Review of the Resolution No. 1139 of the Government of the Republic of Kazakhstan on “Adoption of the Rules of Acquisition of Goods, Works and Services in the Carrying Out of Subsoil Use Operations” of November 28, 2007

Review of the Resolution No. 1139 of the Government of the Republic of Kazakhstan
on “Adoption of the Rules of Acquisition of Goods, Works and Services in the Carrying Out of Subsoil Use Operations” of November 28, 2007

On November 28, 2007 by its Resolution No. 1139 the Government of the Republic of Kazakhstan adopted the new Rules of Acquisition of Goods, Works and Services in the Carrying Out of Subsoil Use Operations (further the Rules). The said Resolution abrogated the statutory acts earlier in effect that governed the given field, namely:

1) Resolution No. 612 of the Government of the Republic of Kazakhstan on “Adoption of the Rules of Acquisition of Goods, Works and Services in the Carrying Out of Subsoil Use Operations” of June 7, 2002 (Collection of Legislative Acts and Resolutions of the Government of the Republic of Kazakhstan, 2002, No. 17, p. 180);

2) Paragraph 2 and subparagraph 3) of Paragraph 5 of the Resolution No. 1204 of the Government of the Republic of Kazakhstan on “Measures to Strengthen the Government Support of Domestic Producers” of November 14, 2002 (Collection of Legislative Acts and Resolutions of the Government of the Republic of Kazakhstan, 2002, No. 40, p. 408);

3) Resolution No. 955 of the Government of the Republic of Kazakhstan on “Extra Measures to Strengthen the Government Support of Domestic Commodity Producers” of September 19, 2003 (Collection of Legislative Acts and Resolutions of the Government of the Republic of Kazakhstan, 2003, No. 38, p. 387).

The Rules were developed in compliance with:

• Article 63-1 of Law on “Subsoil and Subsoil Use”, establishing the procedure for the acquisition of goods, works and services in the carrying out of operations on subsoil;
• Article 5 of Law of the RK on “Oil”, under which the establishing of rules of the acquisition of goods, works and services in the carrying out of petroleum operations is referred to the scope pf competence of the government of the RK;

Below, we set forth the following information to your attention:

I. Procedure for submission of a yearly program of the purchase of goods, works and services (GWS).
II. Methods of purchasing GWS
          a. Purchase of GWS through the bids
          b. Purchase of GWS from one source
          c. Purchase of GWS through inquiry of prices
          d. Purchase of GWS through the electronic purchase system
          e. Purchase of GWS through open commodity exchanges
III. Consequences of violation of the Rules
IV. Distinctive features of the Resolution of November 28, 2007 and Resolution of June 7, 2002.

I. Procedure for submission of a yearly program of the purchase of goods, works and services.

The relevant laws provide for informing the Authorized body (this body is the Ministry of Industry and Trade, as of May of 2008) of the engagement of suppliers of goods and services to carry out subsoil use operations. The subsoil users shall submit to the Authorized body the following:

1) annually – the yearly program of the purchase of goods, works and services for the coming year not later than thirty calendar days from the date of agreeing on the yearly working program (i.e., as a rule, not later than January 30 of every year, according to paragraph 3 of Article 64 of Law on Subsoil, except for the first year of the contract validity or other term, set in the contract). The content of the yearly program of the purchase of goods, works and services, which are required to carry out subsoil use operations is as follows: types and quantity (scope) of, and amounts to be paid for, goods, works and services, which are planned to be purchased, as well as the time constraints and methods of purchasing on each type of GWS in accordance with the yearly program of works. In the yearly program of the purchase, GWS are divided by homogenous types.

2) quarterly – a report on the purchased GWS not later than the fifteenth day of the month following the reporting period.

The yearly program and report forms shall be approved by the Authorized body.

    A failure to submit the annual yearly program of GWS purchase for the coming year and the quarterly report on the purchased GWS does not entail any particular liability, but there is an indirect risk of recognition of the failure to meet the terms and conditions of the subsoil use contract that, in principle, is likely to result in termination of the contract of subsoil use by applying provisions of Article 70 of Law on Subsoil and Subsoil Use.

II. Methods of purchasing GWS:

1. Purchase of GWS through the bids
2. Purchase of GWS from one source
3. Purchase of GWS through inquiry of prices
4. Purchase of GWS through the electronic purchase system
5. Purchase of GWS through open commodity exchanges

The purchase of GWS in the carrying out of subsoil use operations shall be made within the Republic of Kazakhstan. The purchase of GWS is divided into lots by homogenous types and by the place of delivery (destination) of goods, carrying out works and rendering services. The supplier of GWS shall be defined on each certain lot.

