Annual report 2010

11. JSC IDGC Holding ProcurementIn its procurement activities, JSC IDGC Holdingseeks to raise the openness of regulated procurementprocedures, to create transparent competitiveenvironment and increase the quantity ofparticipants in procurement.In 2010, a common on-line trading floor of IDGCHolding began to be actively used. For the firsttime, it was decided to execute all purchases forthe investment program implementation in theform of online sales.2010 saw the beginning of implementation of thecommon rules for shaping the assessment andselection criteria related to the invitation of bidsfor contractor selection. The method is appliedwith a view to improve the quality of contractorselection for performing work aimed at the constructionand rehabilitation of the energy facilitiesof JSC IDGC Holding and its SDCs and to mitigatethe risks associated with non-performanceby contractors of their contractual obligations indue time and at a proper quality level.JSC IDGC Holding also continues to work toupgrade the procurement planning system withinthe distribution electric grid sector, specificallyusing the principle of homogenous procurementlotting. The identification of the principles forshaping homogenous lots of procurement proceduresfor the principal standard electrical productsallowed their manufacturers to participate inthe bidding processes on their own, avoidingmediators. As a result, the purchasing price of certaintypes of equipment decreased by 10% to 20%against the target, depending on the producttype.Pursuant to the resolution of the Government ofthe Russian Federation “On the Implementationof the Practice of Executing Long-termAgreements with Electrical ProductManufacturers” JSC IDGC Holding is pursuing policyaimed at entering into long-term agreementsfor electrical product supplies under the programof import substitution and development of highperformanceequipment manufacturing in Russia.The placement of long-term equipment supplycontracts will allow improving the quality of purchasedproducts, minimizing the risks associatedwith the supplier’s failure to fulfill its contractualobligations, etc.Taking into account the principle of economicfeasibility, JSC IDGC Holding seeks to centralizeits processes of managing procurement, the mainelectrical products and contractual work. In 2010,JSC IDGC Holding performed 40 centralized procurementprocedures worth RUB 4.06 billion. Theeconomic effect of procurement was RUB 568.4RUB millions, or 14% of the target procurementvalue.87