Construction, EU – Baltic States, Latvia, Lithuania, Railways, Transport

International Internet Magazine. Baltic States news & analytics Wednesday, 27.05.2020, 04:52

Renge rebuilding: Lithuania's PPS finds no violations, commission still looking for threat

BC, Vilnius, 12.03.2019.Print version
As the Lithuanian government commission checking deals of strategic companies had doubts over the transparency of the contractor tender called by Lithuania's state-run railway company Lietuvos Gelezinkeliai (Lithuanian Railways) for rebuilding the 19-kilometer railway section between Mazeikiai and Renge, in Latvia, as well as its winning company's shareholder's alleged ties with Russia, Lithuania's Public Procurement Service has stated that the tender was transparent and it will not carry out its in-depth assessment, informed LETA/BNS.

According to information available to LETA/BNS,the tender's winner, railway construction and repair company Vitras-S, part of Estonia's railway services and investment group Skinest Rail, might have come into agreement with LDZ Infrastruktura, a subsidiary of the Latvian Railways (Latvijas Dzelzcels), which came in second in the tender, on participation in the tender. Moreover, there are also doubts over the ties of Vitras-S board members who are former high-ranking employees of Lietuvos Gelezinkeliai.

In February, the commission halted the deal's assessment, with unofficial sources telling LETA/BNS that the deal reached deadlock.

Lead by Deputy Government Chancellor Alminas Masiulis, the commission asked in early February for conclusions from the PPS, Competition Council, Special Investigation Service, Ministry of Transport and Lietuvos Gelezinkeliai.

PPS Deputy Director Jovita Petkuviene told that her service would not carry out an in-depth assessment of the contractor tender as it sees no violations in its conditions.

"We have no suspicions of possible violations, including some competition restriction among the qualification requirement or through the evaluation criteria. Four providers took part, which allows us to conclude that competition was ensured. Another thing is that we have not received any complaints from the market over the procurement conditions. We see no basis to launch the assessment," Petkuviene told.

In her words, if the purchasing organization sees during the proposal assessment stage that several providers coordinated their offers, acted unfairly, and it has substantial evidence, then the public procurement law allows removing such providers from the tender. She underlined that removed providers can turn to court but need serious evidence.

Lietuvos Gelezinkeliai told the company has no sufficient evidence on some providers coming into banned agreements distorting competition.

Vitras-S submitted the best offer of 9.35 mln euros (excluding VAT). LDZ Infrastruktura's offer was higher by 200,000 euros, standing at 9.55 mln euros. Gelezinkeliu Tiesimo Centras, a subsidiary of Lietuvos Gelezinkeliai, comes in third with 10.47 mln euros.

According to information available to LETA/BNS, Vitras-S and LDZ Infrastruktura might have come into agreement on handing over part of work to the other company, depending on which of the two won the tender.

Speaking with LETA/BNS, Vitras-S board chairman Vaidotas Balynas, former deputy director of Lietuvos Gelezinkeliai's procurement center, rejected any suspicions on alleged agreements with the Latvians.

"We have heard that conspiracy theory. Lietuvos Gelezinkeliai has told the commission that it's a conspiracy with the Latvians: if Vitras-S wins, then we will rebuild it with the Latvians. Let's not be ridiculous. It's a subsidiary of the Latvian Railways, having substantial capacity to do everything on its own," Balynas told.

In his words, the three companies want to carry out the same work, rebuilding the railway's upper construction, including the rail tracts and sleepers. Therefore, there's no point for them to hire a subcontractor. But, he added, Vitras-S can offer better prices as the company is smaller and more effective than Gelezinkeliu Tiesimo Centras.

On the other hand, according to Balynas, both Gelezinkeliu Tiesimo Centras and LDZ Infrastruktura have the necessary equipment for such work. Meanwhile, Vitras-S is leasing such equipment.

Lietuvos Gelezinkeliai told Vitras-S and the Latvian railway company might be each other's subcontractors.

"Yes, it's not forbidden. Under the procurement and contract conditions, there are no restrictions on involving subcontractors, excluding the fact that subcontractors need to meet certain qualification requirements related to the work they do," the company told.

Meanwhile, the Latvian Railways refused to comment on the tender, including its participant LDZ Infrastruktura's and the procedures involved, when approached by LETA/BNS.

The Lithuanian commission and the Lithuanian government said last year that Skinest Rail's owner Oleg Ossinovski had links with foreign government bodies or natural or legal persons posing a threat to national security. And after such a conclusion, Lietuvos Gelezinkeliai refused to sign a contract, valued at around 3 million euros, with the tender's winner Skinest Baltija.

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