Miller and Sechin asked Medvedev to classify data on their procurement

To classify public procurement

The President of “Rosneft” Igor Sechin and the Chairman of the Board “Gazprom” Alexey Miller has written to the Prime Minister Dmitry Medvedev a joint letter with the proposal to change the current law “On procurement of goods, works, services by separate types of legal entities” and to deduce from-under its actions of financial transactions, real estate transactions and intra-group transactions. I have a copy.

According to the analysis of the letter, Medvedev instructed the Minister of economy Alexei Ulyukayev and Deputy Prime Minister Igor Shuvalov to “consider the appeal” and to “prepare proposals for improving the rules” of current law on procurement by state-owned companies.

Sechin signed this letter on 27 January (on this very day he met with Miller in the office of “Gazprom”), and Miller — February 8.

The heads of Rosneft and Gazprom propose to amend the law, despite the fact that since the adoption in 2012 he changed more than ten times. The law provides for advance disclosure of the main terms and conditions of all plan contracts. The application of these requirements in terms of procurement of financial services and the conclusion of other financial transactions by companies in respect of which the sanctions the US and EU (under Western sanctions hit Rosneft and individual projects of “Gazprom”), according to the authors, reduces the efficiency and effectiveness of their activities. Moreover, it creates risks of using the control authorities in the US and EU disclosures to check how the company complies with the sanctions regime and may also lead to tougher sanctions and the use of more restrictive measures and penalties.

According to Sechin and Miller, publication of information about transactions, prices, and counterparties “provokes the increased cost of credits and has a significant impact on the Russian financial market, causing price changes of currencies and the rates of loans of a speculative nature”. From the application of the procurement law it is proposed to withdraw transactions with real estate objects and land plots. “Due to the nature of its activities, oil and gas companies enter into real estate transactions on a regular basis, but with due observance of the procedures of the law of unjustified costs,” the letter reads. The choice of locations for the exploration and development of fields based on the project design and other parameters and due to the boundaries of zones with special conditions of use of territories, therefore, is unique and should not fall under the law on public procurement, the authors of the letter.

Leaders of “Rosneft” and “Gazprom” suggest to deduce from-under actions of the procurement rules intra-group transactions, because they “are not inherently market focused on the movement of wealth within a single business entity” and, therefore, the application of the law again increases costs to companies (amount in letter is not specified).

Representatives “Rosneft” and “Gazprom” have refused comments. Representatives of the Ministry of economic development, FAS and Medvedev has not responded to calls .

The first attempt

Earlier “Gazprom” and “Rosneft” has asked to soften the law on public procurement. How to write “Vedomosti”, in September 2015, Sechin had sent a letter to Prime Minister Medvedev with the request to allow state-run companies not to publish the initial maximum purchase price unique or technically complex equipment. According to him, this will help to avoid price collusion and allow you to keep a trade secret. The Ministry of economic development and the FAS did not supported the proposal of Rosneft.

Bidding without specifying the initial price will allow the customer to reject any bid, citing the high price, the letter said the Ministry of economic development to the government from October 1, wrote “Vedomosti”. According to the Agency, “Rosneft” include in the contracts register only every fifth agreement: since the beginning of 2015, the company placed notices on the purchase of 1.6 trillion rubles, while in the contracts register only 331 billion rubles.

“Gazprom” has addressed for comments to the draft amendments, changing the procurement system of state-owned companies, to the first Vice-Premier Igor Shuvalov. The group also provided suggestions to the leadership of the country and the Chairman of the state Duma Sergei Naryshkin. About this previously reported member of the Board of “Gazprom” Vladimir Markov.

In the beginning of 2016, “Gazprom” offered to expand the list of grounds for procurement from a single supplier and to leave the right to choose the means of tendering, wrote “Vedomosti” with reference to the letter from “Gazprom”. Then the government instructed the Ministry of economic development to consider the wishes of “Gazprom” and to report the results.

State-owned companies now employ more than 3000 purchasing methods, with 90% opting for a single supplier. Procurement in 2015, according to the Ministry of economic development, state-owned companies spent more than 23 trillion rubles, saving about 1%.