/ world today news/ Since February, something atypical has been happening in the financial and political life in our country. Mass suspension of public procurement in all sectors. The strange thing in this case is not only their mass, but the different and contradictory explanations given by the rulers for their termination. And the most interesting thing is that all this is happening against the background of taking on a new debt of 2 billion euros.
This raises valid questions. The treasury is empty and there is no money to pay for the orders, and therefore it is quickly replenished with a new loan? Is there a rearrangement of the oligarchic circles and political influence, pressure from the EC, or is the most spectacular draining of state funds after the KTB affair being prepared? Yes, there the capitals were mainly private, but all the taxpayers paid for them with new solid debt. Let’s look at the facts.
By order of Prime Minister Boyko Borisov, public procurement for nearly 2 billion BGN was suspended. That is, BGN 2 billion are blocked – they do not circulate in the economy. What prompted this suspension and what versions have we heard so far?
The first was that the orders were related to questionable persons and therefore should be rerun. This became clear from the words of Prime Minister Boyko Borisov, who, during the first suspended procedure for the construction of 60 km of the Hemus highway, stated that he was terminating it due to doubts that the selected contractors were connected to the MP from the DPS Delyan Peevski and the head of Lukoil Valentin Zlatev. The consortia, as well as the disqualified Turkish company, appealed to the CPC against the decision, but they were not upheld. Borisov even stated that fines for the suspended public procurements will not be paid because the suspension was done in a legal way.
Days after the first version, Borisov stated that the orders were spoiled because these objects could be built with less money. The prime minister even made the odd suggestion that the speed of the Hemus highway be lowered to 120 km/h to save money on construction. The space between the two traffic lanes will also be narrowed. It will no longer be 3 meters. This will save around BGN 100-150 million, he said. Which brings us to reason number two – no money. The regional ministry officially confirmed that the tenders were terminated due to a lack of funding under the OP “Transport and Transport Infrastructure 2014-2020”.
Later, however, Pavlova made a 180-degree turn, making it clear that the new tender for the “Hemus” highway will be announced within two weeks with a new, higher estimated price – BGN 750 million without VAT for 60 km.
The estimated value of the previous auction was BGN 434 million, which completely refuted version number two – lack of funds. And the suspension of public procurement without a clear reason continued. A few days after the suspension of the tender for “Hemus” NKSIP also terminated the procedure for the “Zheleznitsa” tunnel, which was announced at the end of last year with an indicative budget of BGN 250 million. The main motive is completely different – the need for additional drawings and a complaint in CPC. The complaint turned out to be filed by the “SIG Group” company, which has nothing to do with construction, but is engaged in restaurant business. The appeal of “SIG Group” was rejected.
After “Hemus”, public procurements for more than 600 million BGN were suspended. One is to the Southwest Forestry for BGN 95 million for the construction of forest roads, and the other to the Ministry of the Interior for the new personal documents worth half a billion BGN. The BNB would print them itself to protect personal data. Large orders of the municipality of Varna are also suspended. This time a third version appears. The Minister of Finance Vladislav Goranov commented that the procedures are being stopped in order to be conducted according to the rules of the new Law on Public Procurement.
It is expected to be adopted by the end of March.
“We are talking about improving transparency. So that there are no doubts about the awarding of these orders, that is why they are being terminated,” explained Goranov.
Why have doubts suddenly arisen in the manner of awarding public contracts given out by this same cabinet? In turn, Economic Minister Lukarski stated the exact opposite – that the numerous suspended public procurements are recognized as completely legal, and their suspension will in no way harm the economic environment and worry investors. On the contrary, it will create confidence in them, suspending them will give more transparency under the new Public Procurement Law.
Borisov’s new move to stop tenders coincided with the news that the European Commission is ready to stop monitoring Romania, which, unlike Bulgaria, has managed to curb corruption at the top of the government. Observers suspected pressure from the EC, and according to unnamed sources to Mediapool, the EC has stated that they do not want the funds to go to certain economic groups. However, this thesis was refuted by Finance Minister Vladislav Goranov, who stated that orders are being stopped in which not European funds are used, but state funds.
Meanwhile, a fifth version of the suspension of the auctions appeared. GERB stated that it foresees the closure of the National Company “Strategic Infrastructure Projects” (NKSIP), and its activity will be transferred to the “Road Infrastructure Agency”. NKSIP was created during the first Borisov cabinet with amendments to the Roads Act as a state enterprise subordinate to the Minister of Regional Development. At that time, it was written in the law that she would work for the accelerated construction of the Struma, Hemus and Black Sea highways. That is, after they close the agency, the projects for which it is responsible must be stopped until API takes over. And the motive for closing the NKSIP is to concentrate in one structure all the activities of financing, construction and management of key objects of the road infrastructure.
