golan Heights, as a stipulation of tenders to take part in building the Palestinian city of Rawabi, near Ramallah.

Minister Uzi Landau said his office would not "tolerate discrimination between different groups of citizens that is contrary to the basic values of the State of Israel."

Ministry media adviser Chen Ben Lulu told Xinhua on Monday that Landau instructed major national authorities, including The Israel Electric Company, the Mekorot national water company, and national oil and natural gas authorities not to do business with companies that agreed to the terms of the Palestinian boycott.

"What I would suggest to firms -- certainly those connected with my ministry," Landau told Israel Radio, "is to demand an agreement from companies they deal with stating that they will not agree to perform any work, anywhere, under any conditions, that includes a stipulation not to purchase goods manufactured by Israeli companies anywhere within the State of Israel or in Judea or Samaria (the West Bank)."

Two weeks ago, a major Israeli construction product firm denied allegations that it agreed to the boycott. A second company named as taking part in the boycott refused to provide Xinhua with a response to the charges.

The first firm, Ytong, is reportedly among those taking part in construction and infrastructure projects at Rawabi. Ytong is among an estimated number of 20 companies which have allegedly contractually agreed to the boycott. Israel Army radio reported that Ytong, which makes concrete blocks, signed on a supply contract with an arm of the Palestinian National Authority (PNA), which enforces the boycott.

However, company CEO Sasson Har-Sinai, in a statement posted on the company's website soon after the report was aired, denied the charges.

"Ytong dismisses any boycott or suggestion of a boycott of Israeli products and any such activity," Har-Sinai said, adding that his firm "was the victim of nasty manipulation by interested parties that tied the company name to the issue."

Palestinian officials connected with the project contended that every company supplying materials for the multi-million dollar project signed off on the boycott clauses.