«APPROVED»
by the Board of Directors of OJSC “Enel OGK-5”
Protocol№____ dd. ______2009

RULES OF PROCEDURE

for regulated procurement of goods, works, services

for the needs of OJSC Enel OGK-5

Contents:

1.General Provisions

2.Basic Terms

3.Organizational Structure

4.Rights and Obligations of Parties Within the Framework of Purchases

5.Methods and types of Purchases

6.General Procedure for Execution of Purchases

7.Terms of Selection of Various Methods of Purchases

8.Purchase Procedures

9.Settlement of Disagreements Associated with Execution of Purchases

10.Instruction for Execution of Purchase Procedures

11.Procedure of Conclusion and Control of Execution of Expense Related Economic Contracts

12.Requirements to Consultants, Experts, Professional Tender Organizers

  1. General Provisions

1.1.These Rules regulate procedures of procurement of any goods, works, services, with the exception of the procurement of fuel for the production needs of the branches of OJSC Enel OGK-5 (including the services for transportation and quality control of the fuel), the procurement of insurance, audit, fiscal and any other service of financial nature, as well as conclusion of credit contracts and loan agreements (hereinafter referred to as the “Products” on account of funds of OJSC Enel OGK-5 (hereinafter referred to as “the Customer”, “the Company”) with the value over 200,000 rubles.

1.2.The present Rules are developed in accordance with the legislation of the Russian Federation, in the part of tender organization, Ethical Code of Enel Group as well as the “Zero tolerance to corruption” Regulation.

1.3.In accordance with the current legislation of the Russian Federation, a special procedure may be envisaged for carrying out separate purchases which may include deviations from the present Rules.

1.4.The procedural regulation of procurement shall apply for the purpose of target and efficient consumption of monetary funds of the customer as well as for obtainment of economically justified costs (market prices for products) and avoidance of probable abuses on the part of purchasing employees. Regulation of procurement activities:

  • is built upon reasonable use of special approaches for target enforcement of effectiveness of market laws in each case of procurement;
  • is carried out by means of application of compulsory procedures which shall be fulfilled by purchasing employees at each purchase with a value higher than the specified value (such procedures may be also used in case of smaller purchases if this is considered advisable). These procedures suppose the following:

a)careful planning of needs for products;

b)market analysis;

c)actions aimed at achievement of a reasonable level of competition among potential suppliers where it is possible and when it is impossible – higher internal control;

d)fair and reasonable selection of the most preferable proposals at comprehensive analysis of benefits and costs (first of all price and quality of products);

e)procedure of concluding expense-related economic contracts for purchases regulated by the present Rules;

f)control of fulfilment of the contract and use of acquired products;

  • is based upon the system approach which means for the customer availability of the following:

a)regulating environment;

b)established organizational structure for management of purchases and control thereof;

c)trained personnel for execution of purchases;

d)settled infrastructure of purchases (information security, means of electronic commerce, certification, professional advisors);

  • observance of corporate unity of procurement rules;
  • powers and responsibility of purchasing employees.

1.5.Purchases of any products the value of which exceeds 200,000 rubles (exclusive of value added tax) shall be carried out in accordance with norms of these Rules. At that, the Customer shall not split purchases in order to withdraw them from regulation. At application of this norm it is necessary to consider general volumes of purchases according to any nomenclature within the limits of one financial period: for products purchases on an episodic basis of financing for procurement of which is planned only within the limits of the nearest quarter, such a period shall be a quarter, for products of the permanent nomenclature – a year.

1.6.Purchases not exceeding the above mentioned amount may be executed both in accordance with procedures prescribed by these Rules and in other ways.

1.7.In case of receipt of information (claims, complaints) on violation of these Rules the Customer is obliged to carry out a service investigation and submit results of investigation for consideration by the General Director of the Company. The General Director shall submit the report on a quarterly basis to the Board of Directors on results of consideration of submitted complaints, claims and other information on violations of these rules within the framework of the quarterly report provided for in clause 6.5.2.