1. Purchase of GWS through the bids.

1.1. General conditions of conducting open and closed bids.
1.2. Specific features of conducting closed bids
1.3. Bids by using a two-stage procedure.
1.4. Purchase of GWS from one source.

1.1. General conditions of conducting open and closed bids.

    Depending on the circle of participants, the bids can be open and closed.
-The open bids are conducted, if there are an unlimited number of prospective bidders;
-The closed bids are conducted, when GWS to be purchased are offered by a limited number of prospective bidders.

The bids can be conducted with the use of two-stage procedures in the following cases:

1. It is difficult to set forth the detailed specification of goods, works or services and to define their technical and other characteristics, and there is necessity to inquire the bids from prospective suppliers or to conduct negotiations with them;
2. If it is necessary to conduct researches, experiments, studies or developments.

The bids with using a two-stage procedure have the following stages:

1) The inquiry made to prospective suppliers to submit their bids with specifying technical, qualitative and other characteristics of GWS without indication of the price of the bid, the analyzing of the bids so submitted and, if necessary, the conducting of negotiations with prospective suppliers with regard to the characteristics of GWS so offered;
2) Consideration of the bids of preliminary selected prospective suppliers now with indication of the price, the bids of which are recognized as meeting the relevant technical, qualitative and other characteristics of GWS.

1.1.1. Announcement of bids.

1) Content of the bids announcement:
The announcement about the forthcoming bids shall contain the following data:

• Name and location of the company making a bid proposal;
• Quantity (scope), quality and articles of goods to be purchased, works to be carried out and service to be rendered on each certain lot;
• Required time constraints and the place of delivery (destination) of goods, carrying out works and rendering services on each certain lot;
• Place the bidding documents are available at and ways of receiving them;
• Place at which the bids from prospective bidders have to be presented and the deadline for submission of the bids, as well as the place, date and time of opening the envelopes with the bids;
• Other necessary information, to be determined by the company that made the bid proposal (arranger of the bids).

2) Requirements to publication of the bids announcement:
The publication of the bids announcement shall be made 30 calendar days before the expiry of the final term for submission of the bids and 15 calendar days in the event of conducting the recurring open bids (see paragraph 1.2 regarding the conducting of the recurring closed bids)
The bids announcement shall be published in the national and Russian languages:
А) In periodical press published not rarely than three times a week and distributed within the Republic of Kazakhstan, as well as
B) On the web-site of the authorized body (this body is the Ministry of Industry and Trade, as of May of 2008).

1.1.2. Bidding documents.

The bidding documents are intended to inform the prospective bidders about the requirements and conditions of purchasing GWS. The company that made the bid proposal (the arranger of the bids) shall provide the bidding documents to all prospective bidders, which filed their applications for participation in the bids in a form of a hard copy and/or in an electronic form and also filed them to the authorized body upon the relevant inquiry of the given body. The bidding documents is developed and approved by the company-arranger of the bids.

The bidding documents content:

1) Requirements set to the qualification of the prospective bidders for their participation in the bids, as well as the list of documents confirming the matching of a prospective bidder to these requirements;
2) Operational, technical, quality and exploitation characteristics of purchased GWS, including, if necessary, specifications, layouts, designs and sketches, as well as the list of documents confirming the matching of GWS to these requirements;
3) Procedure for setting the bid price and method of payment;
4) Quantity (scope) of purchased goods, works and services;
5) Place of delivery (destination) of goods, carrying out works and rendering services;
6) Set time constraints for the delivery of goods, carrying out works and rendering services;
7) The way of producing, place and deadline for submission of the bids, term of their validity, as well as the place, date and time of opening the envelopes with the bids;
8) Requirements to execution of the bids in accordance with the Rules of Acquisition of Goods, Works and Services in the Carrying Out of Subsoil Use Operations;
9) List of criteria, to be taken into account by the bids committee while selecting the successful bidder;
10) Relevant indication and description of the procedure for assessment and comparison of alternative bids, if the alternative characteristics of GWS are allowed;
11) Draft contract to be entered into with the successful bidder;
12) Ways how the bidders can ask for elucidation with regard to the bidding documents;
13) Indication of the person in charge of preparation and conducting of the bids;
14) Other data and/or documents that may be requested by the bids arranger.
15) Data on the amounts allocated for the purchase of GWS that are the subject of the given bids.

