No surprises as Bonnici Group manages to submit the lowest incinerator bid

There were no surprises this morning at the Department of Contracts when the Best and Final Offers (BAFO) for one of the largest-ever government tenders, worth hundreds of millions of euros, were unsealed.

As expected, following a ‘blunder’ earlier in the process that possibly compromised the entire tender, the French Paprec Energies Consortium – the only one of the final contenders in which a Maltese company is a shareholder – submitted the lowest bid for the project at €600 million.

Maltese road builders Bonnici Group, which has no experience in the complex incineration business, holds a 40% stake in the consortium.

Its managing director, Gilbert Bonnici, was in the past a business partner of Prime Minister Robert Abela for a construction development project in Iklin – earning him hundreds of thousands of euros from property speculation just weeks before he became Labour Party leader.

The Group was also a client of Abela’s private legal office and has received millions of euros in direct orders in recent years.

In its final submission, which now will be evaluated and negotiated by a government-appointed evaluation committee, the Paprec/Bonnici consortium’s final price (€600 million) is a few million less than its original indicative price of €617 million.

In the latest developments, the real surprise came courtesy of two other international consortia, which had originally indicated much lower prices than that of the Bonnici Group and which have now abandoned interest in the multimillion-euro project.

The companies that withdrew their bids at the eleventh hour were Maghtab Gdid Energija Nadifa (€395 million) and Sacyr Industrial Operacion (€422 million).

While they have not given a reason for their withdrawal even though they appeared to have been in pole position for the tender, industry sources told The Shift that the move might be a result of international mergers or because they “smelled a rat”.

“What has already happened in this process is irregular and unprecedented. You cannot just publish sensitive information that gives an advantage to competitors. This may lead to problems, including legal challenges, but one has still to see,” the sources said.

The move had raised eyebrows among the tender’s observers, who described it as a ‘mistake’ that is “compromising the whole process.”

Former MP Jason Azzopardi had, in fact, publicly called out the incident as a “planned mistake aimed to give an advantage to a particular company close to the Prime Minister”.

The withdrawal of the two international consortia opens the way for the Paprec/Bonnici consortium to win the tender, which was originally budgeted at €400 million – €200 million for the installation of the incinerator and another €200 million for its operation for the next 20 years.

Although the Paprec/Bonnici consortium’s bid is now the lowest of the three final bids submitted today, it is still €200 million more than the tender’s estimated value.

According to the final BAFO list published by the Department of Contracts, two other offers were submitted.

FCC Medioambiente Ineternacional S.L.U – another Spanish multinational, which did not indicate its price the last time around, submitted a bid of €617 million, which was slightly higher than that of Paprec/Bonnici.

On the other hand, Hitachi Zasen Inova AG together with Terna S.A. made a final offer of €781 million.

According to the process, a government-nominated evaluation committee will now start negotiations to nominate a preferred bidder.

The Office of the Prime Minister is said to be closely monitoring the evaluation committee’s work but has so far not named the committee’s members.

The Shift has already revealed how the enormous tender was seen to have been compromised when the Department of Contracts ‘mistakenly’ published sensitive information mid-way through the process.

Still, the government ignored advice to start the competitive tender afresh and moved forward with the process.

It is not yet known when the waste-to-energy incinerator will be up and running. In the meantime, Malta is facing stringent EU waste management targets that it is nowhere near achieving. The incinerator project is expected to drastically reduce the amount of waste sent to landfills.