CONTROLLED 2015/03/05

Transcription

1 POLICY NUMBER : PWT/PO/PRC/001 REVISION : 03 ORIGINAL DATE : 2015/02/18 AUTHORISED BY N. Nokwe-Macamo GROUP CHIEF EXECUTIVE OFFICER AUTHORISATION DATE ORIGINATOR J.Bull ACTING SUPPLIER MANAGEMENT & ADMINISTRATION MANAGER APPROVED BY L. Bakoro GROUP CHIEF FINANCIAL OFFICER TITLE PetroSA GROUP PROCUREMENT POLICY PURPOSE As described and detailed in clause 2 of this policy. This policy supersedes PWT/PO/PRC/001 REV 02 PWT/PO/PRC/ /02/18 1 of 23

2 DOCUMENT CONTROL DOCUMENT NO: PWT/PO/PRC/001 DOCUMENT REVISION CONTROL PAGE NUMBER/S CHANGE LOCATED DATE OF ISSUE ROUTING SLIP FOR LAST REVISION NUMBER ROLE NAME POSITION REVIEW DATE REVIEWER 1 PROCUREMENT COMMITTEE MEMBERS VARIOUS 11 September 2014 REVIEWER 2 EXCO MEMBERS VARIOUS 7 October 2014 REVIEWER 3 BOARD MEMBERS VARIOUS REVIEWER 4 REVIEWER 5 REVIEWER 6 REVIEWER 7 REVIEWER 8 REVIEWER 9 REVIEWER 10 RECORDS AND PROCEDURES QUALITY INTERNAL AUDIT C ABDOLL CHIEF INTERNAL AUDITOR PWT/PO/PRC/ /02/18 2 of 23

3 TABLE OF CONTENTS PAGE 1. STATEMENT OF INTENT 5 2. PURPOSE AND SCOPE 6 3. OBJECTIVES/ APPLICATION 6 4. DEFINITIONS AND INTERPRETATIONS 7 5. REFERENCES DELEGATION OF AUTHORITY FOR THE IMPLEMENTATION OF THE GROUP PROCUREMENT / SUPPLY CHAIN MANAGEMENT POLICY SUPPLY CHAIN MANAGEMENT UNIT (SCM) / CORPORATE PROCUREMENT DEPARTMENT THE PROCUREMENT PROCESS BROAD BASED BLACK ECONOMIC EMPOWERMENT (BBBEE) PREFERENCE FOR SUPPLIERS SUPPLIER MANAGEMENT / QUALIFICATION OF SUPPLIERS PROCUREMENT WITHOUT PRIOR TENDERING CAPITAL PROJECTS COMMUNICATION WITH SUPPLIERS TRANSPARENCY THE GROUP CHIEF EXECUTIVE OFFICER PROCUREMENT COMMITTEE ETHICAL STANDARDS / CONFLICT OF INTEREST IMPLICATIONS FOR NON ADHERENCE TO PROCUREMENT POLICIES & PROCEDURES 22 PWT/PO/PRC/ /02/18 3 of 23

4 20. RECORDS UPDATING OF POLICY 23 PWT/PO/PRC/ /02/18 4 of 23

5 1. STATEMENT OF INTENT This policy is to ensure that goods and services are procured by the PetroSA Group in a manner that shall realise best value for money, minimise risk and safeguard PetroSA s interests and shall be in accordance with; prescribed standards and specifications; PetroSA s BBBEE, Enterprise and Supplier Development, Procurement and Levels of Authority procedures; the Promotion of Access to Information Act (PAIA) and recognise the Preferential Procurement Policy Framework Act (PPPFA); the Public Finance Management Act (PFMA) including the Treasury Instructions and/or Regulations issued in compliance with the Act. the Promotion of Access to Justice Act (PAJA); the National Industrial Participation Programme (NIPP), where applicable; the BBBEE Codes of Good Practice. PetroSA s codes of ethics and other relevant policies and procedures PetroSA s exemption from the prescripts of the PPPFA including its Regulations in respect of procurement directly linked to core business (refer to Minister of Finance letter dated 04 June 2014; ref: M4/1/16 (415/14)) In addition PetroSA is intent on: finding reliable and cost effective suppliers; using goods and services that have a South African content and encouraging international supplier organisations to establish local representation in South Africa in one form or another; promoting its role as a responsible corporate citizen in the context of Black Economic Empowerment, Commercial Equity and Corporate Social Investment; ensuring that the procurement process is fair, equitable and comprehensive but logical, transparent, competitive and cost effective; ensuring regional disparities are remedied; promoting Broad Based Black Economic Empowerment (BBBEE) companies & other local South African companies by facilitating their entry into Africa and the rest of the World, through procurement; PWT/PO/PRC/ /02/18 5 of 23