    The laws provide for the possibility of getting elucidation from the bids arranger with regard to the bidding documents. The detailed procedure and the time constraints for making the inquiry about getting the elucidation on the bidding documents terms and the replies to them is described in paragraphs 28 and 29 of the Rules.
    Before expiry of the final term for submission of the bids, the bids arranger is entitled to refuse to purchase GWS. In the event of the bids arranger’s refusal to conduct the bids, it shall publish the relevant announcement in a manner, as provided for the given type of the bids, and to return the envelopes with the bids so received without unsealing them.

1.1.3. Execution of the bid.

    A prospective supplier, which expressed its wish to take part in the bids, shall submit to the bids arranger within the established time limit its bid in a sealed envelope, all to be done in compliance with the bidding documents. The bid shall be executed in compliance with the following requirements:

• The bid shall be submitted in a form of the original copy with all its pages tied together and numbered; the last page shall be certified by the signature and stamp (if it is a legal entity) of the bidder, with a required number of copies enclosed.
• The original copy of the bid shall be submitted separately from its copies in a sealed envelope with the sign “Original copy”, whereas the copies in separated sealed envelopes with the sign “The copy”. The envelopes shall be executed in accordance with requirements of paragraph 34 of the Rules.
• The Rules do not provide for the requirement to produce any other additional documentation that would characterize GWS as of the time of submission of the applications.

1.1.4. Bids Committee composition.

    The bids committee shall be established by the bids arranger for each certain bids for the acquisition of GWS. It shall comprise the Chairman, Deputy Chairman and members of the Bids Committee. The total number of the bids committee members shall be the odd number, but not less than three members.

1.1.5. Refusal to consider a bid.

The Bids Committee is entitled to refuse to consider a certain bid of a prospective supplier in the events as follows:

• The bid is submitted upon expiry of the final term set for the submission of bids in the bidding documents,
• The bid is produced with violation of the requirements set for the submission of bids;
• The prospective supplier, which produced the given bid, does not match the qualification requirements;
• The bid is submitted by the entity, which was found failed to discharge or discharged improperly its obligations under the contracts with the bids arranger within one calendar year, preceding the date of the current bids announcement;
• The application for participation in the bids (in the event of conducting the recurring bids) is filed by the entity, which has refused to enter into a contract with the bids arranger on the results of the first bids.

1.1.6. Consideration of a bid by the Bids Committee.

The Bids Committee shall unseal the envelopes with the bids, as per the requirements set in the bidding documents with regard to the place, date and time of unsealing the envelopes with the bids. Not later than one business day, following the date of unsealing the envelopes with the bids, the Bids Committee shall draw up the relevant minutes of the meeting. Its copy shall be submitted to the Ministry of Industry and Trade within the time limit not later than two business days from the date of unsealing the envelopes with the bids.

1.1.7. Summing up the results of the bids.

The Bids Committee shall assess and compare the bids, which were admitted for participation in the bids and shall select the successful bidder by taking the lowest price so offered, but along with that applying the conditional reduction in the price of the bidders – Kazakhstani producers – by twenty per cent, provided that the GWS so selected are met with the bids requirements and the laws of the Republic of Kazakhstan on technical control.

Based on the bids results in the whole and on a certain lot so conducted, the Bids Committee shall take one of the following decisions within the time limit not later than ten calendar days from the date of unsealing the envelopes with the bids, unless the other longer term is specified in the bidding documents:

1) To announce the successful bidder; 
2) To recognize the bids as not achieving success.

A decision on the bids results shall be executed in a form of minutes of the meeting of the Bids Committee in compliance with the Rules. The minutes of the meeting shall be signed by the Chairman, members and secretary of the Bids Committee.

The minutes of the meeting shall contain:
1) Short description of GWS to be purchased;
2) Name and location of the bidders;
3) Name and location of the successful bidder;
4) Terms, based on which the successful bidder was selected;
5) Time constraints for conclusion of the contract with the successful bidder, based on the bids results;
6) Information on qualification of the bidders, which produced their applications, or information on non-availability of such data;
7) Price and short description of other general conditions of every certain bid;
8) Summary Brief information on the assessment criteria and comparison of the bids;
9) Specifying the relative causes, if the successful bidder has not been selected in connection with rejection of all the bids;
10) Summarized statement of inquiries concerning the bidding documents and replies to them;
11) Information on the bidders, the bids of which are the most preferable after proposing the successful bidder;
12) Other important information upon decision of the Bids Committee.

