State spends about 30 million lev spends to fuel cars transporting officials from, dozens of their subordinate structures, commissions and other bodies. And when it comes to the allocation of so much money there are always big interests involved, accompanied by doubts about unfair competition and favouring certain suppliers over others. In any case, seven months before expiry of the framework contracts with Petrol and Lukoil that were selected to provide gasoline and diesel to state institutions in the spring of 2011, Finance Minister Simeon Dyankov announced a new tender. The aim is select distributors not only for 2013 but also for 2014. Such procedures are time consuming, and having in minds that there is general elections next year, the deputy minister seems obliged to make sure state money goes to the right place.
The previous competition for fuel deliveries has become a practical example of how to carry out public procurement with preliminary known winner. Back then, after a signal from the BANKER it turned out that the tender commission had violated a lot of regulations to appoint Petrol as winner of a 60 million lev contract.
Offers for the present tender can be submitted by 28 June and all of them will be opened the next day. Thus, if there are no appeals, and all statutory time limits are observed, the new winners should be clear in the autumn. Their contracts, however, will come into force on 1 January 2013 when current contracts with Lukoil and Petrol expire.
In practice, the new auction bears almost no differences with the previous one, so the intrigue about who will supply fuel for civil servants is not that great. The preliminary requirements indicate that the main contenders will be the same again. Of course, OMV, Shell or Rompetrol could try again but judging by past practice, they are unlikely to win. For other players there is almost no chance because the applicant must have an overall turnover or core income not less than 50 million lev, VAT excluded, for the past three years (2009, 2010 and 2011) as well as turnover or income from transactions similar to the subject of the tender contract, not less than 15 million lev, VAT excluded. Potential candidates must have at least five completed contracts for supply of fuel through cards of cashless payment and have filling stations in 23 of district towns in Bulgaria. However, the exact number stations will not be important for the rating of participants as it was in the first auction, which largely equalizes their positions. They will compete only on the basis of the proposed discount from current daily prices.
The only major innovation is that apart from fuels the selected firms will carry out also other car care products and technical lubricants. This became possible after at the end of April the Council of Ministers extended the scope of the Central Authority for Public Procurement. The reasons for the change were that this way the state expects to improve performance and interaction with the ministries. In reality, it comes to disposing of small players in the race for state money at the expense of larger ones. Usually these orders are of a relatively small amount (up to 200 thousand levs), since they are placed on a regular basis and have not aroused interest among the big players on the market. But the new rules will open this segment very easily for them.
Despite the many shortcomings and the lack of any competition (author’s note – due to the nature of the framework agreements contracts may be signed with all approved applicants) the tender will give some preference to agencies in the purchase of fuels. Another issue is whether they will really use them. A check of the BANKER found that many institutions now quite easily bypass the Framework Agreement and purchase fuels directly through the Sofia Commodity Exchange. This not only renders the implementation of centralized tenders useless, but also makes the state lose from not taking advantage of the achieved price reductions for petrol and diesel, which ultimately is paid by taxpayers.
The BANKER
