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SNAM RETE GAS SUSTAINABILITY REPORT 2006 / RELATIONS WITH THE STAKEHOLDERSTotal Orders1000 € million7505002502002 20032004 2005 2006The use of electronic negotiations tools (EBP) was also extended in percentageterms and for use by decentralised units.For a good sector which is particularly strategic to the business, a collaboration hasbeen activated with some international parties for the joint purchase of pipes,increasing the market presence and improving purchasing opportunities.For the goods categories most important to the company’s business and inconditions of growing competitiveness and the search for high quality standardsby suppliers, the satisfaction of requirements (in terms of timing and quality) isalso enabled by the continuous search for potential new suppliers.Percentage breakdown of total orders96% Italy3,9% Europe0,1% Extra EuropeSnam Rete Gas makes use of a selection and qualification process handled byspecific company units which, when necessary, enlist the support of otherspecialised departments. For Snam Rete Gas, an important criterion in selecting itssuppliers and contractors is their ability to fulfil requirements not only of aneconomic, technical, production and organisational nature, but also theirobservance of requirements concerning health, safety, environmental protectionand quality, as well as their adherence to international labour laws.Right from the start of the supplier selection and qualification process, candidatesinterested in being included in a Vendors List in accordance with corporateprocedures governing the assessment and supervision of suppliers andcontractors are also required to comply with the principles contained in the Codeof Conduct adopted by Snam Rete Gas.Suppliers, awarded of contracts, are also subject to an assessment process thatevaluates the services, goods and work supplied as well as reliability which iscarried out on a systematic and ongoing basis and the inclusion of suppliersand contractors on the approved Vendor Lists depends on the outcome of theassessment.Orders placed by Snam Rete gas in 2006 totalled approximately € 788 million.96 % of total orders were placed in Italy, distributed over nineteen different regions.Induced trade activated by Snam Rete GasIn 2006, Snam Rete Gas purchased goods and services in Italy for approximately € 756 million.The figure, in which the principal expenditure items incurred by Snam Rete Gas are indicated,shows how the sector most affected by Snam Rete Gas’s activities is the purchase ofmachinery and piping, with an expenditure exceeding € 386 million.The other most relevant expenditure items regard construction (20%), computer services(5%), professional services (2%), other services (22%).On the basis of this data, it can be estimated that Snam Rete Gas‘s demand procures inducedgoods and services for a total of approximately € 1,840 million, spread over various fields ofactivity, in addition to the € 756 million attributed to primary purchases. The sectors in whichthe most induced trade activities take place are those regarding metallic products, machineryand mechanical equipment and metals and alloys (about € 675 million) and construction(about € 175 million).These are followed, with about € 188 million, by the sector regarding other services andby professional services, accounting for € 114 million.This evaluation was carried out by using of the Input Output matrix, or the table ofinter-dependencies between sectors drawn up by ISTAT (Central Institute of Statistics,year 2003), by which it is possible to statistically estimate how much each euro generateswhen spent in each of the various sectors affected by Snam Rete Gas’s demand requirements.Principal economic sectors affectedby demand from Snam Rete Gas51% Machinery and piping22% Other services20% Construction5% Computer services2% Professional services78