6 collaborating with other entities such as State Owned Companies (SOCs), State Owned Enterprises Procurement Forum (SOEPF), the Oil Industry, etc, to ensure maximum value, both for PetroSA and the State in general. 2. PURPOSE AND SCOPE The purpose of this document is to: - Outline the manner in which the Statement of Intent is to be effected; Define the rules of conduct to be observed by all officers and employees; Foster greater optimisation of purchasing by all directors, officers and employees of the PetroSA Group and thereby the creation of value for the PetroSA Group, the shareholders and all stakeholders of the PetroSA Group. Provide for the establishment of the Procurement Committee, its constitution, functions and authority. Provide for the establishment of a Supply Chain Management Unit, its functions and authority. 3. OBJECTIVES/ APPLICATION 3.1 Objectives This document sets out the general policy applicable to the purchasing process in all PetroSA Group companies. 3.2 Application and Responsibility This Group policy applies to PetroSA and to all companies directly or indirectly controlled by PetroSA, including any joint ventures entered into with any third party/ies, wherein PetroSA is confirmed as the operator. In respect of joint ventures, where PetroSA has a minority interest, the joint venture agreement governs the extent to which this policy applies It is the responsibility of the Managers of the Group and Subsidiaries to ensure that this policy is observed by introducing the appropriate processes and deploying appropriate resources thereto, in accordance with the corporate procurement procedure. 3.3 Exclusions of certain trading and upstream activities from standard procurement procedures As a rule, this policy applies to all purchases of goods and services, including trading transactions, and to all PetroSA s activities. Only the following trading and upstream related categories are excluded from compliance with the standard PetroSA procurement procedures. The Group Executive Manager (Vice President) responsible for Trading, Supply & Logistics and New Ventures Upstream shall develop a product specific procurement policy (to be approved by the Board) and procedures, substantively in the same scope PWT/PO/PRC/ /02/18 6 of 23

7 and form as that of the corporate procurement policy and procedures, for the procurement of the following items: Purchase of crude oil Purchase of feedstock Purchase of blendstock Purchase fuel and fuel exchange arrangements (hospitality) Acquisition of an exploration block and/or acquisition of producing or near producing assets and/or trading entity or business. 4. DEFINITIONS AND INTERPRETATIONS 4.1 Definitions For purpose of the policy, the following words and phrases shall have the meaning hereby assigned to them: BEE Black Economic Empowerment Black People Black People is a generic term which means Africans, Coloureds and Indians Blendstock A semi-finished or intermediate product that is blended to other similar intermediate products to produce a final product capable of sale to the market, eg, butane, reformate, alkylate and penexate are blend stocks produced from our GTL Refinery. These blend stocks are subsequently blended in the correct ratio to produce gasoline or petrol of the required quality Broad Based Black Economically Empowered Supplier A BBBEE supplier is a supplier which complies with the requirements of the BBBEE Act and its codes of good practice Confidential Means any information or data which by its nature or content is identifiable as confidential and/or proprietary to PetroSA and/or any third party, and specifically refers to sensitive information relating to PetroSA s strategic objectives and planning for both its existing and future business needs Employee Means any person including a fixed term contractor, but excluding an independent contractor, who works for PetroSA and who receives, or is entitled to receive, any salary. PWT/PO/PRC/ /02/18 7 of 23

