Serbia: World Bank claim Tamnava open mine pit water pumping financed project is clean, story revealed

27. January 2015. / AppSerbia

World Bank financed projects such as draining of open mine pit Tamnava – “West field”, prescribes mandatory tender announcement. Thus Vesna Kostic, advisor for public relations of this international financial institution, commented on the reasons why Power utility EPS had to announce a tender for the selection of the company that will pump out water from the Kolubara which poured in Tamnava “West field” during last year’s floods. Why did BIRN omit the role of the World Bank in its analysis of transferring water from the open pit mine in the Kolubara?

Prime Minister Aleksandar Vucic accused the Balkan Investigative Reporting Network (BIRN) “to lie” in the text “Pumping mine and budget out” written by BIRN journalist, Aleksandar Djordjevic and published in “Vreme” from Belgrade. BIRN journalist accused EPS that did not chose contractor in direct agreement and under urgent procedure instead on the tender. Direct contract is otherwise, as a rule, always more expensive than the tender procedure. “Energotehnika – Juzna Backa” awarded the contract on the tender and BIRN claims that the company had no experience in such matters, as “further increased the cost of the entire job”.

In search of facts about how this work was contracted, “Politika” has asked from the World Bank to explain its role in this work. This organization, in fact, financed the entire job and controlled tender procedures.
– EPS conducted the tender in accordance with local regulations – said Vesna Kostic. – The World Bank experts thoroughly reviewed the documentation, process and all decisions (what is technically called due diligence, due attention) more comprehensively than any previous project funded in Serbia. We found that everything was done in accordance with applicable regulations and practices.
BIRN journalists, however, argued that by Serbian law the tender should not have been announced in the event of natural disasters, and in the text published in “Vreme”, there was not even a mention that the procedure was dictated by the World Bank. This is unusual, since BIRN journalist knew that the World Bank was financier and that it had its own rules in such cases. It is quite unusual, however, that such important facts were not mentioned, since the Code of Serbian Journalists order journalists not to conceal important facts. (In the chapter about the journalistic attention, the Code of Serbian Journalists writes that “the failure to disclose facts that might significantly affect public opinion about an event is equivalent to their deliberate distortion or telling lies”.)

BIRN editor, Slobodan Georgiev, said for “Politika” that World Bank neither led process, nor was it its role.
– Our focus was on the public and citizens interest: Why there was delay in the Tamnava drying when it is known that the state loses millions of dollars daily because of this, not the World Bank. The point is that the work was assigned to the company without reference, that the tender rules were violated by this, that the company hired subcontractors that were not listed in the initial offer and that some of these contractors were participants in the tender by which the law was violated. Finally, the job has not been done, the open pit mine was not drained, therefore Serbia spends tens MEUR on electricity and coal import – explains Georgiev.

Vesna Kostic from the World Bank, on the other hand, says she is very unpleasantly surprised that someone who presents itself as an “investigative reporter” did not explain the role of the World Bank, although he was familiar with it.
– The Serbian press wrote on this job during the whole summer, and the data can be found on the EPS website. And if the “investigative journalist” did not deliberately publish these facts, then it looks like it did not matter – says Kostic.
On the other hand, Georgiev recalls that Serbia is an independent country and we believe that there is a government by RS laws here, and not according to the procedures of international financial institutions.

Nemanja Nenadic, Program Director of “Transparentnost Srbija” says that it might be controversial if the tender winner “Energotehnika – Juzna Backa”, after the contract signing, instead of Romanian companies “Nash”, introduced a new subcontractor. In this case it is the Dutch “Van Hek”, which was one of the bidders in the tender and whose bid was three times more expensive.
– According to Article 80 of the Law on Public Procurement it is possible, but only if the precise requirements are met. The regulation says that the supplier may hire another company, if permanent payment disability occurs on the subcontractor’s side. That company must fulfill all the requirements in the tender defined for the subcontractor, and it must obtain the prior consent of the service contracting authority, such EPS and PE “Kolubara” are in this case. I do not know whether the second subcontractor fulfilled these conditions – says Nenadic.

Nemanja Nenadic thinks that in this case the work could not be started without conducting public procurement. Although Article 7 of the Law on Public Procurement provides that public procurement should not be implemented in the event of natural disasters, nevertheless it provides that it is possible in order to ensure basic living conditions.
-If there had been no electricity then during the days, according to the law, EPS could have done it without public procurement. It is obvious that they decided to import electricity and that citizens’ basic living conditions are not threatened – says Nenadic.

He asks why domestic firms do not report on the tenders without the help of companies from abroad. It seems that foreign companies have the impression that their chances of winning the tender are greater if they are in a consortium with local players.

Interestingly, for example, that the state is one of the largest customer of the company “Energotehnika – Juzna Backa”. So that the company received a contract worth 5.7 MEUR to build a new power plant of Mining and Smelting Company, and that the Ministry of Mines, Energy and Environment signed a contract worth 1.3 MEUR which relates to the construction of district heating systems for New Knjazevac, Leskovac, Negotin and Novi Pazar. Also, Energotehnika broke the deadline for the work completion on the mine pumping out, but in the World Bank say they had good reasons for it.

EPS: We choose the best offer

Under the terms of the tender, the offer of “Energotehnika – Juzna Backa” was the most favorable; this company offered the lowest price and the shortest period of the services performance, according to EPS.
– At the time of the procurement process initiation, the credit arrangement with the World Bank was the only subject of discussion; the procurement process was conducted in accordance with the Law on Public Procurement. The World Bank did not have any objections to such manner of the procurement conducting, but as a potential creditor it had insight into each stage of the procurement implementation – say in EPS.

Conditions of the World Bank, except for the timely reporting on the entire procurement procedure, are primarily related to the competition achievement in the procurement process and consistent regulations compliance related to the environmental protection. They insisted on the environmental plans preparation, they added.
– Public Procurement Law requires that a bidder in the public procurement procedure must prove, among other things, that he and his legal representative has not been convicted for any of the offenses as a member of an organized criminal group, that he has not been sentenced for crimes against the economy, crimes against the environment, the offense of receiving or giving bribes, or an fraud act. The law stipulates that a person registered in the Register of bidders who is leaded by APR, is not required when submitting a bid to prove compliance with the mandatory requirements, and therefore the condition that the bidder and his legal representative convictions. Bidder of “Energotehnika Juzna Backa” is offered submitted evidence that is registered in the Register of bidders, and from the standpoint of the Law on Public Procurement, the offer is acceptable – say in EPS.

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