STB Facing Financial Crisis Over Tram Purchase Dispute
The Bucharest Transport Company (STB) has found itself in a precarious financial situation after a court ruling mandated it to pay nearly €170 million in damages to a consortium of companies, including Electroputere VFU Pașcani and Reloc Craiova, owned by businessman Gruia Stoica. This ruling stems from a legal battle over a contract for the procurement of 40 trams, which was awarded to the consortium despite their lack of previous tram manufacturing experience.
In September 2019, under the administration of Gabriela Firea, STB initiated a procurement process for these trams, intending to replace aging vehicles from the 1970s. The court’s recent decision has upheld previous rulings, rejecting STB’s appeals and affirming that the consortium is entitled to daily penalties amounting to €300,000 until the issues are resolved.
Background of the Dispute
The procurement process attracted two consortiums: one led by Electroputere VFU Pașcani and Reloc Craiova, and another by Astra Vagoane and CRRC Qingdao. The former was awarded the contract, even though neither company had previously manufactured trams. At the time, VFU Pașcani had only modernized a limited number of trams, raising questions about their ability to fulfill the contract requirements.
During the bidding, STB adopted less stringent criteria than in past procurements. They required only proof of supplying a minimum of 20 vehicles in the last five years and a license for an approved tram. Following concerns from potential bidders, STB modified its requirements to include modernized or reconstructed vehicles, which further complicated the bidding process.
Legal Battles and Financial Ramifications
The situation escalated when STB, facing budget constraints and legal challenges, decided to cancel the procurement on December 31, 2020. The cancellation came after the fresh mayor, Nicușor Dan, argued that the 18-meter trams were not suitable for the city’s needs and that their costs were comparable to larger trams.
Dan stated, “STB contracted without having a budget for it. The budget was supposed to come from the municipality. Meanwhile, a control by the Court of Accounts indicated that such purchases by one entity using another’s funds are not permitted.” STB has been embroiled in lawsuits, leading to accumulated penalties currently exceeding €140 million, according to recent reports.
Current Developments and Future Implications
As of now, STB has acknowledged the results of the procurement process legally and has attempted to engage the awarded consortium to finalize the contract. However, the consortium has failed to provide the necessary documents, which has led STB to announce the cancellation of the procurement process once again.
Former STB director Alexandru-Hazem Kansou noted that the lack of a budgetary allocation from the municipality remains a critical issue. He emphasized that the STB’s inability to act unilaterally is compounded by its lack of financial resources, which are contingent on the municipality. “The current situation is stuck between the obligation to respect court rulings and STB’s inability to execute without budgetary coverage,” he stated.
What’s Next?
The STB is awaiting further legal clarifications and potential negotiations that might alleviate the financial burden. Meanwhile, the implications for public transport in Bucharest remain significant, as the ongoing situation could delay the necessary upgrades to the city’s tram fleet. The financial strain on STB may impact its ability to maintain and improve services for the residents of Bucharest.
As the situation develops, it will be essential for all parties involved to engage in constructive dialogue to find a resolution that serves the public interest and ensures the future of sustainable public transport in the capital.
