Supplier relations

The key principles of KMG Group’s procurement activities include compliance with laws and internal requirements, transparency of procurement procedures, promotion of fair competition, and provision of equal opportunities for counterparties. At the same time, KMG implements a number of initiatives in procurement to support domestic manufacturers as part of the Programme to Promote the Modernisation of Existing and Creation of New Production Facilities.

Procurement management at KMG companies is governed by two documents:

To maintain and enhance transparency and efficiency in line with the most advanced international procurement standards and technologies, KMG Group uses the E‑Procurement IT System portal (the “E‑Procurement IT System”) providing unhindered access (with certain exceptions, primarily related to state secrets) to procurement information to all stakeholders and ensuring equal opportunities for all participants in the procurement process.

The E‑Procurement IT System enables automation and standardisation of all procedures within the procurement cycle (from planning to contract management) to cut the time needed to perform relevant tasks and reduce human factor. E‑procurement facilitates market access and thus contributes to improved efficiency, increased competition and reduced administrative burden and operating expenses.

Apart from the E‑Procurement IT System, procurement entities can purchase goods (with a threshold of up to 20 thous. MCI (Monthly Calculation Index)) of specific brands and models from certain manufacturers online at www.skstore.kz using the list of goods categories approved by the Fund’s Management Board.

In addition to the public dissemination of information on procurement procedures and procurement contracts, including details of invitations to bid and the terms and conditions of contracts, the E‑Procurement IT System envisages the advance establishment of requirements for participation in a competitive procurement, including selection criteria, bidding rules and publication thereof, while ensuring an efficient internal control system, including challenging the results of procurement in case of non‑compliance with the rules or procedures established by regulations.

Total procurement volume

The total procurement volume in 2024 under the annual procurement plan amounted to KZT 1,219 bln net of VAT. Reducing supplies from a single source and increasing the share of competitive procurement play an important role in KMG’s procurement activities. Competitive procurement includes open tenders, requests for quotations, e‑procurement, and commodity exchanges. In 2024, the amount of competitive procurement contracts under the annual procurement plan for KMG Group totalled KZT 593 bln (51%), which demonstrates KMG's commitment to ensuring fair competition and sustainability. Non‑competitive single‑source procurement is made in exceptional cases where it is impossible to procure goods on a competitive basis.

Pre‑qualification of potential suppliers

Continuous improvement in procurement with a focus on the requirements and standards applied in Kazakhstani and international practices is one of KMG’s priorities. Pre‑qualification of potential suppliers is an effective tool for addressing this need.

Pre‑qualification (PQ)After completion of the PQ procedure and subject to the approval by the qualification body’s commission, potential suppliers are included in the Register of Qualified Potential Suppliers publicly available at Samruk‑Kazyna’s procurement portal. is the questionnaire‑ and audit‑based process of evaluating potential suppliers for compliance with the qualification requirements defined in accordance with the Procurement Procedure.

The key objectives of PQ are to identify qualified suppliers selected on the basis of formal criteria, and to improve procurement efficiency with respect to the goods, works, and services sourced for the needs of the Fund’s portfolio companies.

So far, the Fund’s PQ Commission has approved 43 categories of goods, works and services that can be procured by KMG’s subsidiaries and associates through open tenders held among bidders pre‑qualified in line with the PQ procedure.

In 2024, KMG developed additional qualification criteria for ten categories of goods, works, and services for the PQ procedure. Of these, three categories were successfully approved in 2024, whilst the remaining seven categories are currently being considered by the Fund's PQ Commission.

Category‑based procurement

Procurement category management is the process of developing a comprehensive approach to reducing costs associated with procurement and the use of goods, works, and services included in priority categories.

Categorisation implies combining goods, works and services into procurement categories on the basis of common characteristics of procurement items and/or a single market of potential suppliers. Categories may include one or more items of goods, works, and services. Categories characterised by a high cost, criticality, savings potential, and manageability are identified as priorities.

Category‑based management helps increase the potential for savings through a more detailed analysis by developing and approving a category‑based procurement strategy. This strategy determines an optimal approach to purchasing goods, works, and services based on maximisation of benefits in the long or short term. Category‑based procurement should contain goals and objectives, internal and external environment analysis, approaches to procurement category management, requirements for supplier development, calculation of benefits, and an implementation plan.

Category‑based management results in significant reduction of the cost of purchase and use of goods, works, and services through strategic planning, a detailed analysis of goods and services to be purchased, and calculations of the total cost of ownership, as well as cross‑functional interaction with various business units. This method of procurement is effective in that it provides both quality and a transparent price by engaging reliable manufacturers and suppliers.

Procurement category management includes:

• categorisation of goods, works, and services to be purchased and identification of priority procurement categories;
• development (update) and approval of category‑based procurement strategies for priority categories;
• implementation of category‑based procurement strategies;
• monitoring of the implementation of category‑based procurement strategies;
• supplier development.

Import substitution

As a company representing the interests of the government in the oil and gas industry, KMG is actively working to promote import substitution in procurement under Law of the Republic of Kazakhstan No. 47‑VII ZRK On Procurement by Certain Quasi‑Public Sector Entities dated 8 June 2021 (Procedure for the Conclusion and Execution of Off‑take Agreements (Programme to Promote the Creation of New Production Facilities) (the “Programme”). The Programme’s primary objective is to support private entrepreneurs who launch new production facilities (especially in the regions of operation) and undertake technological upgrades to manufacture currently imported products sought by Samruk‑Kazyna Group.

Off‑take agreements provide for the implementation of import substitution projects with a condition precedent stipulating the purchase and delivery of goods to be manufactured in Kazakhstan as a result of the project.

As of 31 December 2024, KMG’s subsidiaries and associates entered into 137 off‑take agreements for a total of KZT 58.7 bln.

Under paragraph 6 of the Nationwide Action Plan to implement the Address of the Head of State to the people of Kazakhstan “Economic Course of Fair Kazakhstan” delivered on 1 September 2023, approved by Presidential Decree No. 353 dated 16 September 2023, new KPIs were developed and approved for KMG enterprises to achieve “the share of off‑take agreements in the procurement of goods” in the amount of 10% in 2024. In the reporting period, the share of off‑take agreements in KMG’s procurement was 72%.

In 2024, KMG achieved the Fund’s targets for the share of in‑country value in goods, works, and services.