8 4.1.7 Emergency Purchases Emergency purchases relate to purchases of an urgent nature that may give rise to threats to human life or safety or security and/or environment threats to interruptions in the provision of product to customers the threat of major expense and/or loss to PetroSA purchases in respect of breakdowns of a serious nature that relate specifically to the continuous production and/or safety of PetroSA s operations EXCO Means Executive Committee of the PetroSA Group of Companies Feedstock Means raw material used as the primary component in a process that converts the raw material into another (usually higher value) finished product (eg, crude oil is a feedstock used to produce petroleum products, sugar cane is a feedstock used to produce sugar, wood is a feedstock used to produce paper, etc) Fruitless and Wasteful Expenditure Means expenditure that has been made in vain and would have been avoided had reasonable care been exercised Goods "Goods" are the raw materials or commodities that are available for purchase and/or general sale Group Executive Manager Means any Vice President and/or the Chief Financial Officer and/or the Chief Operating Officer of the PetroSA Group who reports directly to the Group Chief Executive Officer Head of Procurement Means the official responsible for the strategic and operational management of the procurement or supply chain management department / unit of the PetroSA Group of companies. Group Procurement Manager or Group Supply Chain Manager shall have a corresponding meaning. PWT/PO/PRC/ /02/18 8 of 23

9 Irregular Expenditure In relation to PetroSA, means an expenditure incurred by PetroSA in contravention of, or that is not in accordance with a requirement of this policy LoA Level of Authority Local In the case of PetroSA s South African operations, local means the Western Cape. In the case of subsidiaries and joint ventures operating outside South Africa, local refers to the country or province in which they operate Major capital project Means a project or a series of related packages involving the construction, alteration, extensions, refurbishment or the rehabilitation of infrastructure on a single site having an estimated budget of more than R100 million. Shutdown, Turnaround Maintenance Projects, Geophysical Data Acquisition and Seismic studies are specifically excluded from this definition Trading name PetroSA Means the parent company known as The Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd; registration number 1970/008130/ PetroSA Group Refers to The Petroleum Oil and Gas Corporation of South Africa s group of companies Procurement Committee Is the custodian of the procurement process and is responsible for facilitating the implementation thereof in accordance with this policy and for regularly reviewing such policy Services Services are the provision of labour only, labour and goods or labour and equipment combined and knowledge based on expertise SMMEs SMMEs are Small, Medium and Micro Enterprises Subsidiary Executive Manager Means any General Manager or an Executive Officer who reports directly to the Board of Directors of a subsidiary company of PetroSA. PWT/PO/PRC/ /02/18 9 of 23

10 5. REFERENCES Supplier A "supplier" is an existing or potential vendor, contractor or service provider. A supplier may be either a natural person, a legal entity or any other similar entity Supply Chain Management Unit Means the PetroSA group Procurement Department or equivalent, as the case may be. The term Group Supply Chain Department shall have a corresponding meaning. NO. DOC NO. TITLE 1 BEE/PO/000/001 PetroSA s BEE policy 2 FIN/FAC/PR/003 PetroSA s Levels of Authority Procedure 3 PWT/PR/PRC/002 PetroSA s Procurement Procedure 4 CEO/PO/SEC/001 PetroSA s Code of Ethics 5 Act 5 of 2000 The Preferential Procurement Policy Framework Act. 6 Act 2 of 2000 The Promotion of Access to Information Act 7 Obligatory since September 1996 Endorsed by Cabinet 1997 The National Industrial Participation Programme of the Department of Trade and Industry 8 Act 108 of 1996 Constitution of the Republic of South Africa 9 Act 1 of 1999 The Public Finance Management Act 10 Act 53 of 2003 The Broad Based Black Economic Empowerment Act 11 Act 3 of 2000 The Promotion of Administrative Justice Act PWT/PO/PRC/ /02/18 10 of 23

