Annual Report 2013

Procurement

IDGC of Centre procurement is regulated by Federal Law No. 223-FZ On Procurement of Goods, Work and Services by Certain Types of Legal Entities dd. July 18, 201, and the Regulation on Procurement of Goods, Work and Services for the “IDGC of Centre” Needs, approved by the Board of Directors (Minutes dd. June 13, 2013 No. 15/13).

For more information on the document please see our corporate website.

THE COMPANY BASES ITS PROCUREMENT ON THE FOLLOWING PRINCIPLES:

Every year the Board of Directors approves the procurement plan for IDGC of Centre for the next year, which is designed to meet the needs of the Company and is subject to the limitations placed by the IDGC of Centre key performance indicators.

This KPI cuts costs of the procurement of goods (work, services) by no less than 10% annually per unit of production within the three year period in real terms as of the prices in 2010.

For more information on KPIs and target indicators please see the Annual Report
 .

In 2013, the Company declared about 5,500 trade and procurement projects with a total of 32.9 billion rubles including VAT with announcement of results of competition for the reporting period. The actual cost totaled 30.6 billion rubles including VAT. Thus, the Company saved 2.3 billion rubles, or 7 %, on the procurement.

PROCUREMENT STRUCTURE IN 2013:

PROCUREMENT PROCEDURES IN IDGC OF CENTRE AND THE CONDITIONS OF THEIR IMPLEMENTATION: