Filenews 9 August 2023
Citing the "public interest", Cyprus is on the verge of losing €10 million in funding from the EU, while delays already recorded in the award of a tender for the preparation of the arrival of natural gas, lost between €21-€35 million.
This is argued by the Natural Gas Public Company (DEFA) which, in part, presented its positions before the Tender Review Authority expressing disagreement with the issuance of "interim measures", which postpone the whole process by a few months. It is estimated that while DEFA would sign the relevant contract at the end of this month (with a company that it considered to meet the terms of the tender), following a decision of the Reviewing Authority, the whole process is postponed until October.
DEFA observes that approximately €7 million. of the €23 million that Cyprus pays monthly (as a fine for pollutants), relate to the non-arrival of natural gas, so if the delay is limited to three months it results in an amount of €21 million while if it is calculated in five months, then it jumps to €35 million. To these, we can add the sponsorship of €10 million. which are very likely to be lost , based on a letter sent only recently to DEFA by the European Commission.
Based on the above, DEFA, in presenting its positions before the Tender Review Authority, invoked the public interest, but the Authority measured differently what constitutes public interest and rejected DEFA's positions, issuing the "interim measures", which de facto postpone the signing of the contract until the Reviewing Authority decides around October.
DEFA had argued before the Review Committee that when the tender was initially announced, the procedure was cancelled because the company that now appealed to the Reviewing Authority and was the only bidder, made a mistake with the guarantee it submitted, which led (according to DEFA) to a five-month delay, which had to be taken into account, since it was not responsible for this delay. The tender was cancelled after consultation with the Authority involved (in the tenders) and on the basis of the opinion of DEFA's legal advisors.
More specifically, DEFA's representative before the Reviewing Authority stated the following:
>> There is a serious possibility of losing the €10 million grant. from the European Energy Programme for Recovery, since a second extension has already been requested.
>> Every month of delay in the supply of natural gas to the Electricity Authority of Cyprus leads to the cost of emission allowances exceeding €23 million as well as delays in the timetables set by the Regulatory Authority for Energy to DEFA, while the rest of the licensed power producers suffer damage from the non-completion of the transmission network.
>> The tender was published with strict timetables initially in September 2022 and was cancelled as the sole bidder (which was the company that appealed to the Tender Review Authority) did not comply with the condition concerning the duration of the letter of guarantee. The competition was relaunched in January 2023 with minimum deadlines.
It is, the representative of DEFA concluded, a classic case of the primacy of the public interest, which will be harmed to a much greater extent.
For its part, the company argued that "there is nothing urgent, no risk of losing money or any reason to cause damage to the public interest." He further stated that "the project has a duration of 7 years at a cost of €15 million. It is necessary to ensure the legality of the contested decision and, by extension, the public interest, since the duration, cost and seriousness of the project, in case of a wrong decision, will call into question the entire energy policy and interests of Cyprus.
There is, they said, no adverse impact on the public interest of the adoption of the interim measures. On the contrary, their issuance ensures the correctness of the choice of any bidder.
Regarding the position developed that the remaining licensed power producers are suffering damage, the company that requested the measures indicated that this is not in the public interest.
The company also stated that 9 months have passed since the first tender notice and the Contracting Authority itself through its actions has contributed to the delay of the project, which refutes its claims about the urgency of signing the contract.
The Authority and the bogeyman of compensation payments
The Reviewing Authority claims in its decision that it has carefully studied the positions of the two parties, as they have been developed and indicates that the procedures before it have been established in order to harmonize the Republic of Cyprus with European directives and in particular Directive 2007/66/EC of the European Parliament of 11/12/2007. It also invokes legality both for the purpose of minimizing the risk of compensation payments in case the reasons raised by the applicants in the appeal are well-founded and for strengthening the citizen's trust in the administration.
"As we have repeatedly stressed," the decision adds, "when announcing a tender, contracting authorities must not overlook the possibility of recourse to the Tender Review Authority so that their timetables also take into account the very short time needed to complete the appeal."
It is then stated that "there is no doubt that this tender concerns the implementation of an important project for the economy and the environment, with a high budgeted cost". However, this alone cannot lead to the refusal to grant interim measures, since public tenders should be conducted in accordance with the rules governing them, it added.
The judgment also reads: "In the present case, having taken into account all that has been put before us, we consider that there are no grounds for refusing interim measures. It does not follow from the positions of the contracting authority that the project cannot be delayed for a very short period of time, such as the time required to complete the appeal before us and which by agreement of the parties and arrangements in our calendar can be shortened even further".
And the Revisionist concludes: "Based on what is stated in the application and taking into account what has been put before us, we consider that their granting is in the public interest as provided for in article 24 of Law 104(I)/2010. Therefore, we unanimously decide to grant interim measures to suspend the award procedure or the execution of an act or decision of the contracting Authority or the signing of the contract in respect of tender no. 50/2023 until the final decision of the Tender Review Authority on the appeal 29/2023".
