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Procurement management

Procurement activity methodology

The procurement procedures at “Samruk-Energy” JSC group were conducted in accordance with the Procedure for making procurements by the “Sovereign  Wealth Fund “Samruk-Kazyna” JSC and organizations fifty or more percent of the voting stock (equity stake) of which are directly or indirectly held by "Samruk-Kazyna" JSC on the right of ownership or trust management, approved by the resolution of the Fund’s Board of Directors No. 190 d/d December 9, 2021 and the Standard for managing the procurement activities of “Sovereign Wealth Fund "Samruk-Kazyna" JSC and organizations fifty or more percent of voting shares (participatory interests ) which are directly or indirectly owned by “Samruk-Kazyna” JSC on the right of ownership or trust management, approved by the decision of the Executive Board of the Fund No. 59/21 dated December 30, 2021.

The key principles and approaches of procurement activities are described in the procurement procedure. In turn, the details of procurement processes (procedures, deadlines, requirements for the content of documents) are set out in the Procurement Activities Management Standard.

The Program of support for upgrading the existing and creating the new production facilities for 2014–2022 (phase-out of imports)

To implement strategic tasks on promoting the development of national economy, which were set by the Head of State and the Government of the Republic of Kazakhstan, “Samruk-Kazyna” JSC is carrying out an extensive work together with the “Atameken” National Chamber of Entrepreneurs of the Republic of Kazakhstan to create new competitive domestic production facilities in the field of processing industries.

To achieve this objective, the Fund implements the program of support for upgrading the existing and creating the new production facilities for 2014–2022 (import substitution) (hereinafter – the Program), aimed at import substitution of goods purchased by the Fund’s group on an ongoing basis.

The program involves the conclusion of long-term contracts for the procurement of goods (off take contracts). As part of the Program implementation, 20 off-take contracts totaling 3.2 bn tenge were signed in 2021 across “Samruk-Energy” JSC group of companies.

Category Procurement Management

The process of category procurement management involves streamlining of procurement activities.

The concept of category procurement management is based on a decrease in the total cost of ownership indicator, i.e. cutting costs of GWS categories throughout the entire life cycle of its ownership, and not just direct purchase costs, which allows choosing the most up-to-date and cost-effective solutions. Changes that are being introduced in procurement activities contribute to lowering of procurement prices, improving the quality of purchased goods, works and services, and promote domestic producers.

For instance, as part of the implementation of the procurement category strategy for the category "Electric lighting equipment", the agreement with a domestic commodity producer was concluded using a standard form of an energy service contract, which implies saving operating costs by increasing energy efficiency and introducing technologies that ensure energy conservation.

The actual economic result in the amount of 4.68 bn tenge was achieved over the time of implementation of procurement category strategies.

It is worth noting that benefit from the implementation of procurement category strategies is estimated at 5.8 bn tenge by the end of 2022.

Information on the share of local (RK) content in procurements during 2019-2021, mln tenge*

 

2019 actual

2020 actual

2021 actual

 

The total amount of actually supplied GWS

% LC

The total amount of actually supplied GWS

% LC

The total amount of actually supplied GWS

% LC

Goods

159,847.19

80%

168,776.88

79%

187,631.25

89 %

W/S

159,365.72

87%

104,660.70

79%

144,451.81

93 %

*Note: “Samruk-Kazyna Contract” LLP data.