11 6. DELEGATION OF AUTHORITY FOR THE IMPLEMENTATION OF THE GROUP PROCUREMENT / SUPPLY CHAIN MANAGEMENT POLICY 6.1 Delegation The Board of Directors hereby delegates the following powers and duties (in writing) to the Group Chief Executive Officer of PetroSA To discharge the Supply Chain Management responsibilities in line with LoA in terms of: Section 217 of the Constitution of the Republic of South Africa; Section 51(1) (a) of the Public Finance Management Act; The Procurement / Supply Chain Management Policy of PetroSA; Any other relevant legislation; To maximize administrative and operational efficiency in the implementation of the Policy; To enforce reasonable and cost-effective measures for the prevention of fraud, corruption, favouritism and unfair and irregular practices in the implementation of the Policy. 6.2 Sub Delegations The Group Chief Executive Officer of PetroSA, hereby sub-delegates in writing, the following Supply Chain Management powers and duties to maximize administration and operational efficiency and provide adequate checks and balances in financial administration to: The Group Chief Financial Officer The Group Chief Financial Officer for the implementation of Supply Chain Management procedures and processes in terms of this Policy and applicable legislation; The Procurement Committee The Procurement Committee the power to procure goods and services for PetroSA and to arrange the hiring or letting of anything or the acquisition or granting of any right for or on behalf of PetroSA, and to dispose of movable PetroSA property The Head of Procurement The Head of the Procurement / Supply Chain Management Unit the power to implement and administer the procedures and processes in terms of this Policy. This includes inter alia the administration of quotations and tenders, drafting of tenders and procurement contracts, pre-qualification of Suppliers, negotiation of contracts with PWT/PO/PRC/ /02/18 11 of 23

12 Suppliers, conduction of due diligence audits on high risk Suppliers and Contractors, drafting and approval of work practices, drafting and approval of purchasing documents and letters of invitation and engagement, the power to procure goods and services within LoA, issuing of purchase orders, documentation and reporting requirements in terms of the procurement policies and procedures. 6.3 Procurement management systems The Company makes use of a committee and a procurement management system to ensure that the adjudication process for goods and services is open, fair and transparent. The system ensures that objectivity, value for money and cost effective principles are espoused in all phases of the adjudication process. The Company will make use of the following: Committee / management system Procurement Cross Functional Team Procurement Department Procurement Committee Function Composition Delegation of Authority (*) Rand Value Review of specifications, evaluation of quotations and tender bids, compilation of reports & making recommendations Review and approval of the quotation and tender recommendations and final review and approval of contracts awarded Review and approval of the quotation and tender recommendations and final review and approval of contracts awarded User department; Any assigned Procurement Official and/or external specialist advisors. Other functionaries (such as SHEQ, Legal, Finance, Risk, BEE etc) participate based on the complexity of the tender. Head of Procurement and or the Procurement/Supply Chain Officials Chaired by an Executive Manager (at Vice President Level). Membership includes The Head of Procurement/Supply Chain as well as at least 7 other Senior Officials representative of the divisional make up Makes recommendations to the Head of Procurement, Vice Presidents, GCEO, and Procurement Committee for the award of any contract. Any value R1 - R 5 million R R 150 million PWT/PO/PRC/ /02/18 12 of 23

13 Committee / Function Composition Delegation of management Authority (*) system Rand Value of PetroSA (as approved by the Executive Committee from Executive Committee Board of Directors Review and approval of the preferred quotation and tender recommendations and final review and approval of contracts awarded Review and approval of the preferred quotation and tender recommendations and final review and approval of contracts awarded time to time). PetroSA s Executive Committee chaired by the Group CEO. R R 300 million Board of Directors Above R 300 million up to the limit determined from time to time per significant materiality framework 7. SUPPLY CHAIN MANAGEMENT UNIT (SCM) / CORPORATE PROCUREMENT DEPARTMENT The SCM Unit or Corporate Procurement Department shall endeavour to increase return on capital employed and maximise BBBEE initiatives by employing the following purchasing strategies: 7.1 Global purchasing/contracting strategies In order to promote South African BBBEE Suppliers internationally, the Corporate Procurement Department shall establish framework contracts or conventions and make these available for use by Subsidiaries and Joint Ventures which are controlled directly or indirectly by PetroSA. 7.2 Local/country specific purchases/contracting These are managed by the local/subsidiary procurement departments in the case of subsidiaries and joint ventures controlled directly or indirectly by PetroSA. The Corporate Procurement Department shall assist subsidiaries and joint ventures with the identification of goods and services that should be procured locally/country specific. PWT/PO/PRC/ /02/18 13 of 23

