Auction for the modernization of generation at the combined heat and power plant Sursa-1
The Consolidated Unit for the Implementation and Monitoring of Energy Projects (UCIPE) denies the information that appeared in the public space regarding certain violations in the conduct of the auction procedure for the modernization of generation at the combined heat and power plant (CHP) Sursa-1 in Chisinau, which includes the reconstruction of Unit 2 and the overhaul of Unit 3.
The auction was initiated within the framework of the Second Project for Improving the Efficiency of the District Heating System (PIESACET-2), financed by the World Bank, and was conducted in accordance with the World Bank Procurement Regulations for FPI Borrowers of July 2016, revised in November 2017 and August 2018.
Furthermore, this procurement package is subject to review and approval by the World Bank before initiating any stage in the procurement procedure.
We note that UCIPE is a public institution created by Government Decision No. 1276/2000 for the purpose of efficient implementation of projects in the energy sector in accordance with the provisions of the Legal Agreements between the Government of the Republic of Moldova and international financial institutions. UCIPE also ensures the implementation of projects by complying with donor requirements in terms of procurement aspects, financial management, environmental and social aspects, etc. UCIPE has more than 20 years of experience in implementing projects financed by International Financial Institutions.
In the context of the above, we present in the Annex to this press release detailed and complete information on the preparation of PIESACET-2, the initiation and conduct of procurement within this Project.
Contacts:
UCIPE
Email: mepiu@mepiu.md
Phone: +373 22 49 67 90
Str. Alecu Russo, block A1, office no. 163,
MD-2068, Chisinau, Republic of Moldova
www.mepiu.md
Annex: Tender procedure in details regarding the modernization of generation at CHP Sursa-1
During the period 2015-2020, UCIPE successfully implemented the Project for Improving the Efficiency of the Centralized Thermal Energy Supply System (PIESACET-1).
PIESACET-1 Results:
⦁ Three main pumping stations (SP) modernized to reduce electricity consumption and ensure efficient and reliable operation of Termoelectrica S.A. The investment led to a decrease in electricity consumption for pumping the thermal agent by approximately 45%.
⦁ 14.4 km of priority heating networks (about 7.2 km of double pipes) replaced within the Project.
⦁ 306 Individual Thermal Points (PTI) (and associated networks) installed in residential buildings and 181 PTI (and associated networks) installed in public, administrative and social buildings.
⦁ 46 public institutions reconnected to the centralized thermal energy supply system (SACET) and benefited from 115 PTI (including associated networks).
⦁ Installation of 4 pumps, 4 motors, 6 frequency converters and 6 sets of modern electrical equipment installed at the production sources.
⦁ A new Pumping Station built and an interconnection pipeline between the CET Sursa-1 and CET Sursa-2 circuits installed - to streamline the operation of Termoelectrica and optimize the supply of heat to the transmission network.
All indicators set since the preparation stage of the Project for monitoring and implementing PIESACET-1 were met.
The Second Project for Improving the Efficiency of the Centralized Thermal Energy Supply System
Following the implementation of PIESACET-1, the need for significant investments in the production infrastructure, which is approaching the end of its operational life, was revealed, which represents a risk for the stability of the thermal energy supply in the municipality of Chisinau and, consequently, for ensuring the optimal quality of living conditions for the residents of the capital and the stability of the activity of public institutions and economic agents connected to SACET, and a risk for the production of domestic electricity. To this end, in 2018, the World Bank launched a study on the optimization of the centralized heating system in Chisinau. The objective of the study was to help Termoelectrica S.A. and the Government of the Republic of Moldova to identify the optimal energy model for the short, medium and long-term development of the centralized heating system in Chisinau and a supporting investment plan, to further improve the operational efficiency and financial viability of Termoelectrica S.A..
Following the results and recommendations of the aforementioned system study, in 2020, the World Bank provided another loan, worth 92 million Euros, for the implementation of the Second Project for Improving the Efficiency of the Centralized Thermal Energy Supply System (PIESACET-2).
The Loan Agreement was signed on September 30, 2020 and entered into force on March 29, 2021.
