Finance Ministry wants another look at big train purchase

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Before the government votes on allotting financing for the procurement of new electric trains, the Corruption Prevention and Combating Bureau must issue its opinion on that risks the deal may carry, believes the Finance Ministry, the LETA newswire reported July 15.

The Finance Ministry has prepared its opinion about the Transport Ministry's report on the new electric train project and draft decree on the Transport Ministry's long-term obligations regarding the project, which will now be reviewed by the government. According to the current plan, the government will permit the Transport Ministry to secure funding in 2019-2024 in the amount of up to EUR 255,889 to sign contract with the Czech company Skoda Vagonka.

On May 21, Finance Minister Janis Reirs pointed out that Skoda was one of the entities being investigated over the Riga City Council's procurement tenders. If the purchase of new electric trains is co-financed by the European Union, Reirs is not ruling out that, taking into consideration risks to Skoda's reputation, Latvia could have to repay the EU financing, said the minister.

The Finance Ministry therefore suggests that representatives from the Corruption Prevention Bureau also vet the pending deal with Skoda and the risks it may carry.

The Finance Ministry also points out that the schedule for the purchase of electric trains has changed substantially, which will have a negative impact on the general government budget balance in 2022 and 2023, unless the Transport Ministry proposes compensatory measures.

As reported, the Public Procurement Monitoring Bureau has turned down a complaint filed by Spanish company Patentes Talgo S.L. (Talgo) about procurement of new electric trains by Pasazieru Vilciens, permitting the Latvian company to sign contract with Skoda.

Taking into account the Procurement Monitoring Bureau's decision, Pasazieru Vilciens at the end of May revised bids submitted by prospective electric train suppliers, and selected Skoda's offer as the winning bid.

Four companies offered to supply 32 new electric trains for Pasazieru Vilciens - Talgo, Polish subsidiary of the Swiss company Stadler, Spain's Construcciones y Auxiliar de Ferrocarriles (CAF), and Skoda.

Pasazieru Vilciens initially picked Talgo's bid, which offered to provide the new trains for EUR 225.303 million. However, after Skoda Vagonka and CAF filed protests against the negotiations procedure, the Procurement Monitoring Bureau banned Pasazieru Vilciens to sign contract with Talgo. After a repeat review of the bids, Pasazieru Vilciens decided to sign contract with Skoda, which was asking EUR 241.888 million for the new trains.

Pasazieru Vilciens reported that the tender’s original winner, Spanish company Talgo, had offered to supply the trains for a lower price but that the maintenance costs offered by Skoda for the trains’ 35-year lifecycle were lower, which meant lower overall costs.

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