2020.05.25 16:06

Lithuanian Railways under fire for €363m deal with ‘dubious company’

BNS 2020.05.25 16:06

An audit into the 363-million-euro Lithuania's railway electrification tender won by a Spanish consortium Elecnor has come under criticism from Lithuanian Transport Minister Jaroslav Narkevič. 

The summary of an internal audit published on Monday said the actions of the state-owned Lietuvos Geležinkeliai (Lithuanian Railways) have led to delays and an increase in costs, while the reputation of the Spanish consortium is also raising doubts.

Read more: Prosecutors to look into Lithuania’s €363m railway deal

Transport Minister Jaroslav Narkevič has called for the report to be made public.

"We informed Lietuvos Geležinkeliai last Friday that due to major public interest in this internal audit, we plan to make [it] public,” Narkevič said in a statement. “We asked the company to indicate whether there's confidential information in the report and also to provide [its] arguments and motives.”

Prime Minister Saulius Skvernelis has also recently called for the report to be made public.

Mantas Dubauskas, spokesman for Lithuanian Railways, told BNS the company has never objected to the publication of the audit report, adding that the ministry marked it as confidential at its own initiative.

'Dubious reputation'

The report also questions the tender’s winner, Spain’s Elecnor due to its “dubious reputation,” as it’s “currently under a pre-trial investigation in Spain".

Last year, Spain's competition watchdog hit Elecnor with a 20.35 million euro fine for a cartel agreement.

Other well-known companies, including Siemens (16.8 million euros), Elecnor's partner Inabensa (11.56 million euros) and France's Alstom (8.83 million euros) also faced financial sanctions in the same ruling.

The watchdog's decision has not come into force yet, however, as the companies later appealed the ruling.

Cobra, who came second in the tender, was also fined as part of the investigation, and received the largest fine of 27.2 million euros, according to media reports.

Lithuania's Transport Ministry says there should be a better oversight during the design stage of the electrification project, and in case of the supplier’s bankruptcy, the work already completed should be bought out.

Contractual conditions prevented more suppliers from competing

The audit also criticises Lithuanian Railways for the price of the electrification project, as Cobra's offer was around 40 million euro lower.

And although Lithuanian Railways said Elecnor presented an advantage over the whole exploitation period, the criteria was not mentioned in the procurement documents.

The audit summary also states that "the increased size of the procurement object and very high qualification requirements for suppliers prevented both foreign and Lithuanian companies from taking part in the tender".

The document states that out of 57 interested suppliers that accepted invitations to take part in the procurement, only seven later submitted their applications. Initial proposals were received from four companies and only two later presented updated and final offers.

The ministry also warned that the project is running behind schedule, which is increasing the risk of failing to use EU funds.

Read more: Lithuanian Railways sign €363m electrification contract with Spain's Elecnor