Budapest’s contested contract with Russia’s Metrowagonmash under the spotlight again

By bne IntelliNews June 2, 2016

Hungary may have received new metro cars from Russian subway manufacturer Metrowagonmash instead of the ones that had been sent for refurbishment, local press reported on June 2.

In August, Budapest awarded a €219.1mn contract to Russia’s Metrowagonmash for the modernisation of trains on the Hungarian capital's M3 metro line. It is alleged, however, that to avoid public procurement rules brand new metro cars were sent instead of renovating the old ones.

According to local daily Nepszabadsag’s sources, if the tender had been called for new metro cars, the out-of-date technology of the Russian manufacturer would clearly not have had a chance versus new models of other companies. “The terms of the public procurement could not have been as tailor made [for the Russian company],” the paper wrote.

Besides Metrowagonmash, Estonia’s Skinest Rail also submitted a bid for the renewal of metro cars. However, Skinest Rail was excluded from the tender despite offering a lower price. Skinest Rail filed a complaint with the European Commission against the Hungarian transport operator’s decision, claiming that the eight points cited as reasons to disqualify its bid are formal in character.

Nepszabadsag’s sources claim it was obvious that the deadline for refurbishing Budapest’s metro trains was too tight. They claim that the metro trains that arrived to Budapest last week are completely different from the ones that had been sent for renovation, and Metrowagonmash shipped cars that it already had in store.

Unnamed sources claim that awarding the metro tender to Russia might have been part of a deal relating to Hungary’s Paks II project. Budapest tore up an international tender in January 2014 to hand Russia a €12.5bn contract to expand Hungary's only nuclear power plant. However, questions have recently been asked over the project’s profitability, and there are hints that Russia may pull out of its agreement to lend Hungary €10bn for the project.

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