A copy of the minutes of the meeting, based on the bids results, shall be submitted to the Ministry of Industry and Trade in a form of a hard copy and/or in an electronic form within four business days from the date of signing of the minutes of the meeting.

The bids arranger within five business days from the date of summing up the results of the open bids shall notify all the prospective bidders that took part in the bids of such bids results by means of publication of the relevant announcement. The announcement about the results of the bids shall be published in the national and Russian languages both in periodicals that are published not rarely than three times a week and distributed throughout the Republic of Kazakhstan and on the web-site of the authorized body. The publication of the bids results shall contain the name of the bids, successful bidder and its address, name of GWS that were offered by the successful bidder.

1.1.8. Entering into a contract, based on the bids results

Upon completion of the bids and announcement of the bids results, a relevant contract shall be concluded with the successful bidder within the time constraints set in accordance with the minutes of the meeting on the terms and conditions that comply with those that were set forth by the successful bidder in its bid.
In the event of the successful bidder’s refusal to enter into the said contract, based on the results of the bids, within the time constraints set in accordance with the minutes of the meeting, the bids arranger is entitled to conclude the contract with the other bidder, the bid of which was recognized as the most preferable after the bid of the successful bidder, in compliance with the minutes of the meeting.

1.1.9. Recognition of the bids as having no success and consequences of that.

Grounds for recognition of the bids as having no success:

• If less than two participants took part in the bids, 
• If prices offered in the bids that were accepted for participation exceed the amount provided for the purchase of GWS.

If the bids were recognized as having no success, the bids arranger may, if necessary, change the content of the bidding documents and conduct the bids again or purchase GWS from one source.

1.2. Specific features of conducting the closed bids.

    The closed bids are conducted in those cases, when GWS, to be purchased, are available only at a limited number of prospective bidders.
    The procedure for conducting the closed bids is similar to that for conducting the open bids (see paragraph 1.1. hereof).
    A distinction between these two types of the bids is that the bids arranger shall submit to the address of a prospective bidder so invited to take part in the bids the relevant notification in writing with acknowledgement of receipt 30 calendar days before the expiry of the final day set for submission of the bids and 15 calendar days before the same in the event of recurring closed bids. Following the summing up the results of the bids in the event of the open bids, it is required to publish the results of the bids in official press (paragraph 20 of the Rules). In the vent of the closed bids, the Rules do not provide for the bids arranger’s responsibility to notify all prospective suppliers of the bids results.

1.3. The bids with using a two-stage procedure.

The open and closed bids can be conducted by using a two-stage procedure in the events as follows:

1. If it is complicated to set forth the detailed specification of goods, works and services and to define their technical and other characteristics, and there is the necessity to ask for submission of bids by the prospective bidders or to conduct negotiations with them;
2. If it is required to carry out research, studies, experiments or developments.

Te bids with using of a two-stage procedure have the following stages:

• Invitation to the prospective bidders to submit their bids with information regarding the technical, quality and other characteristics of GWS without specifying the price of the bid, the carrying out of analysis of the bids so submitted and, if necessary, the conducting of negotiations with the prospective bidders with regard to the characteristics of GWS so offered in the bids; all listed measures are necessary for preliminary selection of the prospective bidders;
• Consideration of the bids now with indication of the price of those prospective bidders that were preliminarily selected, whose bids were recognized as matching the set technical, quality and other characteristics of GWS.

2. Purchase of GWS from one source.

    The Rules provide for the possibility of purchasing GWS from one source that is considered a simpler method of purchasing than the purchase through conducting the open or closed bids. The purchase of GWS from one source is applied in cases as follows:

1) If in the purchasing through the bids the bids are recognized as having no success;
2) If GWS to be purchased are available only to a certain Kazakhstani or foreign supplier and the conducting of the bids makes no sense;
3) If the bids arranger that has purchased GWS from a certain supplier has the necessity to acquire another GWS from the same supplier with the purpose of unification, standardization or provision of compatibility with GWS already bought;
4) If as a result of declaring a state of emergency in accordance with the procedure, established by the laws of the Republic of Kazakhstan, and in the event, when there is a threat of emergence of the said circumstances, there is an acute need in the given GWS that excludes the possibility of applying of other methods of purchasing.

