Procurement Activities

Commentary-interview of the Deputy Director General for Logistics and Procurement M. L. Budyko

What are the main achievements and results delivered by the Department under your supervision?

PJSC MOESK performs its procurement activities in compliance with Federal Law No. 223-FZ dated July 18, 2011 On Procurement of Goods, Works, Services by Certain Types of Legal Entities (further referred to as Law 223-FZ), which establishes general principles and main requirements to procurement of goods, works, and services. In addition to reduction of expenses on procured equipment, works, and services without prejudice to improvement of power supply reliability in the region, last year, Director General of PJSC MOESK assigned new tasks to the Logistics and Procurement Department.

Thus, improvement of accessibility of the Company’s procurement processes for the small and medium businesses became another priority field for the Logistics and Procurement Department in 2015.

A number of activities were performed to achieve this objective:

  • increase in the share of procurement from small and medium businesses in the total annual procurement volume;
  • increase in the share of direct procurement by the customers from small and medium businesses in the total annual procurement volume;
  • elimination of administrative, financial, and information barriers for the small and medium businesses in the course of their participation in procurement and supply of goods, works and services for the customers.

Additionally, the Company approved the PJSC MOESK Partnership Program for Small and Medium Companies. In the framework of this program, the Company maintains the Register of Small and Medium Companies, which jointed the Program.

Based on the results of procurement procedures held in 2015, the economic effect was 1,321 mln rubles with VAT (or 2.2% of the planned and declared procurement costs).

Moreover:

  • the share of procurement from the single supplier was reduced to 1%,
  • the share of electronic procurement was increased to 99%. The volume of procurement from small and medium businesses only over the period from July 1 to December 31, 2015 was 1,602 mln rubles without VAT or 8.7% of the total procurement volume in H2 2015.
  • the share of equipment procurement from the manufacturers and their official representatives increased to 78%.

How do you manage your relations with the suppliers considering that they are not at all willing to lower the equipment prices?

We organized negotiations with all the main Russian manufacturers and openly explained the key principles of our operation:

1. Development of competitive environment
2. Equal accessibility of bidding procedures for all bidders
3. Lower prices without prejudice to the quality
4. Compliance with the requirement of MOESK technical policy
5. Elimination of intermediaries from the supply chain

What are the Company plans and forecasts for 2016?

In order to enable successful fulfillment of the Company’s maintenance and repair program for 2016 and improvement of electric power supply to consumers, the Procurement Department must ensure fulfillment of procurement plan for repair activities for 100%.

To achieve the target rating of the Russian Federation in the category “Connection to Power Supply System” and expedite the procedure of consumers’ connection to electric grids of PJSC MOESK, the priority goal of the Procurement Department shall be arrangement of bidding procedures for selection of contractors as required to perform the contracts on technological connection within the shortest possible timeframe.

PJSC MOESK has implemented the import substitution program in order to minimize the Company’s dependence on imported equipment. Thus, according to the Department’s plans, the share of purchased imported equipment shall not exceed 5%, if the corresponding equipment currently has Russian analogs.

In order to eliminate involvement of intermediary organizations in the supply chain and thus reduce the costs of goods and materials, the Logistics and Procurement Department shall ensure that the manufacturers and their direct representatives deliver least 75% of goods and materials.

The Company holds the procurement procedures through the electronic trading platform www.b2b-energo.ru which enables involvement of a large number of service suppliers and therefore contributes to higher efficiency of procurement activities.

Special attention is paid to general availability of information on the procurement procedures, which is fully supported by mandatory publication of information on the requested goods, works, and services in the uniform information system of the Russian Federation on the Internet (www.zakupki.gov.ru).

Structure of Procurement, with Breakdown to Types of Activities, ea

Structure of Procurement, with Breakdown to Types of Activities, RUB mln with VAT

Procurement Structure, with Breakdown to Procurement Procedures, ea

Procurement Structure, with Breakdown to Procurement Procedures, RUB mln with VAT

Improvement of Procurement Activities in 2015

In view of the large volumes of procurement and in order to expedite the procurement procedures and optimize the work of procurement committees, the Company distributed the powers in terms of organization of bidding procedures for contracted services as required to perform the Company’s contracts on technological connections between the executive bodies of PJSC MOESK and its branches.

In 2015, the Company continued work on reduction of the volume of procurement from the single supplier. In particular, in case of consideration of non-planned procurement possibilities from the single supplier, the Central Bidding Committee of the Company made resolutions to organize other competitive procedures in compliance with the Regulations on Procurement.

My Report

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