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Company Procurement Activities

When procuring goods, works, and services, Kubanenergo PJSC follows the norms of the laws of the Russian Federation, the Company’s Articles of Association and Unified Procurement Standard of PJSC Rosseti, approved as an internal document by Desicion of the Company’s Board of Directors of 12/25/2015, Minutes No. 227/2015.

Principles of procurement activity:

  • timely (long-term and short-term) planning of procurement, rapid decision-making on adjusting the parameters of procurement;
  • equality, justice, non-discrimination and unjustified restrictions of competition to the procurement participants;
  • targeted and cost-effective funds use for the procurement of goods, works and services;
  • absence of restrictions for admission to the procurement;
  • determination of procurement parameters with regard to the specific features of purchased products, markets and circumstances under which the purchase is performed;
  • competition-based selection of suppliers, contractors, executors, wherever possible and expedient, and, if possible collective decision-making in the situations where competition-based selection is not possible or expedient;
  • recognition of the necessary combination of price and non-price factors ensuring efficient selection of the best offers for the Company;
  • procurement transparency;
  • application of advanced information technology, electronic document management tools and procurement activities automation, including the use of functional electronic trading platforms;
  • collective decision making on the critical issues of the whole procurement activity and of the individual purchases arrangement;
  • professionalism and competence of the Company’s employees in preparing and making decisions on purchases, impeccable in terms of ethical behavior of such employees.

The methods of procurement and their application conditions are specified in the above mentioned internal documents of the Company.

Procurement methods used by the Company, in order of priority:

  • Tender, auction;
  • Request for offers, competitive negotiations, request for prices;
  • Simple purchase, small purchase;
  • Purchase from a single supplier (service provider, contractor).

Main results of the Company’s procurement activities in 2016.

In 2016, the Company conducted 641 procurement procedures for a total amount of RUB 15,263 mln (excluding VAT). 599 purchases for the amount of RUB 14,780 mln were conducted using e-commerce (excluding VAT), making 100% of the total cost of procurement (excluding purchases from a single supplier).

In the reporting year, following the results of scheduled procurements the Company obtained an economic effect in the amount of RUB 861 mln (excluding VAT), making 5.5% of the planned yearly costs of procurement of goods, works, services.

As of the end of 2016, the results of 22 procurements with the mark of innovative and high-technology products for the amount of RUB 1,838 mln (excluding VAT) were summarized.

Structure of the Company’s procurements made in 2016, RUB mln. (in relation to the scope of procurement, excluding VAT):

Structure of the Company’s procurements made in 2016, RUB mln. (in relation to the scope of procurement, excluding VAT):

Structure of the Company’s procurements made in 2016, RUB mln. (in relation to the procurement procedure, excluding VAT):

Structure of the Company’s procurements made in 2016, RUB mln. (in relation to the procurement procedure, excluding VAT):

Participation of small and medium businesses in the procurements conducted by Kubanenergo PJSC

Within the implementation of the Road Map on the collaboration with small and medium businesses, the Partnership Program between Kubanenergo PJSC and small and medium businesses has been effective since 2014. 29 participants have joined the program since its start.

In 2016, the winners of 77.3% of conducted procurement procedures were small and medium businesses, totaling to RUB 6,319 mln.

During 2016, the Company conducted 261 procurement procedures with small and medium businesses, totaling to RUB 2,461 mln (excluding VAT), amounting to 26.1% of the total purchases.

In order to ensure efficient procurements conducted by Kubanenergo PJSC, including procurement from small and medium business, starting from 2014, the Company has the Advisory Body involving not only the Company employees, but also the representatives of JSC MSP Corporation, the Fund for Infrastructure and Educational Programs, regional offices of the Russian Union of Industrialists and Entrepreneurs, All-Russian Public Organization of Small and Medium Business OPORA RUSSIA, and All-Russian Public Organization Delovaya Rossiya.

Improvement of procurement activity

The Company purchases goods and services predominantly on an open, competitive basis from suppliers offering the best price and quality ratio optimizing procurement activities through the following measures:

  • using techniques to reduce the limit purchase price;
  • increasing the share of open competitive procedures;
  • introducing mandatory actions to reduce prices by the procurement parties (re-bidding);
  • adherence to the Procurement Policy of the Company and the Partnership Program between Kubanenergo PJSC and small and medium businesses;
  • operation of the Advisory Body to ensure efficiency procurement conducted by Kubanenergo PJSC, including procurement from small and medium businesses.
 RESULTS OF OPERATING ACTIVITIES Company Procurement Activities