14 Jan 2016 13:33

End to South Stream project prompts Gazprom to think about amending procurement law

MOSCOW. Jan 14 (Interfax) - Gazprom is asking for amendments to a bill setting new rules for procurements by state companies to be reworked.

The Russian gas giant has forwarded proposals to the country's leadership and to the speaker of the State Duma, Vladimir Markov, a member of the Gazprom executive board, said during discussion of the bill by a working groups et up by the Duma's Economic Policy Committee.

The amendments, for example, oblige a client to sign a contract with the winner of a competitive procurement process.

"There are aspects that require considerably more work. There are situations when decisions are made to suspend fulfillment of an investment contract, to suspend a construction project. And then, even if we have conducted a competitive procedure and selected a participant, we are unable to carry this out as we have no funding for this. There may be a political decision that a project is being closed or suspended, but we are obliged to sign a contract," said Irina Yanovskaya, who is in charge of competitive procurement at Gazprom.

She said the terms for amending contracts were also too rigid and imposed considerable constraints on the client.

Complications with the international South Stream and then TurkStream pipeline projects have forced Gazprom to halt construction projects to expand the Unified Gas Supply System (UGSS) to feed the Black Sea export route with gas.

Maxim Chemerisov, director of the Economic Development Ministry's department for development of the contract system, said the proposed amendments to the law were designed to prevent schemes where a client backs out of signing a contract with "unsuitable" vendors or changes the terms of a contract immediately after procurement.

The bill also states that a client is entitled to procure goods and services by sending out requests for quotes (RFQ) on the condition that the starting price of the contract does not exceed 7 million rubles. If a contract starts at no more than 15 million rubles, a client has the right to procure goods and services with requests for proposals (RFP).

This amount would be enough for some companies, all contracts signed with those companies would be within that amount, and procurements would be carried out only on requests for proposals and requests for quotations. But there will be large companies, which will not have the opportunity to send out RFP or RFQ. "Imposing the same threshold for all companies is not an appropriate requirement, it does not meet the objectives for which it is being introduced," Yanovskaya said.

The amendments in their present form state that the bill will be enacted on January 1, 2017. The Econ Ministry's Chemerisov said this might be put back, depending when the bill is passed at its second and third readings.