    When purchasing from one source, the purchasing company shall independently conclude a contract with the supplier and make the purchase; within ten calendar days from the date of entering into the contract the purchasing company shall notify the Authorized Body of the contract concluded, with indication of the supplier, its address, GWS items purchased, their quantity (scope) and quality.

3. Purchase of GWS through inquiry of prices

The purchase of GWS through inquiry of prices is carried out in the events when the volume of purchase of some homogeneous GWS on a separate lot does not exceed, in money terms, fourteen thousand (14000) monthly computation indices (it is KZT1,168, as of January 1, 2008), and the detailed specification of such GWS is of no material importance for the purchasing company.

Purchase of GWS by inquiry of prices shall be carried out in a way as follows:

1)The purchasing company shall submit in a form of a hard copy and/or in an electronic form an inquiry of prices for interested GWS to not less than two prospective suppliers, including those listed in the register of goods, works and services (that is used in the carrying out of subsoil use operations), their producers, on the items interested;
     The register of GWS that is used in the carrying out of subsoil use operations is kept and developed by the relevant authorized body. The given register contains data on legal entities and entrepreneurs that have the relevant experience in supplying or manufacturing of required GWS, which are in the yearly purchase plans of the subsoil users. By now (as of May 20, 2008) the Rules of development of such the register are not put in effect.
     Also in accordance with the Resolution of the Government of the Republic of Kazakhstan on "Measures to Strengthen the Government Support of Domestic Producers” of November 14, 2002, JSC Kazakhstan Contract Agency was  established, which is a formal representative of the Ministry of Energy and Mineral Resources and the Ministry of Industry and Trade. The major goal of this organization is the promotion of more active participation of Kazakhstani producers in all sectors of the economy. With exactly this purpose JSC Kazakhstan Contract Agency keeps its register of the producers of goods and services, summarizes all information on available GWS and contributes to interaction between suppliers and consumers (including subsoil users).

The inquiry of prices shall contain information on the planned purchase of GWS, including:

• Name and location of the purchasing company;
• Quantity (scope), quality and articles of goods, work and services to be purchased on each certain lot;
• Specified term and place of delivery of goods, carrying out works and rendering services;
• The starting and final dates for submission of prices;
• Other required information to be defined by the purchasing company.

2) The purchasing company shall set the term for submission of the price list, to be not less than three business days from the date of making the inquiry of prices. In the event of absence of the price lists submitted or availability of just one reply with the price list within the time limit set for submission of prices, the purchasing company may prolong the term for submission of prices up to five business days.
3) The analysis of prices so submitted shall be carried out by the purchasing company independently within three business days from the date of expiry of the term set for submission of prices.

In the event of refusal by the prospective supplier that submitted the most preferable prices for the purchasing company to enter into the relevant contract, the purchasing company is entitled to:

1)Conclude the contract with the other prospective supplier that offered the most preferable price after that one that failed to conclude the contract;
2)Make recurrent purchase of GWS through inquiry of prices.

The procedure for purchase of GWS through inquiry of prices is described in details in Chapter 5 of the Rules.

4. Purchase of GWS through the electronic purchase system

The purchase of GWS through the electronic purchase system shall be carried out through the systems of electronic trade that allows to purchase GWS in real time regime.
The admission of prospective suppliers to the electronic purchase system, registration of contracts of purchase concluded within the electronic purchase system, and the collection, generalization and analysis of information on the purchase of GWS through the electronic purchase system shall be carried out by using a national information system that is created and operated in compliance with the laws of the Republic of Kazakhstan on information.

5. Purchase of goods through the open commodity exchanges

    The purchase of goods through the open commodity exchanges shall be carried out in compliance with the Law No. 2170 of the Republic of Kazakhstan on “Commodity Exchanges” of April 7, 1995.
There are no special commodity exchanges established for subsoil users in Kazakhstan by now. The procedure for purchase of goods through commodity exchanges for the purpose of carrying out subsoil operations does not differ from purchase of any other goods through commodity exchanges. The major principle of operation of the commodity exchanges is the conducting the regular public auctions at a certain place and at a certain time in accordance with the established exchange trade rules.
An exchange transaction shall be deemed a contract (agreement) registered by the exchange in the course of the auction, concluded with the auction participant with respect to the commodity traded. The procedure for registration and execution of exchange transactions shall be set by the exchange in accordance with the relevant laws in effect.)

