“Samruk-Energy” JSC | Integrated annual report
Procurement and inventory management

Murat Abdygulov

Managing Director for Procurement of the “Samruk-Energy” JSC

Physical resources are provided in accordance with the Company’s development plan which is prepared using business units’ requests based on business needs.

Procurement procedures in the Company are conducted in line with the Rules for Procurement of goods, works and services by “SWF “Samruk-Kazyna” JSC and organizations, fifty or more percent of voting stock (equity stake) of which are directly or indirectly belong to “Samruk-Kazyna” JSC on the right of ownership or trust management, approved by the Decision of the Board of Directors of “Samruk-Kazyna” JSC No. 126 dated January 28, 2016 (hereinafter – the Fund’s Procurement Rules).

According to the Fund’s Procurement Rules, procurement procedures are conducted in the Electronic Procurement Information System hosted on the website http://tender.sk.kz. A supplier is selected on the basis of results of a tender conducted, the request for quotations and from a single source.

The share of local content in procurement of goods, works and services is monitored on the portal of the Fund’s authorized body in charge of procurement affairs  – “The map of monitoring Kazakhstani content in procurement” on the website http://www.kmks.kz.

As part of the study of suppliers’ market and commodity prices, the Company has developed prices catalog for “Samruk-Energy” JSC group of companies, which enabled achieving the following results:

Determination of fair market value of goods purchased by the Samruk-Energy group of companies;

Optimization of planned expenditures;

Identification and standardization of USIC GWS codes, according to the format of “Samruk-Kazyna” JSC;

The database of suppliers was formed;

A list of goods imported for the entire group of “Samruk-Energy” JSC was formed (to reduce the timing of price adjustments at fluctuation of exchange rates).

This project gave an independent assessment of cost ranges for the purchased goods. The structured grouping of purchased goods enabled to analyze the cost of similar goods and their interchangeability. The territorial association allowed getting reduction in cost of batch of goods. As a result, the project made it possible to achieve an economic effect in the form of cost reduction or provision of market conditions for goods purchased.

In order to develop domestic producers market, the Company continues to include the submission of report on local content into obligations of suppliers, thereby monitoring the share of local content and supporting domestic producers.

The share of local content in purchases 2014–2016 in mln. tenge*

actual 2014 actual 2015 actual 2016
Ttal amount of actually delivered GWS Amount
of LC
%
of LC
Ttal amount of actually delivered GWS Amount
of LC
%
of LC
Ttal amount of actually delivered GWS Amount
of LC
%
of LC
Goods 157 966,73 125 853,12 80 134 371,84 112 279,78 84 118 986,63 109 439,26 92
Works 99 769,40 49 652,59 50 99 091,02 37 149,45 37 90 117,93 37 815,31 42
Services 99 018,10 97 399,44 98 92 663,07 91 230,50 98 92 910,12 90 793,51 98
Total 356 754,23 272 905,15 76 326 125,92 240 659,73 74 302 014,67 238 048,07 79

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

“Samruk-Energy” JSC group of companies executed long-term contracts with such companies as “Semipalatinsk Plant of Oils” LLP, “Pavlodar Pipeline Valves Plant” LLP, “Tynys” JSC, “HighIndustrialLubricants & LiquidsCorporation” LLP (HILL), “KAZELEKTROMASH” LLP, “Kazcentrelectroprovod” LLP, “Zharyk Electromechanical Plant” LLP, “ATI-KAZAKHSTAN” LLP, “KagazShahary SEZ” LLP, DOC Co.LTD, “Kazenergokabel” JSC, “NUR-STROY LTD” LLP, “ECOprom Pavlodar” LLP, “ZhersuMetal” JSC, “EnergoPromStroyservis” LLP, “Semipalatinsk Shoe Factory” LLP, “Kentau Transformer Plant” LLP, “Asia Prom Invest” LLP, “Graphics-M” LLP, “SEMIPALATINSK METALWARE FACTORY” LLP, and also with organization “Atyrau Training and Production Enterprise of the Kazakh Society of the Deaf”

Indicator Measurement unit 2014 2015 2016
The volume of long-term procurements bln. tenge 99 465 73
incl. commodity items 40 231.345 2.176
incl. purchase from DCP 11 231.321 2.154
Annual Procurement Plan 277 213 178
incl. commodity items 152 121 93
incl.purchase from DCP 134 102 71

According to the Company’s profile, intercompany purchases for such items as electricity, coal, fuel and lubricants, services for transmission, distribution and balancing of electricity account for a significant volume of procurements (45 % of the total volume of purchases in 2014, respectively 46 % in 2015 and 37 % in 2016).

Goods are purchased on DDP terms, i.e. a supplier is responsible for delivery to the specified place in the buyer’s country. All risks, shipping costs (taxes, duties, etc.), responsibility for damage and loss of goods, including duties and other payments paid upon import, are borne by the supplier up to this point, including for customs clearance.

The project “Category Procurement Management” is implemented in order to optimize the Company’s procurement activities.

The idea of “Category procurement management” project is to combine purchased goods similar in technical and other properties into a category.

Management of a category implies the search for additional value, increasing the economic effect, estimating the total cost of ownership and reducing costs throughout the supply chain. Introduced changes will enable to reduce procurement prices, improve the quality of purchased goods, works and services, develop local producers, reduce stock balances and transport costs.

At the end of 2016, procurement category group was established, which applied this tool in “POL” pilot category as an example with the involvement of external consulting. Procurement category group developed “POL” strategy based on results of works conducted.

In addition, the development of procurement category strategies of second and third waves, approved in the List of categories of the Company is scheduled for 2017.

The list of categories is formed on the basis of an analysis of the volume of costs and importance of goods, works and services for production of final product that generates revenue.

Generally speaking, all necessary actions to optimize procurement activities, develop local producers and achieve strategic goals are taken across the Company’s group.

“Samruk-Energy” JSC | Integrated annual report
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