Four years for one tender on the Vc corridor through Herzegovina, and the Chinese slowly take the highway to the largest wind farm in BiH

While Russian influence and the Russian people in BiH are talked about and discussed on a daily basis, and then the influence of the West, Chinese influence is in the background. But Chinese companies are taking a nice business cake, and providing themselves with multimillion-dollar jobs, plants and facilities in BiH. They enter slowly, gently, or as the most famous director would say “from behind”, in order to break through

Writes: Kristina PERIĆ/Hercegovina. info

On June 20, 2019, a contract on the construction of the motorway on Corridor 5c of the section Počitelj – Bijača, subsection Počitelj – Zvirovići, LOT 1 and LOT 2 was signed at the headquarters of JP Autoceste FBiH.

The contracts were signed by Adnan Terzić, director of JP Autoceste FBiH on behalf of the investor, on behalf of the contractor for LOT 1, Yanming Liu, representative of China State Construction Engineering Corporation Ltd. (China), and Yang Bo, on behalf of the consortium of contractors AzVirt L.L.C. (Azerbaijan), Sinohydro Corporation LTD. (China) and Power China Road Bridge Group Co. Ltd. (China) for LOT2.

How the Chinese won the tender on the section through Herzegovina is a story all on its own.

Tender Počitelj – Zvirovići, bridge Počitelj

The tender for the section of the Zvirovići Počitelj motorway was, in the first tender in 2014/2015, divided into two LOTs, LOT 1 – construction of the bridge Pocitelj with access roads and LOT 2 construction of a tunnel about 1 km long and other facilities and the rest of the route that connected to the already built highway from the border with Croatia to Zvirovići.

The financial bids were submitted in October 2015, more precisely, on October 27, 2015, and in May 2017, the tender was cancelled due to, as they said, a ‘long evaluation process’.

As numerous portals reported at the time, the controversial bid evaluation process, which sought to award contracts to more expensive bidders, was even monitored by the EIB’s Commission of Inquiry, whose report was not published.

The second tender was announced with great public attention on May 11, 2017, this time as a single LOT, that is, the entire route was conceived as a single contract.

The Chinese-Azerbaijani consortium was the most favourable, but the contract was again awarded to the second-ranked bidder, and the then director of JP Autoceste Adnan Terzić publicly announced, before the end of the selection process, that the Eurroasfalt-Strabag consortium had won the job.

And that tender too was eventually annulled. On their website, which was transmitted by all portals on November 27, 2017, the highways announced that they had received a letter from the bank stating:

“The Bank believes that the procurement procedure was violated due to the publication of confidential information in certain media.”

It was stated that they violated the confidentiality provisions of the financing agreement concluded between BiH and the Bank, although the Motorway Administration “did everything” to protect the integrity of the bid evaluation process that began on July 17, 2017. In this regard, the bank offers an expert who will, at the expense of the bank, assist the Motorways in the retrial. Thus, in June 2018, for the third time, a tender was announced for the construction of the Počitelj bridge and the route from the Zvirovići junction to the Počitelj bridge and loop to be built by Chinese companies, as mentioned above. So, after three attempts, the bidder was chosen, and the procedure lasted for almost 4 years.

The Chinese are not doing well in the karst

Terzić’s predecessor, Ensad Karić, was sentenced to five years in prison for buying a non-existent facility in Velešiće, where they laundered 4.5 million KM. Terzić’s (SDA) procedures and actions have yet to come on the agenda, and the FBIH government replaced him with Elmedin Voloder (SDA) at a session held in early June last year, with the reason being – his term expired.

Domestic companies, such as Hering, could have done the job in Herzegovina, more insiders claim. However, Chinese companies are entering this section of the highway, and as they did not really manage in the Herzegovinian stone, they hired domestic subcontractors, who could easily be the main contractor.

People involved in the whole story say that in fact, the highway was not the primary goal of Chinese companies, but a way to enter BiH, and then match much more important and difficult – multimillion-dollar projects in the country. That this is so is proved by the fact that the same Chinese company appears in HBŽ after Zvirović and Počitelj, where it is building the Ivovik wind farm.

“Today, on the Ivovik hill near Livno, the beginning of the construction of the IVOVIK 84MW Wind Farm was solemnly marked by a joint symbolic cutting of the ribbon of the representatives of investors, the Government of Herceg-Bosnia County, the City of Livno and the Municipality of Tomislavgrad. The Ivovik wind farm is the largest investment in renewable energy sources in BiH and is the first wind farm in BiH to be presented as a Chinese investment. The installed capacity of the wind farm “Ivovik” will be 84MW, while the annual production of electricity will be 236.6GW”, they were proud of the announcement in mid-December last year from the Government of HBŽ.

In addition to investors from the People’s Republic of China, representatives of Herceg-Bosnia County were present; Prime Minister of Herceg-Bosnia County, Ivan Vukadin and Ministers Božo Perić, Mario Lovrić, Momčilo Bajić, Dijana Puzigaća and Gordana Nakić, Mayor of Livno, Darko Čondrić and Tomislavgrad Municipality Representative Mijo Zrinušić.