14 8. THE PROCUREMENT PROCESS 8.1. The Supply Chain Management Unit / Corporate Procurement Department shall develop a comprehensive procurement procedure that will define, in detail, the procurement process for the PetroSA Group. The procurement procedure shall be binding to all employees and must be consistent with the provisions of this policy. 8.2 In the case of subsidiaries and joint ventures controlled by PetroSA, PetroSA s corporate procurement procedure shall apply, unless the Board of that subsidiary/joint venture approves a company specific or local procurement procedure, which procedure shall be substantively in line with this Policy. In all instances, any company specific or local procurement procedure shall be consistent with this policy as well as the corporate procurement procedure. 9. BROAD BASED BLACK ECONOMIC EMPOWERMENT (BBBEE) 9.1 BBBEE is a deliberate socio-economic process or intervention strategy designed to redress the imbalances of the past and to facilitate the participation of Black people in the economy. 9.2 PetroSA shall apply the provisions of the Broad Based Black Economic Empowerment Act and it s Codes of Good Practice in the procurement of goods and services. 9.3 PetroSA shall fulfil its corporate responsibilities regarding BBBEE through affirmative procurement, Enterprise / Supplier Development and other interventions by, inter alia: ensuring that preferential procurement is included in the performance contracts of all cost centre holders, where applicable; giving effect to the principles encompassed in the PetroSA policies; relating thereto in all its commercial activities; facilitating the development of BBBEE enterprises by making opportunities available through its own operations; assisting in the development of SMMEs and Local South African Enterprises; 10. PREFERENCE FOR SUPPLIERS 10.1 Order of preference PetroSA shall deal with suppliers in accordance with the BBBEE Codes of Good Practice. PWT/PO/PRC/ /02/18 14 of 23

15 10.2 Support initiatives PetroSA may, inter alia, assist BBBEE enterprises by setting tenders aside, either entirely or partially, for such enterprises (PetroSA's BBBEE policy refers) Joint ventures between BBBEE and non-bbbee organisations will be actively encouraged in order that the transfer of skills may be effected to BBBEE organisations, but only if such skill will be transferable i.e. the black partner must have the required level of education and/or aptitude PetroSA will from time to time determine the cut-off value in terms of percentage of acceptable tenders from BBBEE suppliers Permit price matching for set-aside portions of certain tenders Subcontracting and unbundling will also be utilised to assist BBBEE suppliers that lack capacity for the entire service required Arranging for expedited payment to BBBEE suppliers. This may include advance payments. In all instances the risk should be evaluated by the procurement department Any other reasonable assistance that could be provided which does not conflict and compromise PetroSA s overall objectives The assistance provided can only be given where BBBEE suppliers meet certain criteria which shall be spelt out in the corporate procurement procedures, e.g. well established BBBEE suppliers would not qualify for some of the assistance The following additional assistance will also be provided: - Assistance with tendering; Financial assistance, through the supplier/enterprise development initiatives or any other initiative aimed at providing assistance to Black Suppliers; Training, Skills and Technology transfer 11. SUPPLIER MANAGEMENT / QUALIFICATION OF SUPPLIERS 11.1 PetroSA shall maintain a comprehensive register of qualified suppliers. Qualification criteria shall, inter alia, include BBBEE ratings based on defined criteria Compliance with BBBEE constitutes a material condition of a PetroSA contract and as such implementation of BBBEE programmes and initiatives by suppliers shall be monitored and audited for compliance. PWT/PO/PRC/ /02/18 15 of 23