Deputy Prime Minister Tomislav Donchev, in turn, presented the sixth version of the suspended orders. He was categorical that “so far, there have been no registered violations of the government’s noisily suspended public contracts”. However, there are “a number of reasons for a public procurement to be terminated, including a change in the financing regime or if the contracting authority no longer needs what was ordered”. In addition, Donchev admitted that not all of the public contracts suspended in recent days had a selected contractor – in the tender for the production of new personal documents, for example, the procedure is in the tendering phase.
Transport Minister Ivaylo Moskovski also “accounted” for suspended tenders – for BGN 50 million. He justified the decision with Prime Minister Borissov’s order for all ministers to review public procurement “in order to clear any doubts about them”. However, Borisov has not publicly indicated what exactly he means by “dubious”. Defense Minister Nikolay Nenchev was not far behind. Initially, Nenchev expressed timid reservations about the “anti-corruption course” announced by Borisov and said that “large public procurements in defense should not be suspended, because it is part of national security”, and modestly “accounted” for only one suspended competition for cars and jeeps with a total value of BGN 1.5 million. Only a few days later, however, he announced that he was suspending two of the largest public procurements – for the purchase of new armored vehicles for the Ground Forces and the Military Police with a total value of over BGN 50 million. Nenchev also suspended the order for the army’s food with estimated value of nearly BGN 26 million without VAT. He repeated the slogan that he would “be absolutely uncompromising and stop orders at every shadow of doubt”, but it was never made clear what caused his decision to end another competition.
Against the background of the conflicting arguments for the suspended orders, the state took out a new debt of nearly BGN 4 billion. This year, our country can take out BGN 5.3 billion, including BGN 3.9 billion from foreign markets. What necessitated its withdrawal at once? The arguments sound too general and lack clarity. The new debt will be used to cover the budget deficit, refinance old debts and as a buffer in the fiscal reserve, the Ministry of Finance says. First, a small part of this new loan will go to refinance old debt (about 450 million euros), why does it need to be withdrawn at once? Second, the MoF data from the end of January show a budget surplus of nearly BGN 1 billion (BGN 991.6 million). The size of the fiscal reserve as of 31.01.2016 is a record – BGN 9.2 billion – why is a buffer needed? In addition, there are no development reforms in place that would require a larger buffer. In this year’s new debt vote budget, it was stipulated that a significant portion of the debt funds would be held as a reserve to possibly help the financial sector (banks) after their asset quality and stress tests. However, the finance minister categorically denied that the money was a buffer for the banks. That is, there is no logic and no economic reason for withdrawing the entire amount of the debt.
And the Deputy Prime Minister Tomislav Donchev said these days: It is frivolous to claim that there is no money in the state and that is why a number of tenders have been suspended. There is even an overrun of revenues in the budget. Then Donchev spiraled into contradictions and impotence. The reasons for the suspension were different – for each of them there is both a technical and a formal reason for the suspension. He commented that this is neither the first nor unique case of suspension of public procurements, but he did not specify why they were stopped at the same time and how so many reasons suddenly came together. The Deputy Prime Minister also entered into a serious contradiction with himself: “If there are any doubts regarding any one of the procedures, perhaps it is not the job of the administration to react, but it is the job of the political leadership to do so”. At the same time, he admitted that such a practice, in which the prime minister personally orders the suspension of public procurement, is unusual: “In a normal situation, the suspension of tenders would be a commitment of the administrations themselves, and not of the prime minister.”
Borisov himself said on Monday that he stopped them because the orders have now come to light and have reached him. “I stopped them when they had to go to the CPC, to pay the advances, and I examined them thoroughly”. He added that the inspectorates are now checking the orders.
Against the background of this mish-mash of controversies, the reasons for the suspension of the auctions, instead of being clarified, sink into an ever deeper fog of doubt. And the withdrawal of the entire external debt at once in parallel with the suspension of public procurement in all departments raises questions and arouses serious concern. Is there a parallel between the two? The thesis that the treasury is empty and that is why there is no money for public procurement, respectively and that is why debt is being taken out, was completely refuted. It turns out that the treasury is fuller than ever. However, in the political and financial world, when it comes to millions and billions, there are no coincidences and random things.
The only logical conclusion is: we stop public procurement until we get the billions to make new tenders and distribute the fresh money to “specially selected” people along the way. Goranov clearly stated that all suspended orders are financed not with euro funds, but with state money. Here’s the money. With new auctions they will be given to the “right” people and the whole mystery falls into place. If this is the answer, it would be logical for the new orders to be more expensive than the old ones. This, of course, is a hypothesis that does not have the force of a statement and an accusation. But the lack of clarity and reasonable explanation for this chaos and unargued debt logically raises all sorts of doubts.
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