  1. Basic Terms

2.1. The Company – OJSC Enel OGK-5.

2.2. Other terms and definitions of procurement activity shall be used according to the Glossary (Annex No.1).

  1. Organizational Structure

3.1. The permit for execution of purchases of products for needs of the Customer, control and coordination of procurement activity shall be effectedby the Procurement and Logistics Director and to the extent of approval of the ACPP – by the Board of Directors of the Company. Decisions in respect to procurement activities which were not included in these Rules and which are beyond the responsibility of the Procurement and Logistics Director, are made by the General Director of the Company or the Board of Directors of the Company.

3.2. The head of the Tender Committee shall be approved by the resolution of the General Director of the Company.

3.3. For the purpose of ensuring of transparency of procurement activity the section “purchases” in the internet site of the Company shall be made as follows:

3.3.1.The link to the section shall be placed on the main page of the Company’s web site.

3.3.2.The section shall include the following subsections: “Announcement of purchases”, “Notices on execution of tenders and other announcements of purchases”, “Information on results of purchases”, “Management of procurement activity”.

3.3.3.The section “Announcement of purchases” shall contain the Annual Comprehensive Procurement Programme (ACPP) by types of activity without indication of planned (limited) prices as well as announcements according to clauses 6.1.2., 8.1.6., 10.6.3.2.

3.3.4.The section “Notices on execution of tenders and other announcements of purchases” shall contain documents announcing commencement of purchase procedures and copies thereof in accordance with requirements of section 8.

3.3.5.The section “Information on results of purchases” shall contain notices on results of executed purchases in accordance with requirements of section 8.

3.3.6.The section “Management of procurement activity” shall contain the regulatory base of the Company on procurement (including these Rules) and shall specify contact details of the executive secretary of the Tender Committee.

3.3.7.Storage of information in sections “Notices on execution of tenders and other announcements of purchases” and “Information on results of purchases” shall provide any interested person with access to such information over at least 3 previous years, to be structured by the following directions of purchases:

  • Construction, reconstruction and technical re-equipment of energy facilities (other investment costs);
  • Power facilities maintenance
  • Research and development services;
  • Consulting services;
  • Products for general administration and amenity purposes;
  • Other purchases.
  1. Rights and Obligations of Parties Within the Framework of Purchases

4.1. Rights and obligations of the Purchase Organizer.

4.1.1. The Purchase Organizer is obliged to provide the participants with the possibility for realization of their rights provided by effective legislation of the Russian Federation and these Rules.

4.1.2. The Purchase Organizer is entitled to refuse to carry out any procedure after announcement thereof:

a)In case of open tenders — according to terms published in the tender notice and in the absence of relevant instructions – not later than 30 days prior to the day established for termination of the deadline for submission of bids; at that, the Purchase Organizer shall take into account norms of cause 4 of article 448 of the Civil Code of the Russian Federation;

b)In case of closed tenders – at any time but subject to compensation for any actual damage caused to the tender participants;

c)In case of non-tender ways – at any time unless otherwise is expressly stipulated in the purchase documentation.

4.1.3. The Purchase Organizer is entitled to extend the term for submission of bids for participation in any procedure at any time until expiration of the initially declared term.

4.1.4. The Purchase Organizer may establish requirements to participants of purchase procedures, purchased products, terms of delivery thereof and shall determine necessary documents confirming (declaring) compliance with such requirements.

4.1.5. The Purchase Organizer is entitled to require from participants documentary confirmation of compliance (of products, processes of production, storage, transportation thereof etc.) carried out on the basis of effective legislation on technical regulations. The Purchase Organizer shall not establish as a selective criterion availability of a certificate of voluntary certification systems.

