6.10.Responsible Procurement

In the procurement of goods, works and services Transneft is guided by the Civil Code of the Russian Federation, Federal Law No. 223-FZ On the Procurement of Goods, Works and Services by Certain Legal Entities (Procurement Act) dated 18 July 2011, other national laws and regulatory acts of the Russian Federation, as well as the Regulations on the Procurement of Goods, Works and Services of Transneft approved by the Company’s Board of Directors. Information about the procurement activities must be both placed in the procurement section of the unified information system and uploaded onto the official website of the Company.

Information on procurement includes:

  • the regulations on procurement and amendments thereto;
  • the plan for procurement of goods, works and services;
  • the plan for procurement of innovative and high-tech products, as well as pharmaceuticals;
  • procurement information, including a notification of any specific procurement, excluding quotation inquiries, draft agreements, etc.

Transneft is guided by the following principles in the procurement of goods, works and services:

  • information transparency;
  • equality, fairness, no discrimination or unreasonable restrictions of competition in relation to procurement parties;
  • targeted and economically efficient spending on the procurement of goods, works and services (taking into account the cost of the life cycle of the products purchased, if necessary), and measures to reduce the purchaser’s expenditures;
  • unlimited access to participation in procurement activities due to absence of immeasurable requirements for participants.

On the basis of Article 3 of the Law on Procurement, Resolution of the Government of the Russian Federation No. 616 On Approving the List of Goods, Works and Services to be Procured in Electronic Form dated 21 June 2012 stipulates the list of related goods, works and services. Transneft also conducts online procurement of goods, works and services which are not included in this list; thus, the share of Transneft’s online purchases is even greater.

Confidentiality of the information provided by procurement participants is one of the principles of online procurement. In practice, online procurement is organised by operators of online platforms who transfer documents and information between participants and the purchaser in a timely manner, in full, ensuring the confidentiality of submitted bids. The operators of these e-commerce resources are independent from Transneft. The whole process promotes conscientious competition, publicity and transparency of procurement policies, preventing corruption and other abuses.

Dynamics of Transneft Group’s procurement in 2017-2019Across Transneft Group, excluding NCSP and its subsidiaries.
Indicator 2017 2018 2019
Number of procurements by the Company and its subsidiaries 43,517 47,027 60,515
Initial lot price (the maximum starting price), RUB billion, VAT included 431.6 326.3 376.0
Cost of contracts signed, RUB billion, VAT included 413.4 307.5 338.0
Share of e-commerce procurementAs per Resolution No. 616 dated 21 June 2012, procurements from a single supplier are not accounted for in our calculations. (from the maximum starting price) 42% 60% 66%
Share of bidding procedures in total procurement (from the maximum starting price) 73% 88% 93%
Share of acquisitions from a single supplier in total procurement (from the maximum starting price) 27% 12% 7%
Share of acquisitions from SME in total procurementIn figuring the share of acquisitions from small and medium-sized enterprises (SMEs), the procurement of air patrol services, supplies of large-diameter pipes and other procurement types were deducted from the total value of contracts signed on the basis of procurement in the reporting period, in accordance with Clause 7 of Resolution No. 1352 the Russian Government On Specifics of SME Participation in the Procurement of Goods, Works and Services by Certain Types of Legal Entities dated 11 December 2014. 49% 65% 63%