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Deputy PM urges scrapping of SE Russian debt tender

The state energy utitility Slovenské Elektrárne (SE) came under heavy pressure last week to cancel a tender for a mediator to settle Russia's outstanding debt to Slovakia. Deputy Prime Minister Ivan Mikloš spoke for many critics when he urged the SE to cancel a current tender which, he said, had been marred by murky rules and the absence of outside supervision.
Mikloš's public criticism of the tender came on the heels of a decision by independent corruption watchdog Transparency International Slovakia (TIS) to refuse an invitation from SE to monitor the tender.
However, SE officials said that they had no intention of abandoning the tender, origianlly called on August 11. Instead, the utility said, SE's Supervisory Board would choose a winner of the lucrative contract by September 15 at the latest. The Economy Ministry, for its part, passed the final decision on the tender to the government on August 26.

The state energy utitility Slovenské Elektrárne (SE) came under heavy pressure last week to cancel a tender for a mediator to settle Russia's outstanding debt to Slovakia. Deputy Prime Minister Ivan Mikloš spoke for many critics when he urged the SE to cancel a current tender which, he said, had been marred by murky rules and the absence of outside supervision.

Mikloš's public criticism of the tender came on the heels of a decision by independent corruption watchdog Transparency International Slovakia (TIS) to refuse an invitation from SE to monitor the tender.

However, SE officials said that they had no intention of abandoning the tender, origianlly called on August 11. Instead, the utility said, SE's Supervisory Board would choose a winner of the lucrative contract by September 15 at the latest. The Economy Ministry, for its part, passed the final decision on the tender to the government on August 26.

"The debt settlement issue is one that concerns many ministries," said Economy Ministry Maroš Turek. "That's why the final decision will be made by the government."

Too much secrecy

TIS director Emília Sičáková told The Slovak Spectator on August 25 that her agency had not been able to accept the offer from Slovenské Elektrárne because the conditions of the tender were secret, preventing TIS from publicly commenting on the fairness of the process.

"The role of TIS is to collect as much information as possible and to shed light on the entire process. These [tender] conditions do not allow us to do that," Sičáková said.

She also argued that TIS had not been present when the tender conditions were created, and that the agency was unwilling merely to supervise the selection of a winning bid.

However, SE spokesperson Alena Melichárková responded on August 26 that "the tender conditions are not secret but confidential," and said that "SE invited [TIS]... in conformity with the law."

Slovenské Elektrárne signed a contract with the Finance Ministry earlier this year giving it the job of importing fuel - principally black coal - from Russia and deducting the value of the imports from the $1.2 billion Russia still owes Slovakia. By the year 2001 the value of these fuel imports should reach 19 billion crowns ($450 million), 20% of which will be paid to a mediator who arranges the deal between Russian suppliers and SE.

"This settling of the Russian debt is very tough work, and the mediator really earns the money, given the instability in Russia right now," said Martin Barto, chief of strategy for state bank SLSP.

Sičáková had recommended earlier that TIS be involved in the SE tender process from beginning to end after a similar tender called by the Telecom Ministry ended in scandal and the resignation of Telecom Minister Gabriel Palacka in early August. "We had bad experiences in the Telecom Ministry tender, because we were only able to monitor the selection of a winner, not the creation of the tender's terms of reference [ie. its rules and conditions] and the methodology of selecting the winner," she said.

However, the SE Supervisory Board decided on August 9 to invite TIS to oversee only the final selection of bids rather than the whole process. The tender was launched on August 11, but a draft of the tender conditions, labelled "secret," did not reach TIS until August 18. "In order to get the terms of reference from SE we had to sign a promise that we would not discuss them. So what then would our role in the process be?" Sičáková asked.

TIS's Eugen Jurzyca said that although the rules of the tender forbade him to comment specifically on its conditions, TIS was concerned that the process was not transparent. "If the tender conditions had eliminated non-transparency, TIS would not have had a reason to turn down the offer to participate," he told the daily paper Pravda.

The ostensibly secret tender conditions have been widely reported in the Slovak media since the tender was launched. According to the reports, participants in the bidding process had to be licensed for issuing foreign loans, effectively restricting the tender to banks. Futhermore, bidders were required to have a basic capital of 150 million Slovak crowns, which may have ruled out foreign banks whose basic capital was registered in foreign currencies. Finally, each tender participant was required to have been in existence for five years, making it difficult for consortiums - temporary partnerships between banks and financial institutions - to participate.

"From these conditions it is not certain whether it is consortiums that must have existed for five years, or whether one or all of their members [must meet this condition]," said Jurzyca.

SE's Melichárková, on the other hand, dismissed the three tender conditions reported in the press as "incorrect," but said she could not be more specific because "[the tender conditions] contain facts from contracts between the Ministry of Finance and SE which are confidential."

Before doubts surfaced surrounding the SE tender, Sičáková seemed to have won cabinet support in her drive for greater transparency in tenders for the awarding of state contracts and the sale of state property.

Two days after Palacká resigned, Prime Minister Mikuláš Dzurinda announced that TIS would henceforth be invited to participate in "all important public tenders," as well as to join the government in a fight against corruption. "One of the greatest problems of Slovak society, as in all western civilisation, is that of bribery, corruption, clientelism and meddling with public finances," he said.

Sičáková ascribed the speed with which TIS had been accepted by the government to pressure created by public opinion. "The topic is becoming very important in Slovakia, because people are getting very impatient with corruption," she said.

The SLSP's Barto, on the other hand, said that pressure from the international community had also played a role in bringing TIS to the fore. "There is a lot of pressure from various sides, such as the European Commission," he said.

Barto cited the example of an August 24 visit to Slovakia by Finnish Deputy Foreign Minister Jukko Valtasaari, in which Valtasaari criticised the Slovak Economy Ministry's decision in July to cancel a tender for a stake in mobile operator Globtel GSM.

"These things are closely watched, and with Finland holding the chairmanship of the European Commission, these comments must have a certain impact," Barto said.

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