III. Consequences of violation of the Rules provisions:

1) A failure by the subsoil user to comply with the Rules provisions can entail the recognition of its failure to discharge the similar terms and conditions of the subsoil use contract. This, in its turn, can serve as a ground for termination of the subsoil use contract (subparagraph 2 of paragraph 2 Article 45-2 of the Law on Subsoil).
2) A failure by the supplier to comply with the Rules provisions can serve as a ground for recognition of the contracts of supply so concluded as invalid and deeming that the parties of the contract should return to their original state as before conclusion of the contract.

    In the vent of violation of the Rules in the course of purchasing GWS in order to carry out subsoil operations, any prospective supplier of GWS so purchased can appeal against the actions of the purchasing company in accordance with the laws of the RK.

V. Distinctive features of the Resolution of November 28, 2007 and Resolution of June 7, 2002

    We would like to note the following distinctive features between Resolution No. 612 of the Government of the RK on “Adoption of the Rules of Purchasing Goods, Works and Services in the Carrying Out of Subsoil Use Operations” (old Rules) of June 7, 2002 and Resolution No. 1139 of the Government of Kazakhstan on “Adoption of the Rules of Purchasing Goods, Works and Services in the Carrying Out of Subsoil Use Operations” (new Rules) of November 28, 2007.

1, Methods of purchasing GWS
 
Old Rules:

• Bids (major method used)
• Purchase without conducting the bids (which was carried out in the event when GWS was available to only one supplier or in case when there were considerations about unification of GWS already bought, or in the event of recognition of the previous bids as invalid)

New Rules:

• Conducting the bids (open and closed);
• Purchase of GWS from one source;
• Purchase of GWS through inquiry of prices
• Purchase of GWS through the electronic purchase system
• Purchase of GWS through open commodity exchanges.

2. Procedure for conducting the bids

1). Under the old version of the Rules, in order to conduct the bids the Purchasing Company was obliged to approve the terms of conducting the bids with the Ministry of Industry and Trade. The terms of conducting the bids so approved were in effect for six months, unless the other shorter term was set by the Ministry of Industry and Trade. If necessary, by petition of the Purchasing Company the ministry could prolong the term of operation of the approved terms of conducting the bids for a period not exceeding six months.

    The new Rules do not require to make such notification.
 
2). According to the old Rules, in the conducting of the bids it was required to necessarily include a reprehensive of the Ministry of Industry and Trade in the Bids Committee.
    The new Rules abrogated such requirement.

3. The terms of determining the successful bidder.
    According to the old Rules, in the determining of the successful bidder the Bids Committee had to take into account the following criteria:

• The price offered in the bid (the bid price);
• Expenses for operation, maintenance and repair and other factors characterizing GWS, the time of delivery, availability of quality certificates or certificates of origin and other things characterizing the goods;
• With the other conditions being equal, the priority was given to Kazakhstani producers of goods, works and services in compliance with the Rules. Along with that, the priority given to Kazakhstani enterprises - manufacturers of goods was taken into account, while producing the certificate of origin of goods (or the guarantee of producing it) that confirm the manufacturing of goods in the Republic of Kazakhstan, whereas the priority to Kazakhstani companies – providers of works and services was taken into account, depending on the extent of engagement of Kazakhstani labor force, Kazakhstani specialists and Kazakhstani companies acting as sub-providers of works and services.

    Decisions by the Bids Committee were taken by open voting. The decision was considered taken, if it has the majority of votes of the total number of the Bids Committee members participating in the voting. In case of the equality of votes, that decision was considered taken, for which the Chairman of the Bids Committee voted.
    The Bids Committee members were entitled to have an individual opinion, which, in case of the intention to express it, had to be expressed in writing and attached to the minutes of the Bids Committee’s meeting.
    According to the new Rules, the Bids Committee shall take a decision, based on the minor price offered, whereas the price so offered by the Kazakhstani producer shall be conditionally reduced by 20%, providing that such the bid meets all the other requirements.

Findings

Thus, we can ascertain the striving by the lawmakers to simplify the Rules provisions and make them to be easily understandable by the subsoil users and prospective suppliers. In particular, the criteria for taking a decision by the Bids Committee on the successful bidder became more simplified, the system of encouragement of GWS purchase from Kazakhstani manufacturers (suppliers, providers) also became more simplified (the introduction into the Rules of a 20% conditional reduction in the price offered by Kazakhstani producers).

The major particular feature is that that the old Rules were applied to only petroleum operations, whereas the current Rules in effect are applied to any operations related to subsoil use, except for operations on generally used minerals and government purchases.