16 11.3 PetroSA may, at its discretion on approval by the Executive Committee, Procurement Committee or Head of Procurement remove a supplier from the register if the supplier:- has been proved on a balance of probabilities to be a front; gives false declarations in order to gain some advantage; does not fulfil his/her promises of transferring skills to the satisfaction of PetroSA; becomes insolvent; behaves unethically from a business perspective in its operations or to the detriment of PetroSA (obligatory removal)(petrosa's Code of Ethics policy refers); does not perform in respect of contracts awarded; Is found to have been practicing unfair labour practices; the supplier is an employee of PetroSA or a close relative (i.e. parent, spouse, lifelong partner and child) of a PetroSA employee, as defined in paragraph 17; Is blacklisted by an organ of the state; has unfairly influenced the process of award and have been found guilty of improper conduct, on a balance of probability; has been convicted for fraud or corruption during the past 5 years; has neglected, reneged on or failed to comply with any government, municipal or other public sector contract during the past five years; has been listed in the Register for Tender Defaulters in terms of section 29 of the Prevention and Combating of Corrupt Activities Act No 12 of 2004; has a poor safety culture and/or performance that does not meet PetroSA s requirements 11.4 The guilty Supplier and / or any of its members in the above cases will be blacklisted and PetroSA may refuse to register any new companies in which they are involved If a supplier is to be removed from the list such supplier shall be given written notice of the proposed removal together with reasons thereof. Such supplier may, at the sole discretion of PetroSA, be given an opportunity to justify its actions before such removal is effected. PWT/PO/PRC/ /02/18 16 of 23

17 11.6 Where an application for qualification is refused, the reasons for the refusal and the action required in order to qualify will be given to the supplier in writing PetroSA may from time to time publish advertisements inviting suppliers to register with PetroSA and thereby be included on the supplier database Should a supplier with whom orders have been placed employ subcontractors, that supplier shall comply with PetroSA's BBBEE guidelines in respect of the appointment of such sub-contractors who in turn must conform in like manner. 12. PROCUREMENT WITHOUT PRIOR TENDERING 12.1 The tendering process referred to in PetroSA's Procurement Procedure will be effected prior to the placement of an order for goods or services, except in the circumstances referred to in paragraph 12.4 below A mandate may be obtained from the Group Chief Executive Officer, Procurement Committee or Head of Procurement that permits negotiation with a supplier or suppliers without first calling for tenders (see 12.4 below) Negotiation may not be effected without tendering in order to: - avoid competition discriminate among suppliers, or give unwarranted assistance to particular suppliers 12.4 PetroSA may procure without tenders being invited with the consent of the Group Chief Executive Officer, Procurement Committee or the Head of Procurement, where: Procurement is for immovable property, proprietary items and specific expertise which, needs to be justified on a performance basis, as to why only the special goods or services are required; No suitable responses are received in respect of an advertisement or enquiry; An emergency purchase, as defined, arises.; Additional work is to be undertaken in respect of a particular contract, which work is within the objectives of the original enquiry and tender documents and the cost of which can be reasonably negotiated and reduced to writing. The total value of such negotiated contract extensions may not exceed 10% of the amount of the original PWT/PO/PRC/ /02/18 17 of 23

18 contract without the prior approval of the Group Chief Executive/Procurement Committee; Goods or services that are required are available on exceptionally favourable terms only in the very short term; Goods or services are procured from another organ of state, which was (a) secured by that other organ of state by means of a competitive bidding process applicable to that organ of state; and (b) there is no reason to believe that such contract was not validly procured; and (c) there are demonstrable discounts or benefits to do so; and (d) the other organ of state and the Supplier has consented to such procurement in writing; and (e) the goods or services required by the Company are similar to those on contract; Only one supplier manufactures or renders goods and services due to the unique nature of the requirements; Goods and services are procured from a Supplier that was identified through a Supplier Development Process, initiated by the National Treasury, Department of Trade and Industry, Department of Economic Development, Department of Small Business Development or any State Owned Company affiliated to State Owned Enterprises Procurement Forum (SOEPF) to support Governments strategy for industrialisation; PetroSA is required to comply with licensing conditions and/or other legal requirements Procurement is for advisory services for the Board and is not directly linked to business operations (such as evaluation of management, confidential advisory services, etc.). In this instance, the services shall be procured through the office of the Company Secretary supported by the Group Supply Chain Manager PetroSA needs to respond to an external bid invitation and is required to identify a technical partner/s essential to the success of the bid PetroSA decides to procure materially discounted or distressed goods and/or services (excluding items listed in paragraph 3.3) in order to take advantage of market conditions that enables or profits the business. In all instances, the final contract award shall be subject to the normal approved delegation of authority, listed in paragraph 6 above. 13. CAPITAL PROJECTS 13.1 PetroSA has adopted the Project Lifecycle Process ( PLP ), also referred to as the Gated Framework, as the standard methodology for the development PWT/PO/PRC/ /02/18 18 of 23

