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Gazpromís Import Substitution Efforts Boost Cutting-Edge Technologies in Russia

Source: 11/25/2015, Location: Asia

The Gazprom Board of Directors took notice of the information about Gazprom Group's procurement activity in the new business environment as well as about the import restricting measures.

Gazprom has been facilitating the domestic industry development for a long time by giving priority to domestic goods. The import substitution activity is still in progress.

A new form of cooperation with Russian manufacturers launched this year is a crucial step in this direction. It stipulates signing of new contracts to initiate full-scale production, supply of import substitution products to be purchased in agreed amounts for years ahead and at the prices not exceeding the cost of their foreign counterparts as well as an extended maintenance coverage.

Under long-term contracts the suppliers will sell goods in clearly defined amounts and Gazprom will obtain high-quality products at competitive prices. By now, such scheme is introduced for Pipe Metallurgical Company and Tomsk Machine-Building Technologies, the work is underway on enlarging the list of potential partners.

The meeting highlighted that domestic manufacturers will have equal opportunities to enter into long-term agreements. In order to provide a single-standard approach to selection of domestic manufacturers of import substitution products as well as ensure the transparency of their assessment, Gazprom has worked out a relevant procedure to determine the manufacturer's readiness to commercialize import substitution products and conclude a long-term agreement.

As for high-tech and high-intelligent domestic companies, a possibility to build their work processes under long-term contracts may give a serious impetus to develop state-of-the-art technologies, upgrade the production facilities and broaden a range of produced equipment. In this regard, Gazprom is ready to allocate its own funds to the invention of prototypes of top-priority products by signing agreements with manufacturers to conduct engineering R&D aimed at import substitution.

Gazprom advocates for updating the Russian law taking into account the importance of long-term contracts that will stimulate the development of the high-quality production sector in Russia. The relevant proposals were submitted to the Russian Government and the Ministry of Industry and Trade.

Gazprom finds another way of meeting the import substitution objectives Ė collaboration with Russian entities (currently there are 19 of them) in the frames of roadmaps, which provide for a whole range of activities, from assessing technological potential of a manufacturing facility to arranging production of state-of-the-art equipment and materials.

In addition, Gazprom set stringent requirement to the procurement of imported products which cannot be replaced with Russian counterparts. The Company makes efforts to create conditions for the deployment of production facilities within Russia as well as to attract suppliers from the Customs Union, the CIS, Asia-Pacific, BRICS and other countries with a view to diversify the procurement of imported products.

At the end of the meeting the Board of Directors approved amendments to the Provision on Goods, Works and Services Procurement at Gazprom and Gazprom Group. The document included a new section describing special terms for conducting bidding procedure to conclude long-term agreements for procurement of import substitution goods and non-domestic products unparalleled in Russia.

In addition, the Board of Directors considered the information about the execution of Russian Government Resolution No. 2016-r dated November 13, 2010 concerning the acquisition of shares in gas distribution companies.

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