PIESACET-2 will finance the following investments:
Component 1. Optimization of thermal and electrical energy generation:
1.1. Generation Modernization at CET Sursa-1 (Procurement Package B1.1.), through:
(i) Reconstruction of Unit No. 2, which will include, among others: i) reconstruction of high-pressure equipment of the steam turbine; ii) retrofitting of low-pressure equipment; iii) diagnostics of the electric generator; iv) retrofitting and modernization of the vibration control module; v) replacement of turbine equipment; vi) replacement of burners in the thermal boiler and other equipment to increase boiler efficiency; and vii) installation of the automated control module for capacity and combustion regulation; and
(ii) Turbine overhaul and boiler heating surface replacement at Unit 3, including: turbine high pressure equipment overhaul and steam boiler economizer replacement.
1.2. Increasing efficient cogeneration (Procurement Package B1.2.) by:
(i) Installation of efficient modular cogeneration units (gas engines) at CT Vest and CHP Sursa-3.
(ii) Installation of electrical transformers and distribution facilities, as well as any other equipment for connection to the urban network from CT Vest to CHP Sursa-3.
(iii) Technical supervision and support for bid evaluation.
1.3. Development and installation of a management information system for Termoelectrica.
1.4. Development and installation of a Hydraulic Simulation System.
Component 2. Energy Efficiency Investments:
i. Installation of individual heat points and related heat networks in selected residential and public buildings;
ii. Reconstruction of internal heat and domestic hot water distribution systems in selected buildings by switching from vertical to horizontal distribution to allow control of heat consumption at the apartment level.
iii. Thermal rehabilitation of selected residential buildings with horizontal distribution systems.
In accordance with the provisions of the Loan Agreement and the Implementation Agreement for PIESACET-02 of March 02, 2021, UCIPE has fiduciary responsibilities related to the implementation of the Project, such as financial management, procurement, disbursements, management of social and environmental aspects, monitoring, evaluation and reporting.
Procurement procedures under PIESACET-2 have started with procurement package B1.1 “Generation Modernization at CET Source 1 through the reconstruction of Unit 2 and the overhaul of Unit 3 (Facilities - Design, Supply and Installation), in accordance with the Project Procurement Plan, approved by the World Bank and published on its website.
Procurement Documentation/Terms of Reference
The international public tender for procurement package RFB no. 9134-MD B1.1, including the preparation of the Procurement Document/Terms of Reference, is based on the World Bank Procurement Regulations for FPI borrowers of July 2016, revised in November 2017 and August 2018. https://www.worldbank.org/en/projects-operations/products-and-services/brief/procurement-new-framework
In accordance with the Agreement Implementation The role and responsibilities of the implementing entities are clearly delimited. Therefore, the preparation of technical specifications for the procurement packages under PIESACET-2 is the responsibility of the Beneficiary, and UCIPE is responsible for preparing the Procurement Document based on the specifications developed by the Beneficiary and approved by the World Bank. The entire procurement documentation is reviewed and approved by the World Bank. Also, major procurement packages are examined and monitored ex-ante by the World Bank at all stages of implementation.
The World Bank Standard Procurement Document, published on its website, is used to prepare the procurement documentation. Thus, all potential bidders are treated equally and have equal opportunities. The entire procurement process is transparent, without ambiguity.
The technical requirements, eligibility criteria and evaluation criteria for this tender have been developed based on the type, volume and complexity of the works required and offers the opportunity to all eligible bidders with the necessary experience and capacity to participate in the tender. This tender is internationally competitive, thus no preference is given to potential local bidders.
Regarding the information published in the public domain regarding the Terms of Reference, which would include only GOST, regarding the short term of contract completion and similar experience, we mention the following:
The Terms of Reference mention some GOST standards with reference to the existing equipment/facilities, for which repairs and reconstruction are required, which were originally designed and built in the Soviet period based on those GOST standards. However, the Terms of Reference also explicitly indicate the possibility of using equivalent standards. Thus, bidders could propose materials/equipment according to equivalent standards or European standards, which would ensure the required characteristics. It is also stipulated that the Contractor must propose and use modern technologies and solutions for the reconstruction/overhaul of turbines, boilers, generators and other equipment.
The deadline for the completion of the works was established based on the urgent need for reconstruction and major repairs, in order to ensure the operation of the Centralized Thermal Energy Supply System (SACET) at optimal parameters according to the forecasted demand for thermal energy, taking into account that CET-Source 1 provides about 80% of the thermal energy delivered to consumers through SACET and is the main source of electricity production on the right bank of the Dniester River, and the delay in the modernization works would affect the stability of thermal energy delivery to consumers and energy security. Thus, the implementation of the eventual contract according to the Tender Document was to be completed within 17 months from the date of entry into force of the contract.