19 and execution / implementation of all projects. The various phases of the PLP are, Concept (ends with Gate 1); Phase 1(Pre-Feasibility (FEL-1)) (ends with Gate 2); Phase 2 (Feasibility (FEL-2)); Phase 3 (Front End Engineering Design (FEED) (FEL-3)) and Phase 4 (Execution) or simply referred to as Gate 1 to All major capital projects (as defined in paragraph ) must be subjected to an independent gateway review prior to acceptance. As a standard, PetroSA shall appoint a Managing Contractor or Managing Agent Contractor (i.e. an Engineering, Procurement and Construction Management ( EPCM ), Project Management Contractor ( PMC ), Engineering, Procurement & Construction ( EPC ) Contractor) to manage major capital projects, unless directed otherwise by the Procurement Committee For all major capital projects, a Managing Contractor or Managing Agent shall be appointed at Phase 3 (FEED). It is not necessary for the same Contractor to be utilized over the entire lifecycle of the PLP. However, the same Contractor may be utilized for Phase 3 (FEED) and Phase 4 (Execution) in order to minimise the risk to PetroSA. The selection of a Contractor must follow the normal procurement process. The appointment of the Contractor, who was appointed for several phases of the Project, will be reviewed at each gate and may be terminated at PetroSA s discretion. 14. COMMUNICATION WITH SUPPLIERS PetroSA shall communicate with suppliers on the following issues: 14.1 Notification The award of the contract shall be communicated to the successful tenderer in writing by an authorised PetroSA Procurement Official. No verbal or telephonic awards shall be valid. Unsuccessful tenderers shall be notified in writing by the relevant PetroSA Procurement official 14.2 Complaints If a supplier complains that PetroSA has not acted in accordance with its procurement and/or related policies the supplier must communicate the details of the complaint to the Head of the Procurement Department or the Group Chief Financial Officer, in writing. Should the complaint relate to the Chief Financial Officer the Complainant may refer the matter to the Group Chief Executive Officer. The complainant shall be advised in writing of the outcome of the complaint after it has been fully investigated. Should a complainant feel that his/her complaint is not being satisfactorily resolved, the complainant may report the issue to the PetroSA fraud prevention hotline. PWT/PO/PRC/ /02/18 19 of 23

20 15. TRANSPARENCY PetroSA s procurement and related policies shall be made available to suppliers and any other interested parties upon request. Other relevant information may also be made available if the business interests of PetroSA and/or other parties concerned will not be adversely affected thereby. 16. THE GROUP CHIEF EXECUTIVE OFFICER The Group Chief Executive Officer shall be accorded the power to enact and enforce decisions in accordance with the provisions as detailed in this Policy. The Group Chief Executive Officer may use the Executive Committee (EXCO) to assist him/her in this regard. 17. PROCUREMENT COMMITTEE The Procurement Committee shall be responsible for the rules and practices for the adjudication of tenders in respect of the award of contracts Authority The Committee is empowered in terms of the Procurement Policy To independently manage, regulate, and control the procurement of goods and services for PetroSA on behalf of the Group Chief Executive Officer and the Board Investigate, review, accept, reject and approve matters concerning the procurement of goods and services within its scope of responsibility Adjudicate tenders with a rand value of up to one hundred and fifty million rand (R ) To review and present all recommendations on any tender matters (including tenders with a rand value above one hundred and fifty million rand (R ) To delegate any of its authority to the Head of Procurement Proceedings of the Procurement Committee Details of Procurement Committee proceedings, decisions and relevant documentation and minutes will be regarded as strictly confidential and will be disclosed to non-members of that committee on a need-to-know basis only Should any members of the Procurement Committee be placed in a conflict of interest situation (PetroSA s Code of Conduct refers) they must excuse themselves from the relevant Procurement Committee proceedings and their alternates attend in their stead, at the discretion of the Chairperson. PWT/PO/PRC/ /02/18 20 of 23

