Bulgaria drops Saudi firm Arkad as gas grid capacity expansion contractor

Written by on May 29, 2019 in Bulgaria - Comments Off on Bulgaria drops Saudi firm Arkad as gas grid capacity expansion contractor

Bulgaria’s gas grid operator Bulgartransgaz has changed its decision in the tender to design and build the expansion of Bulgaria’s domestic gas infrastructure, needed in order for the country to handle the transiting gas from the Turkish Stream pipeline, dropping Saudi Arabian Arkad Engineering as the contractor.

Bulgartransgaz picked Arkad Engineering on April 3 because it offered the lowest price, but was unable to sign a contract because the Saudi firm did not provide all the paperwork required by law, despite several postponements granted by Bulgartransgaz.

Arkad Engineering’s failure to meet deadlines, as well as the changes it suggested to the draft contract, which would have breached the terms of the public tender, were interpreted as a refusal to sign the contract, Bulgartransgaz said.

While communications with Arkad went on, the second-placed bidder in the tender – a consortium including Italy’s Bonatti, the Italian subsidiary of German firm Max Streicher and Luxembourg-registered Completions Development Sàrl, which Bulgarian media linked to Russian pipe manufacturer TMK – told Bulgartransgaz that it was prepared to offer a 31.1 per cent discount on the price it originally offered.

Arkad had offered to build the 474.7km expansion for 1.1 billion euro by the end of 2020, compared to 1.6 billion euro offered by its rival. With the discount, however, the Bonatti-Max Streicher offer also came down to 1.1 billion euro, which was within the 2.29 billion leva (about 1.17 billion euro) cost ceiling set by Bulgartransgaz.

Given those factors and the importance of the project, Bulgartransgaz said that it was amending its initial decision and awarding the construction contract to the Bonatti-Max Streicher consortium. The decision is subject to appeal in a period of 10 days, the company said.

Such an appeal could create additional pressure to avoid construction delays. Some analysts have already questioned whether Bulgaria will manage to complete the project on time, with deliveries through Turkish Stream at the border with Serbia slated to begin at the start of next year and reach full capacity by the end of 2020, given its track record of long delays on building inter-connector gas pipelines with neighbouring countries like Romania and Greece.

(Photo: jarpur/sxc.hu)

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