4.1.6. Other rights and obligations of the Purchase Organizer shall be stipulated in purchase documentation.

4.1.7. Distribution of functions between the Company and an external Purchase Organizer shall be determined by the contract signed between them. Such a contract shall contain the following, without limitation:

  • distributionof rights and obligations between the Customer and the Purchase Organizer.
  • procedure for execution of the purchase procedures.
  • rights and responsibility of both parties in taking decision in connection with selection of Supplier.
  • compositionof purchase commission and its chairman and if it is impossible them who and how will subsequently appoint these persons.
  • stipulation that the Purchase Organizer shall act in its own name but at the expense of the Customer.
  • clause that the Purchase Organizer shall observe norms of these Rules including the stipulated procedure for settlement of disagreements.
  • at execution of negotiations provided for within the framework of these or those procedures – who and on what matters shall carry out such negotiations as well as who and what decisions shall take following the results of negotiations.
  • amount of the fee which shall not exceed 5% of the proposed purchase price (in exclusive cases the Procurement and Logistics Director may increase the above mentioned limit).
  • procedure for preparation, approval, submission and storage of documents on the purchase procedure.

At execution of a tender it shall be obligatorily stipulated that the tender documentation is subject to approval by the Procurement and Logistics Director, as well as the responsibility shall be indicated of the party entrusted with signing of the minutes on results of the tender in case of failure to execute these actions.

4.2. Rights and obligations of the Company.

4.2.1. Notwithstanding if the Company is the Purchase Organizer or not, it is entitled to publish in its site as well as to present to the additional internet resource the lists of suppliers, both those who successfully fulfil concluded contracts and those violating their obligations (“white” and “black” lists). At fulfilment of this right the Company shall independently ensure that publication of the above mentioned information does not violate legislation of the Russian Federation.

4.3. Rights and obligations of the participant.

4.3.1.Any supplier shall have the right to submit a bid for participation in open procedures.

4.3.2.In closed(private) procedures only those suppliers who have been personally invited may take part.

4.3.3.Collective participants may take part in purchases unless it is expressly prohibited by purchase documentation.

4.3.4.At execution of close procedures it is necessary to specify in the purchase documentation whether a person whichhas not been personally invited to the purchase may participate within a collective person. In any case however, the leader of a collective participant shall be only the person invited to participate in the purchase.

4.3.5.The participant in any procedures shall have the following rights:

a)to receive from the Purchase Organizercomprehensive information on the terms and procedure for execution of purchases (except for information of confidential nature or constituting a commercial secret);

b)to amend, supplement or withdraw its bid until expiration of the term of submission unless otherwise is expressly stated in the purchase documentation;

c)to ask the Purchase Organizerto clarify the purchase documentation as well as to request extension of the established term for submission of bids.

d)To receive from the Purchase Organizer brief information on the reasons why their bid was rejected and/or did not win in the tender. In case of use of this clause the Participant is not entitled to require information regarding persons taking these or those decisions.

4.3.6.Only qualified participants are entitled tobe awarded a contract with the Customer (Purchase Organizer) or to execute any other right arisingfrom awarding the contract to the tender winner. The qualification selective criteria shall not impose excessive restrictions on the competition between the participants. If required, the Procurement Department of the Company is entitled to set an exhausting list of conditions non-fulfilment of which excludes the possibility of winning of a participant in a tender or any other competitive purchaseprocedure.

4.3.7.Other rights and obligations of participants shall be stipulated by purchase documentation.

4.4. Scope of rights and obligations occurring to the winner.

4.4.1. The scope of rights and obligations occurring to the winner of a tender or another procedure (usually – the right for conclusion of the contract) shall be clearly stipulated in the purchase documentation.

Note – at execution of a tender the subject of which was the right for conclusion of a contract the contract with the winner of the tender shall be compulsorily concluded according to clause 5 of article 448 of the Civil Code of the Russian Federation. At execution of request for bids, request for quotation, competitive negotiations the winner shall receive the right for conclusion of the contract but the Purchase Organizer shall not have the obligation to do that (it is possible to refuse to purchase and conclude the contract with the winner).

