Government temporarily suspends TGV competition

By CHRIS GRAEME [email protected]

The Portuguese Government has cancelled the tendering competition for the TGV high-speed rail link’s second branch line between Lisbon and Poceirão near Setubal.

Before making the cancellation official last week, the Minister of Transport and Public Works, António Mendonça, held a meeting with the three consortiums bidding for the project, which also includes the third bridge over the River Tejo.

The three consortiums involved are TaveTejo led by the Spanish company FCC (Fomento de Construcciones y Contratas); AltaVia, headed by Portuguese company Mota-Engil; and Elos, co-led by Portuguese companies Brisa and Soares da Costa.

The competitors are to be informed that a new competition is to be launched at a later date but are still awaiting an official Government dispatch from the ministry outlining the terms and reasons why the competition has been cancelled.

The decision had been announced in May but was only made public on Friday last week with its publication in the weekly Diário da República.

The Minister for Public Works played down the length of time between the first announcement and Friday’s formal announcement, claiming it was normal when it involved two different ministries, Public Works and Finance.

The competition, which was launched a year ago, would have meant an investment of around two billion Euros.

The Spanish consortium TaveTejo surprised the other competitors by gazumping them with a cheaper bid, which was 50 million Euros lower than estimates from RAVE and 300 million Euros cheaper than the proposal from AltaVia.

RAVE (Rede Ferroviávia de Alta Velocidade, SA) is the Portuguese public company set up to develop, coordinate and oversee the high-speed rail link project which links Lisbon to Madrid and Vigo to Porto.

On Friday, António Mendonça confirmed that he hoped these and other competitors would be able to present their bids in the new competition at a date to be set in the future.

But the Spanish competitor Taves reacted by saying it was “surprised” at the Government’s decision, claiming that it had always made itself available to present alternatives or alterations.

Officially, the Public-Private competition has been temporarily suspended “because unforeseen circumstances have made it necessary to alter fundamental aspects of the proceedings … caused by the international financial crisis”.

In other words the Government has had to put the project on ice to satisfy the IMF and European Commission’s austerity measures.   

Critics have suggested that the Government cancelled the competition to rule out the Spanish winning the bid and thus ensure that a Portuguese consortium bagged the lucrative contract.

Portugal currently has over 10 per cent unemployed and the local construction industry is sluggish.

Interest in securing the investment led to a number of important exploratory meetings between the competing consortiums, namely between the Spanish TaveTejo and Portuguese Altavia.

In one meeting, held in a Lisbon restaurant, the leaders of the Portuguese consortium had shown their concern at the way the competition was going and suggested to the Spanish competitors FCC that they drop their bid and instead collaborate with Altavia as subcontractors. FCC allegedly refused.

The reaction of Portuguese parties across the spectrum to cancelling the tendering competition has been varied.

The right-wing PSD and CDS parties said it wasn’t surprising since the Government didn’t have the financial means to fund it while the left-wing BE and communist PCP parties regretted the decision which would have provided thousands of jobs and helped stimulate the economy.

Jorge Costa, a PSD MP said: “We’ve always said that Portugal hasn’t got the money for this kind of project” while the leader of the CDS Paulo Portas, added, “does anyone really believe that in a few months time Portugal’s financial situation will be sufficiently improved to launch a new competition?”