Despite the fact that in two years it is planned to de-synchronize the Baltic electricity grid from Russia and Belarus, synchronizing with the rest of Europe, Latvia has been locked in a two-year procurement procedure for the purchase and installation of synchronous compensators.
Two of the three tender participants, SIA Reck and the Greek company Mytilineos SA, have just submitted a complaint to the IUB regarding the procurement carried out by AS Augstsprieguma tīkls, as they believe that the contractor did not organize an open and transparent procedure , ensuring equal treatment and fair competition.
Dienas Bizness invited RECK chairman Viestura Kagi to an interview on the current situation.
I start with the general. What is the current situation in energy building?
The energy sector is not separated from the current processes in the national economy. I must admit that there has never been such a dangerous and unpredictable situation in the energy market as it is now. Taking into account the war in Ukraine and the sanctions imposed on Russia, we obviously feel a sharp increase in costs, because many raw materials (for example ferrous and non-ferrous metals) came from Russia and Belarus. We need to buy not only cables, but also build various metal and reinforced concrete structures. Of course, copper and aluminum prices are primary in our industry. And again, most of the manufacturers are located in Russia, so we are already working with suppliers from other countries. Along with rising prices, the next problem is the inability to predict prices. If we previously received price offers for products that were valid for one month, it is now one week. The entire construction sector is currently in crisis and prompt government action is expected to finalize and approve the price indexation model. It is normal practice in other countries for an indexation formula to be incorporated at the time of conclusion of contracts, both in the event of a price increase and a decrease. This is a great way for both contracting parties to avoid the risks we are currently facing. I also agree with the Latvian Construction Contractors’ Partnership statement that a realistic forecast of at least 12 months of state orders is needed. Unfortunately, until now the state administration has not been able to create a transparent and centralized public order forecast. I would like to emphasize that both the civil service and the government need to realize that we are all in the same boat. If the public sector is unable to make decisions in a timely and pragmatic manner, working side by side with representatives from all sectors (not just construction), the national economy, or our common boat, will begin to sink.
