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2019.08.13 14:00

Lithuanian-Polish gas connector bidder removed due national security risks

Roma Pakėnienė, BNS2019.08.13 14:00

The Lithuanian government removed a Belarusian firm from the tender process for a Gas Interconnector Poland-Lithuania (GIPL) construction contract due to its business ties with Russian companies and contacts with individuals deemed as posing risks, according to documents seen by BNS. 

A consortium of Kaunas-based KRS and Belarus' pipeline construction company Beltruboprovodstroy submitted the lowest price offer, at around 74.9 million euros, for the contract, but was removed from the bidding process due to national security concerns.

Lithuania’s State Security Department (VSD) has said on numerous occasions that Russian intelligence bodies have a special interest in Lithuania's strategic projects and uses other countries' resources to gather information abroad.

According to information available to BNS, the government ruled in early July that a deal with the consortium would not be in line with national security interests.

The Cabinet made the decision based on an opinion issued on June 20 by a special governmental commission vetting deals by strategic companies.

Links with Gazprom

The government notes that GIPL builders would be given access to strategic infrastructure, including the pipeline, taps, the Jauniūnai gas compressor station and the Santaka cross-border metering station equipment, and a gas transmission pipeline remote control information system.

The government says in its resolution, which was not made public, the Belarusian firm has links with foreign government bodies or natural or legal persons of these states that pose a threat to national security.

According to the commission's opinion, seen by BNS, Beltruboprovodstroy's main customers are Russian and Belarusian enterprises, including Gazprom companies from which it derives the most revenue.

VSD says in its report to the commission that Beltruboprovodstroy has business links with Gazprom, Stroytransgaz and Rosneftegazstroy, and has accreditations not only from Gazprom, but also from Transneft and Rosneft. The Belarusian company is involved in Russia's strategic energy projects, such as the Yamal–Europe gas pipeline.

According to the intelligence agency, this increases the risk of the reallocation of the company's resources and of delays in the implementation of the project in Lithuania.

Moreover, the head of the Belarusian company's representative office in Lithuania maintains contacts with people who may cause damage to the implementation of the project. These individuals are not named in the document.

Lithuania drawing up reply to Belarus' diplomatic note

In late July, Belarus' Foreign Ministry handed a protest note to Lithuania's chargé d'affaires in Minsk over what it described as "interference in a commercial transaction". Neither side gave more details.

Lithuania's Foreign Ministry has told BNS that it is drawing up its reply to the neighboring country's diplomatic note.

"We would like to underline that transactions with foreign companies that are vetted under the law on the protection of objects of importance to ensuring national security are subject to the same requirements as transactions with Lithuanian companies," the ministry told BNS.

Following the rejection of KRS' offer, the gas transmission system operator Amber Grid named Lithuania's gas pipeline and engineering network construction company Alvora, the runner-up bidder, as the winner of the contract.

However, Poland's Rafako, which bid jointly with Lithuania's MT Group, said it believed that Alvora might may pose a threat to national security.

Spain's infrastructure, renewable energy and technology group Elecnor, yet another bidder, is not happy with the results of the bidding process either, because its final offer was rejected as not meeting the requirements. In May, the Spanish group submitted a claim to Amber Grid, but the latter did not satisfy it.

"In this case, all of Amber Grid's decisions and actions point to the company's unwillingness to ensure fair competition; its actions are very formal, clearly aimed at rejecting Elecnor's final bid, which is unacceptable," Elecnor said in a document, a copy of which was seen by BNS.

Elecnor maintains that its final offer did not differ substantially from the initial one which was recognized as eligible. The Spanish company considered taking legal action, but decided not to hinder the implementation of the project of national importance, the company's representatives have confirmed to BNS.

Alvora, which bid jointly with Šiaulių Dujotiekio Statyba (Šiauliai Gas Pipeline Construction), was named the winner after being cleared by the special governmental commission in late July.

Government Vice-Chancellor Alminas Mačiulis, who heads of the commission, has told BNS that the Amber Grid was allowed to sign the contract, worth 79.85 million euros excluding VAT and 96.6 million euros including VAT, with Alvora, which operates in the Belarusian market, but was issued "with very clear recommendations on potential risk management measures".

Amber Grid's shareholders are yet to give the go-ahead on August 28 before the deal can be signed. Construction work is expected to begin in the fall.

Lithuania's HSC Baltic and Greece's J&P-Avax also bid for the contract.

The Lithuanian part of the project calls for building a 165-kilometer gas transmission pipeline from the Jauniūnai compressor station in the district of Širvinta to the Holowczyce gas compressor station in Poland.

The GIPL project is estimated to cost 500 million euros in total, including up to 136 million euros in Lithuania.