Government defines the List of international price agencies whose Indicators may be used in public procurement contracts

The Cabinet of Ministers of Ukraine has adopted a resolution defining the list of international price agencies whose indicators procuring entities may use in procurement. The list includes S&P Global Energy/S&P Global Inc. (Platts), Argus Media group (Argus) and Independent Commodity Intelligence Services (ICIS).

The resolution was drafted to implement amendments to the Law of Ukraine "On Public Procurement". Under these amendments, the essential terms of a procurement contract cannot be changed after signing until the obligations are fully performed. The exception is a change in the indicators of international price agencies.

Previously, the Law explicitly allowed the use of Platts and Argus indicators to change the contract price, provided the contract sets out a procedure for such a change. These indicators are used in contracts for the procurement of fuel, gas and electricity with formula-based pricing.

Under such pricing, the price of goods is determined by a formula fixed in the contract and linked to exchange quotations. For example, prices may depend on the cost of gas or fuels and lubricants on European and Ukrainian exchanges, taking into account the hryvnia exchange rate. This approach is effective when the market is volatile: if the global market rises by 5%, the contract price is automatically recalculated under the formula without the risk of violating the Law.

The agencies defined by the resolution:

• S&P Global Energy/S&P Global Inc. (Platts) – a leading provider of information and benchmark prices for global commodity and energy markets;

• Argus Media group (Argus) – an international independent agency that publishes price quotations and analytics on commodity markets;

• Independent Commodity Intelligence Services (ICIS) – an independent analytical agency specializing in benchmark pricing for the energy and petrochemical industries.

The decision will allow procuring entities to manage contracts for goods whose prices are prone to sharp fluctuations, in compliance with paragraph 7 of part five of Article 41 of the Law.