It is interesting that in the whole case, the father of the car wizard Mate Rimac, Ivan Rimac, is considered injured, claiming that he claims the right to 75 per cent of Ivovik’s ownership structure and that in August last year he learned that the company from which he was evicted recieved 8 million Euros from Chinese investors.

According to the Register of Business Entities, the members of Ivovik’s management board are Chinese.

On the other hand, the founder of Ivovik Sinohydro is one of the builders of the highway through Herzegovina, the same one with whom the removed Adnan Terzić (SDA) signed a contract to build a highway through Herzegovina, which speaks in favour of the Chinese highway being only a ticket to BiH.

“In Herceg-Bosnia County, concessions are issued without any communication with the local community, they are inactive for tens of years, for select ones to be, with political ties, such as the Ivovik concession, which was issued to a person in the HBŽ Government  be sold for millions of euros to the Chinese, provided that the contract itself is not revised, and no new benefits to the local community are realized. Another example of the way it is done is the concession for water Lara natural, which was considered illegal by this Government, so that after some lobbying from the Republic of Croatia by Minister Grlić Radman, the concession was returned to the table and legalized by an annex to the contract. there were no changes to the contract itself. So a year ago the concession was illegal, and a year later the same government legalized it”, Ivica Brešić, a former minister in the HBŽ government and now an opposition councillor in the Livno City Council, told Hercegovina.info when asked how the Chinese entered concession for Ivovik.

Chinese companies are closely monitoring new tenders on the highway through BiH, in this case, Herzegovina. After Počitelj and Zvirović, they are competing for Kvanj and Buna, tunnel breaking and the construction of the highway in the south of Mostar.

Tender Buna – Kvanj cancelled

China Road and Bridge Corporation also applied for the tender for the Kvanj – Buna tunnel, where the same scenario is taking place as on the Počitelj Zvirovići section. 
The tender for the Construction of the Motorway on the Vc corridor – Kvanj Buna tunnel section, whose creditor is the EIB (European Investment Bank), was announced in December 2019 (December 30, 2019).

It was designed so that the offer took place in two phases. In the first phase, the investor, JP Autoceste, assessed the technical and financial capacity of the bidders, as well as the correctness of the bids. Financial bids are opened only to those bidders who successfully pass this retraining procedure. The bids were submitted on May 19, 2020. Given the covid pandemic, the eligibility assessment took a long time to meet the deadlines. Thus, after the pre-qualification procedure, the essentially correct bids were opened on March 5, 2021.

These companies were in the game (price – euros / without VAT)

1. Consortium Ozaltin (Turkey) & Azvirt (Azerbaijan) & Hering (BiH) 77,722,222.15 
2. JV China Second Metallurgy Group & Guizhou Transportation planing Survey (China) 81,774,604.00 
3. China Road and Bridge Corporation (China) 89,318,789.61 
4. Euro-asfalt doo (BiH) 90,431,047.79 
5. Cengiz Insaat Sanayi (Turkey) 95,812,028.14 
6. China Railway 14 th Bureau Group (China) 106,305,147.22 
7. JV AGE Insaat ve Ticaret Anonymous Secrets (Turkey) & LLC Stoyproekt (Russia) 146,277,437.91

After the submission of the bid on May 19, 2020, the evaluation of the bidders’ bids took place several times and to date, no contractor has been selected. Moreover, as they confirmed to us from the Autocesta, the tender was cancelled.

What happened in the meantime?

From March 5, 2021 (financial bids of successfully re-qualified bidders open) until the appointment of a new acting director (Elvedin Voloder replaced Adnan Terzić) JP Autocesta FBiH (seventh month 2021) an evaluation committee was appointed contractors from those who were re-qualified, although it was only necessary to declare the lowest price and perform an accounting control (the criterion for selecting the contractor is the lowest price offered).

This, in turn, would mean that Hering and the Azerbaijanis from Široki Brijeg got the job. But it is not so. Upon arrival, the new acting director appoints a new committee to evaluate the bids in this tender, which also fails to select a contractor, so they continue to ask the bidders to extend the options (validity) of the bid and the guarantee with the bid.
During this period, the head of the second bid evaluation committee cancelled the employment contract and as a reason cited pressures and “inappropriate influences” during the evaluation process.
After that, a new, third bid evaluation committee is appointed.

At that time, at the end of 2021, due to such a long tender procedure and the resulting circumstances, investigators of the European Anti-Fraud Office and the EIB through their mechanisms set out to investigate possible illegal actions during the tender, inviting actors to interview in the Delegation building of the European Union in Sarajevo.

Insiders ask if this is a repeat scenario from the tender from the Počitelj-Zvirovići sub-section, which started in 2014, and the contract was signed with Chinese companies, after two unsuccessful tenders, in the third tender/attempt, in 2019.

It will be faster and better, claims the Ministry and Autoceste

The Highways and the Ministry of Transport claim that it will be better than it was, because both the administration and the commission have changed.

