THE EAC does not seem unduly ruffled by a European Commission decision to refer Cyprus to the European Court of Justice over the award of a public contract for Vasilikos Power Station.
The move concerns the tendering procedure launched by the Electricity Authority of Cyprus (EAC) for the award of the public contract for the design, supply and construction of the 4th Unit of the Vasilikos Power Station.
More specifically, the Commission found that the provisions of the invitation to tender were not applied in a uniform, firstly by rejecting an offer on the basis of criteria which were not clearly mentioned in the call for tenders, and secondly by accepting a candidate who did not respect the requirements on experience.
Also, the Commission determined that the complainant was not provided in due time with the necessary information concerning the reasons for his rejection so that the latter could have formed an effective procedural defence.
By acting in this way, the Commission said, Cyprus has infringed its obligations under Articles 4(2) and 33(1) of Directive 93/38/EEC coordinating the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors, as well as Article 1(1) of Directive 92/13/EEC as interpreted by the Court of Justice.
The case dates back to early 2006, when reports surfaced that an Italian state-controlled corporation complained it had been wrongly disqualified from the tender.
In the course of two previous tenders, Ansaldo Energia, the company in question, was deemed to meet all the EAC’s technical demands. But during the third tender (the first two were cancelled) consultants and EAC technicians decided the Italian firm was not up to scratch.
The apparent reason for excluding Ansaldo was that its turbines were deemed unstable during power fluctuations, and that this could jeopardise the entire facility at Vasilikos, outside Limassol.
The Italian company says it was informed of these new requirements with just weeks to go to the tender’s expiry date. Moreover, it claims the contention that its turbines are below par was based on a hypothetical scenario, which was not included in the tender documents.
By default, the lucrative contract went to a consortium comprising J&P, Itochu and BH&E.
The EAC insists that it has spelled out these requirements in the tender documents, suggesting the glitch lies in differences in interpretation.
The fourth combined-cycle unit at Vasilikos is expected to churn out around 130-150 megawatts. The total amount of power currently handled by the EAC grid is 988 megawatts, but studies have shown that electricity demand could reach 1,000 megawatts by 2008.
The fourth unit is combined-cycle, meaning it can run on both natural gas and diesel. It has been tested but is not yet fully operational.
But the EAC is not particularly alarmed by the European Commission’s decision. Its chairman Harris Thrasou yesterday told the Mail that, even if the European Court of Justice (ECJ) were to find against it, the ensuing penalties would be far from crushing.
According to Thrasou, it would be extremely difficult for the Italian complainant to demonstrate in court loss of potential profit due to its elimination from the tender.
At the most, he opined, it might be awarded damages for the cost of preparing the tender.
Either way, he said, there was no possibility of the contract being cancelled.
“We feel the EAC did everything by the book,” Thrasou said.
