Procurement

This Standard was adopted by a resolution of the Board of Directors of Rosseti PJSC on 29 December 2022Minutes No. 604 dated 30 December 2022. and approved as an internal document of Rosseti Kuban by a resolution of the Company’s Board of Directors on 26 January 2023Minutes No. 508/2023 dated 27 January 2023.. The Company’s collegial working body for the development and implementation of unified procurement policy, ensuring the proper level of competition in procurement, objectivity, impartiality, and transparency of procurement procedures, fair and equal treatment of all participants in procurement procedures, and choosing contractors based on the results of regulated procedures is the Central Tender Committee.

Procurement principles:

• Information transparency of procurements
• Equality, fairness, absence of discrimination and unreasonable competition restrictions against the procurement participants
• Appropriate and efficient spending of monetary assets for acquiring the goods, works, services, and compliance with measures to reduce the customer expenditures
• Lack of restriction to participate in procurement by establishing unmeasurable requirements for procurement participants
• Transparency and manageability of procurement activities
• Professionalism and competence of employees involved in procurement activities of Customers
• Compliance with applicable legislation governing the arrangement of procurement activities, as well as anti‑corruption legislation, including the anti‑corruption procurement activity standard (Appendix to the Standard)

The methods to perform procurement procedures and the conditions for their application are determined by the Standard.

Participation of SMEs in procurements organised by the Company

As part of the roadmap for cooperation with SMEs, the Company has been running a partnership programme between Rosseti Kuban and SMEsOrder No. 231 dated 6 March 2018. since 2014. In 2018, the Company joined a partnership programme between Rosseti Group and SMEs, which established a unified register of participants in the Partnership Programme. Thus, SMEs become partners for all S&As of Rosseti PJSC.

Since 2014, the Company has had an advisory body for ensuring the efficiency of purchases made by the Company, including those from SMEs. In addition to Company employees, the body also includes representatives of SME Corporation JSC, the Infrastructure and Educational Programmes Fund, the Russian Union of Industrialists and Entrepreneurs (RSPP), OPORA RUSSIA All‑Russian Public Organisation of Small and Medium‑Sized Businesses, Delovaya Rossiya All‑Russian Public Organisation, and the Chamber of Commerce and Industry of the Russian Federation.

In order to expand opportunities and encourage the participation of contractors (suppliers, contractors) in the procurement of goods, works and services for the needs of Rosseti PJSC in accordance with Article 16.1 of Federal Law No. 209‑FZ dated 24 July 2007 on the development of small and medium‑sized enterprises in the Russian Federation, Rosseti PJSC has been implementing a SME Development Programme since 2023 with a view to their potential participation in the procurement of goods (works, services) for the needs of Rosseti PJSC. The Company ensures the implementation of this programme alongside other subsidiaries and affiliated companies of Rosseti PJSC.

Key results of the Company’s procurement activities in 2024

In 2024, the Company summed up the results of 1,495 procurement procedures totalling RUB 60,174.1 million. Using electronic commerce means, 1,397 purchases were made for RUB 58,543.3 million, which was 100% of the total volume of purchases (excluding purchases from a single supplier).

In the reporting year, regulated procurement resulted in economic benefits of RUB 1,633.9 million (2.6% of the planned declared procurement value) for the Company.

At the end of 2024, results were finalised for 31 procurements for innovative and high‑tech products, totalling RUB 4,346.3 million

Improvement of procurement activities

The Company purchases goods and services primarily on a competitive basis from suppliers offering the best value for money, and optimises its procurement activities by:

• Using techniques to reduce the marginal purchase price
• Increasing the share of competitive procedures
• Introducing mandatory actions to reduce prices of procurement participants (rebidding, pre‑contractual negotiations)
• Adhering to the Company’s procurement policy and the SME Partnership Programme
• Functioning the advisory body on ensuring the effectiveness of purchases conducted by the Company, including from SMEs

Supply chain management

The Company’s supply chain management strategy aims to optimise the procurement of goods and services through competitive procedures.

In order to ensure effective interaction with its counterparties, Rosseti Kuban participates annually in the assessment of suppliers and equipment for the energy sector through a questionnaire organised by TEC rating agency.

Types of suppliers involved in the supply chain:

• Financial and credit organisations
• Contractors (construction and installation, design and survey works, etc.)
• Suppliers (supply of materials, equipment, spare parts, etc.)
• Others (security, mail, administrative services)

Supplies and services for the Company’s needs are provided by organisations from 36 regions of the Russian Federation, but the priority share of suppliers is made up of regional companies (63%).