“As a line ministry, according to the program, we are regularly informed about the activities, and progress of all procedures conducted in JP Autoceste FBiH, which cannot be characterized as delaying procedures, as stated in the inquiry, but as a result of complex procedures and offers which were with premeditated changes. Specifically for the tender tunnel Kvanj – Buna, which was announced in 2029, bids were received from some bidders, which included changes in advance (so-called speculative bids) that would occur in the implementation of contracts that would lead to subsequent price changes to the detriment of investors, that is, JP Autoceste FBiH”, states the Federal Ministry of Transport for Hercegovina.info.

They say that an important detail is the procedure under the yellow FIDIC, according to which the contractor is the designer of the main project, and the investor was obliged to prepare the preliminary design.

“Such a project was not prepared due to the then mined terrain as a consequence of the war, so only the background was a conceptual solution as sketches for the future highway. An improperly prepared tender and the risk of choosing a contractor led to an unreasonable deadline for the selection of contractors, which would make the construction deadline as well as the construction price itself beyond the control of the investor. The new Management of JP Autoceste Federacije BiH d.o.o. has decided to annul the procedure for which the decision to start was made in 2018 and initiate a new procedure for the selection of contractors on the subsection Tunel Kvanj – Buna. The earlier procedure had a number of shortcomings that they tried to rectify, but without success. That is why JP Autoceste Federacije BiH d.o.o. Mostar will prepare a detailed preliminary design for the new tender, corridor Vc subsection tunnel Kvanj – Buna because of the procurement procedure of the contractor showed that a higher level of processing project documentation leads to faster contracting”, they said.

After they cancelled the tender, they assure that everything will be faster now !?

“Due to the agreement with international financial institutions, changing the way of contracting for works on this section would be complex, so that the design and construction model would be kept, that is, according to the yellow FDIC, but with a higher level of project documentation processing, the tender would be simpler and clearer. The development of the Detailed Preliminary Design will enable the implementation of additional geotechnical and geological research works, better acquaintance with the terrain conditions, and the development of up-to-date geodetic bases for the needs of the development of the preliminary design. In the new tender, the deadline for the execution of works was shortened from 36 to 24 months. JP Autoceste BiH d.o.o. Mostar has the right to cancel the procedure without explanation at any time, as defined in the tender documents, on the basis of which at a meeting with representatives of the European Investment Bank, which finances this subsection, proposed to suspend the current procurement procedure from 2019. year, and launch a new one within which the contractor would be selected as soon as possible. The creditor bank, the European Investment Bank, understood the reasons and supported the position that the procedure for selecting a contractor for this sub-section should be renewed”, they said.

According to them, the decision was made in order to speed up the construction of all sections in accordance with the new policy of the Management Board of JP Autoceste FBiH.

“In this particular case, the repeated procedure should be completed in five to six months, while the procedure according to the old tender might not be completed successfully at all. The subsection Tunel Kvanj – Buna is of exceptional importance for the completion of the southern part of Corridor Vc, because it connects the already built subsection Buna – Počitelj on the M17. We cannot comment on any repetition of the scenario you cite. In particular, the old management of the Motorway was removed due to poor results in the past period, and we expect concrete results and acceleration of the process from the new Management. This has already been confirmed through the prepared tenders for two stocks that are of strategic importance in Corridor Vc – Mostar North – Mostar South and the Prenj Tunnel, for which tenders will be announced very soon. Circumstances that used to be and the reasons why one got the impression that the construction is not going out have been overcome, and now we expect that the picture on the ground will completely change after the works and contracting of a larger number of shares begin. The new Management, the Supervisory Board and the Ministry are determined to do everything possible to unlock the processes of all projects, relieve any political confrontations and influences, and move in a positive direction”, the Federal Ministry of Transport concludes, lightly touching Terzić, the same left because of the “expiration of the mandate”.

Almost the same answer came to us from Autoceste:

MEPs are also aware of the Chinese influence and breakthrough in BiH, which is in the top four countries in the region.

“We in Bruxelles do not have a real impression of what is happening in your country, but we are aware that due to recent events and the war in Ukraine, we must follow the Western Balkans and involve you in our common European project. Russia’s influence on Serbia, and thus on Republika Srpska, is also influenced by Turkey, because we can only see that under Erdogan’s leadership they are trying to introduce a more aggressive Islam. They invest in Western Europe through the Islamic prism, so wherever they can they build the most expensive and largest mosques, the best example is Strasbourg, where we mostly work and where the largest mosque is built. The third, but also bad influence, is the Chinese influence that exploits those fields where the EU is not present, so the Chinese infiltrate there and strengthen their influence and political assistance through infrastructure projects. We in the Group (ECR) are of the opinion that we are losing in the fight against European ideology, and then there is room for authoritarian systems. Globalization is an ideological struggle, and then if you reduce your activities only to migration, LGBT population and similar agendas, then some member states say that this is not their environment and it is not natural for them to move away from the European Union and weaken the whole community, so this opens a space for other influences outside Europe”, guest MEP Carlo Fidanza in Mostar, a member of the largest Italian parliamentary party Frateli d’Italia, will recently tell our portal about this topic.

The Chinese entered Herzegovina by highway and continued their multimillion-dollar investments in Livno. There seems to be no end to them. Investigative bodies would certainly have a lot of work to do with the competition in Herzegovina, but that is the subject of a new story.

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