4.4.2. If as a result of a tender or another procedure not an immediate right to conclude a contract but any other right arises the procedure for realization thereof shall be specified in the purchase documentation with all details possible.

4.5. Preferences.

4.5.1. The procedure for application of preferences shall be approved by the Board of Directors of the Company.

4.5.2. The customer or the Purchase Organizer is entitled to apply preferences only if their availability and way of application in this purchase were directly declared in the purchase documentation and in case of a tender – in the notice.

4.6. Requirements to purchase participants

4.6.1. A purchase participant shall be registered as a legal entity or an entrepreneur without formation of a legal entity in accordance with the established procedure and for types of activity requiring in accordance with legislation of the Russian Federation special permits (licenses) – it shall have the same. In case of purchases of creative nature legally capable citizens not registered as an entrepreneur without formation of a legal entity mat participant.

4.6.2. Members of associations being collective participants of purchases shall have an agreement between each other (another document) compliant with norms of the Civil Code of the Russian Federation which shall determine rights and obligations of the parties and stipulate the leader of the collective participant. The agreement shall provide for joint liability for obligations associated with participation in purchases, conclusion and further fulfilment of the contract. In case of closed purchase procedures the purchase documentation shall state if a person not invited to participate in the purchase may be a member of an association. In any case only the person invited to participate in the purchase may be the leader of an association.

4.6.3. The participant shall draw up an application according to the form of the purchase documentation provided to it. It shall be clear from the text of the application that submission thereof means acceptance of all the terms of the customer (Purchase Organizer) including consent to fulfill obligations of the participant.

4.6.4. Other requirements shall be set by purchase documentation.

4.6.5. The following rights and obligations shall be provided to purchasing employees.

4.6.5.1. Purchasing employees are obliged:

a)to execute actions prescribed by these Rules;

b)to immediately report to the management on any circumstances which may lead to results unfavorable for the Company including those which will result in impossibility or inadvisability of execution of actions prescribed by these Rules;

c)to inform the management know about any circumstances which do not allow these employees to carry out the purchase according to the norms of these Rules.

4.6.5.2. The following shall be forbidden to purchasing employees:

a)to coordinate activity of purchase participants otherwise than it is prescribed by effective legislation, these Rules and purchase documentation;

b)to get any benefits from execution of the purchase other than officially provided for by the Company or the Purchase Organizer;

c)to provide anybody (other that persons having the official right to receive information) with any data on progress of purchases including information on consideration, evaluation and comparison of applications;

d)to establish with participants to procedures any relations other than those arising in the course of common business activity (for example, to be an affiliate of a purchase participant) which have not been declared by him to the Tender Committee;

e)to carry out negotiations not provided for in the purchase documentation with participants to purchase procedures.

4.6.5.3. Purchasing employees are entitled:

a)on the basis of the accumulated experience in execution of purchases to recommend to the management introduction of amendments to documents regulating procurement activities;

b)to improve their qualification in the area of purchase activities independently or, if possible, at specialized trainings.

4.6.5.4. The purchasing employees shall bear personal responsibility for performing actions necessary to execute the purchase.

  1. Methods and types of Purchases

5.1. Applicable methods of purchase.

5.1.1.The list of permitted methods of purchase.

5.1.1.1.The following types of purchases are provided for by these Rules:

a)Tender;

b)Request for proposal;

c)Request for quotation;

d)Competitive negotiations;

e)Single source purchase;

f)Purchase by means of participation in procedures organized by product sellers.

5.1.2.Tender.

5.1.2.1.Depending on the possible range of participants a tender may be open or closed.

5.1.2.2.Depending on availability of the procedure for prequalification selection a tender may be with execution or without execution of prequalification selection.

5.1.2.3.In case of purchase of especially complex products a tender may be carried out with application of special procedures for purchase of complex products as determined by these Rules.