21 All Procurement Committee meetings to be minuted. Minutes of meetings to be authorised at the following meeting There should be full and transparent disclosure made to the Group Chief Executive Officer and Executive Committee of details of Procurement Committee proceedings, decisions, relevant documentation and minutes Details of all Procurement Committee proceedings, decisions, relevant documentation and minutes to be reported to the Group Chief Executive Officer and Executive Committee in a timely manner Membership The Membership shall be representative and members shall be appointed by the Group Chief Executive Officer/Executive Committee from time-to-time Independence To provide for the independence of the Procurement Committee, the Committee shall be accountable to the Group Chief Executive Officer and/or the Executive Committee (EXCO) Decisions / Quorum Formal Meetings In principle, Committees shall endeavour to operate by consensus. All decisions of the Committee shall be on a majority basis of members present at the meeting Quorum Any seven members present, one of whom shall be an Executive Manager shall form a quorum. Any member may, with the approval of the Chairperson, appoint an alternate, not already on the Committee, to attend Committee meetings in his/her stead Round Robin The Committee may take decisions on a round robin basis. A decision taken by round robin is valid if all (100%) members or their nominees approve. 18. ETHICAL STANDARDS / CONFLICT OF INTEREST The purpose of this ethical code of conduct is to ensure that all business transactions take place in an environment of honesty, integrity, fair competition and respect for South African Laws. This code outlines PetroSA s expectations from all PWT/PO/PRC/ /02/18 21 of 23

22 its employees and suppliers who participate, directly or indirectly, in procurement activities Suppliers Supplier s interest in relation to PetroSA must be included with the quotation/tender documents. A quotation/tender shall be excluded from further evaluation if a supplier fails to declare any interest or potential conflict of interest PetroSA personnel (a) All employees have a duty to promote the reputation and business of PetroSA and not to make any personal gain at the expense of or as a result of their employment by PetroSA. Decisions and functions carried out in the course and scope of employment must be directed at what is in the best interests of the PetroSA. Personal interests must not conflict with those of PetroSA. (b) An employee of PetroSA (including long term contract workers) and their immediate family (i.e. spouse, life long partners, parents and children) may not participate in or benefit directly or indirectly (i.e. through shareholding, profit sharing etc) from tenders / contracts with PetroSA. This provision specifically excludes shareholding and/or profit sharing which is immaterial (as defined in the Companies Act) in a public and/or listed company. (c) When a conflict of interest arise after a contract is awarded or in the case of a sole source supplier, the Procurement Committee shall deliberate the merits of each case and recommend to the Executive Committee and/or Board for a final decision. (d) Where a possible conflict of interest (other than the above) arises, the interest must be declared in writing to the Procurement Committee as soon as it arises and the employee must recuse him/herself from participating in any way in related business dealings. Written disclosure is effected by the employee Non-Executive Board Members of PetroSA In respect of non-executive board members, the provisions of the companies act in respect of declaration of interest shall be strictly observed. 19. IMPLICATIONS FOR NON ADHERENCE TO PROCUREMENT POLICIES & PROCEDURES Abuse and failure to comply with the provisions of this policy and its procedures is not acceptable and PetroSA shall take disciplinary action against any person found to have violated and/or abused this policy or any of its procedures. PWT/PO/PRC/ /02/18 22 of 23

23 19.2. Employees found guilty of conniving with suppliers or contravening PetroSA s policy and its related procedures shall be subject to PetroSA s Disciplinary Code and Procedure Suppliers and their directors who have been found guilty of abusing this policy and its procedures shall be barred / suspended from doing business with PetroSA PetroSA reserves the right to criminally prosecute any person found to have violated or abused this policy and its procedures. To this extent the South African Law Enforcement agencies shall be informed and the case handed over to them for processing. 20. RECORDS Title Location Retention Period Purchasing Documents SAP System 10 years 21. UPDATING OF POLICY The policy document will be reviewed every 3 years by the Group Supply Chain Management Department. PWT/PO/PRC/ /02/18 23 of 23