The requirements regarding similar experience set out in the Terms of Reference are in line with the standard requirements of the World Bank, that the bidder should present experience of successful execution, as a consortium member or contractor or subcontractor, of at least one contract of similar complexity and value. Later, during the bidding process, at the request of potential bidders, following coordination with the World Bank, amendments were made to the Terms of Reference that offered the possibility for potential bidders to present similar experience from 2 or 3 successfully executed contracts, which would cumulatively meet the requirements regarding similar experience.
The World Bank approved the Procurement Document/Terms of Reference on May 25, 2021.
Procurement Procedure
The publication of the specific invitation to tender for this package took place on May 31, 2021, online - on the United Nations Development Business (UNDB), on the UCIPE and Termoelectrica S.A. websites, but also in the local press “Logos Press” edition of June 04, 2021.
As a result, the Procurement Document was procured by 11 companies from the Republic of Moldova, Romania, Slovakia, Ireland, Ukraine, China, United Kingdom. It should be noted that even if the Procurement Document is procured, potential bidders are not registered to submit bids, only contact details are collected to be informed in case of any changes, clarifications to the Procurement Document (as applicable). During the bid preparation period, potential bidders submitted several requests for clarifications to the requirements of the Procurement Document regarding economic, legal, financial and technical aspects, which were responded to in the near future.
Following the requests of the companies, as well as in order to appropriately respond to requests for clarifications and appeals, the deadline for submitting bids was extended 3 times.
On September 28, 2021, the public bid opening meeting took place.
On the deadline for submission of bids, only one company submitted its bid, namely – the Consortium between SRL “Horus” (Republic of Moldova) and JSC “Power Machines” (Russian Federation). The price offered at the opening was in the amount of 13,270,000.37 Euro.
The submitted bid was evaluated in accordance with the provisions of the Evaluation and Qualification Criteria expressly provided in the Procurement Documentation, which is the basis for the conduct of the tender in question, but also in accordance with the Procurement Regulations of the World Bank (2018).
Additionally, we note that in accordance with the eligibility conditions of the World Bank, the participation of companies from any country is allowed in tenders financed by the World Bank, provided that the eligibility conditions are met (paragraph 3.21. of the Procurement Regulations and Instructions to Bidders, p. 4 of the Procurement Documentation). Thus, limiting a company’s participation in a World Bank-financed tender on the grounds of its registration or activity in a particular country is, a priori, contrary to the provisions of the World Bank Procurement Regulations, but also to the principles of good public procurement.
At the same time, the provisions of the World Bank Procurement Regulations expressly establish the situations in which a company or private individual from a particular country may be excluded from a public procurement process and declared ineligible (paragraph 3.23 of the Procurement Regulations). Thus, exclusion may only occur i) as a result of the Borrower’s country prohibiting trade relations with a particular country, provided that the Bank finds that this exclusion does not affect the existence of effective competition in the procurement process; [...] ii) when the Borrower's country prohibits payments to a particular company or individual pursuant to a decision of the United Nations Security Council taken in accordance with Chapter VII of the Charter of the United Nations.
Accordingly, the World Bank has its own list of companies and individuals that are excluded from the list of participants in tenders financed by it. The list can be viewed by accessing the link http://www.worldbank.org/debarr.
The consortium that submitted the bid has been verified according to the requirements mentioned above and it cannot be declared ineligible, according to the requirements and criteria of the World Bank.
Following the World Bank's approval of the Bid Evaluation Report, the contract clarification meetings with the above-mentioned Consortium were held between March 22 and April 5, 2022. According to the procedures, on April 8, 2022, the contract for the reconstruction of Unit 2 and the capital repair of Unit 3, CET Sursa-1 was signed.
Following the initiative of the Ministry of Infrastructure and Regional Development, on April 12, 2022, UCIPE submitted to the World Bank the request for termination of the signed contract. According to the Bank's regulations, further actions can only be taken after receiving the World Bank's position/approval on the submitted request. Currently, we do not have the official position of the World Bank regarding further actions in the implementation of this activity.