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“ELECTRON” CONCERN ABOUT THE SITUATION WITH THE PURCHASE OF 100 BUSES FOR LVIV ATP №1
18.01.2021"Electron" Concern, whose company is a bidder in
the project "Urban Public Transport in Ukraine" with a loan from the
European Investment Bank, informs the public that comments on the circumstances
of this procurement are limited due to the obligations of bidders to comply
conditions of confidentiality.
However, taking into consideration the loud public response and heated
discussion on the possible purchase of 100 MAZ 203 buses made in Belarus for
Lviv and mentions in the context of statements and discussions of Concern's products, including the cost of
"Electron” buses and the ability to produce them in a timely manner, "Electron”
reports .
As to the actual proposal for the production of buses
submitted to the tender.
These are A185 ‘Electron” buses of a new generation, which
have been mass-produced since 2016 and they stand out among the most buses sold
on the Ukrainian market. Yes, these buses are a bit more expensive, but their
price is justified by economic efficiency in operation during the so-called
"life cycle" with a guarantee of more than 15 years.
A number of the latest design solutions are used in the
design of the A185 "Electron". Namely:
- the
body of the bus is made of structural and stainless steel and composite
materials, which provide better corrosion protection and guaranteed service
life of more than 15 years;
-
electrical equipment of the bus, made using CAN-modules and CAN-bus, provides
continuous computer control and diagnostics of all systems and units of the
bus, allows you quickly to find faults, reduces operating costs;
- for
the convenience of passengers, especially low-mobility groups, the cabin has 9
seats on the low floor, and, at the request of the customer, their number can
be increased to 12 (in the bus MAZ 203 there are only 2 such seats);
-
engines of American company CUMMINS in the world ranking for the third year in
a row are recognized as the best in their class, have the lowest fuel
consumption per 1 kW of power;
- a
number of innovative and technical measures implemented by "Electron” made it
possible significantly to save fuel and lubricants (up to 10%);
- units
and components used from leading European manufacturers also significantly
improve the quality, reliability and durability of the bus.
Therefore,
A185 "Electron" buses in their technical level should be compared
with modern buses manufactured by companies such as MAN, MERCEDES, Solaris Bus
& Coach, and not with MAZ 203, which belongs to the previous generation.
The
difference in prices between Ukrainian and Belarusian producers is also
significantly influenced by a number of other factors.
MAZ is
a state-owned enterprise that receives support from subsidies from the state
budget of Belarus, as well as enjoys significant tax benefits in its own
country. MAZ actively sells buses in Ukraine and does not pay customs duties on
their import. Why? Because the Free Trade Agreement within the CIS (the virtual
commonwealth of states formed during the collapse of the Soviet Union) is still
in force. In addition, the Ministry of Finance of the Republic of Belarus
reimburses banks and leasing companies for interest payments and lease payments
in the amount of 2/3 of the refinancing rate, if these customers buy goods of
Belarusian origin.
In
addition, the President of Belarus in order to expand into foreign markets,
including Ukraine, provided MAZ in 2017-2018 with non-refundable state aid in
the amount of over USD 500 million. However, despite significant government
support, MAZ is chronically unprofitable: losses for the period 2015-2018
amounted to more than 100 million USD. The above financial information is
provided from open sources in Belarus.
All
this together testifies to the use of dumping by the Belarusian producer - low
pricing in the Ukrainian market. And another confirmation of MAZ's dumping at
Lviv auctions is that the price of similar MAZ 203 buses purchased by Kyiv on
lease terms (without a tender) is 30% higher than in Lviv.
At the
same time, the Belarusian transport market, despite the current free trade
agreement within the CIS, is completely closed to foreign producers, including
Ukrainian ones: since 2008 there has been a strict legislative ban on imports
of products produced in Belarus.
Ukrainian
producers work in completely different conditions, without any tax benefits and
preferences from the state. And the credit policy of financial institutions is
aimed only at the complete destruction of Ukrainian producers: interest rates
on loans exceed - up to 20% and above.
Furthermore,
Ukrainian commodity produces in no way are not defended from the unpredictable
and often speculative number of foreign currency. So, only through
non-transfer, foreign exchange enterprises of "Concern” spent on the supply of
50 trolleybuses to Lviv 40 million UAH.
It is worth paying attention to another
tool that has not been used to save budget funds. It is a question of practice
of application by the European and world banks of an important preference:
customers can provide a 15% difference in the preferential tariff for goods
produced or created in the country and containing at least 30% of the local
finished product. This is an opportunity at least partially to protect the
interests of Ukrainian producers. And in the tender documentation of the
mentioned tender, unfortunately, this option was absent. Although in other
cities of Ukraine it is successfully used.
And now about the comments of some bloggers about the
extremely long delivery times of our company, including these 100 buses and
that they will be allegedly produced by "Electron” not earlier than by the end
of 2022. Therefore, we draw their attention to the fact that the tender
documentation contains completely different, specific delivery dates.
Namely: the first batch of 20 buses must be delivered not
later than 30 weeks from the date of receipt of the advance payment by the
supplier and starting from that time every four weeks 20 buses must be
delivered. As a result, the entire contract will become 47 weeks, so that less
than one year and, in addition, early delivery is allowed. And our "Concern”
has all the production capabilities to withstand this schedule and fulfill the
contract in time, but provided that the customers will fulfill their
obligations in a timely manner too.
And
finally. When ordering from a Ukrainian manufacturer, taxes are paid to
Ukraine, and from a foreign manufacturer, the funds are used for the
development of other countries. In particular, under this contract, the
Ukrainian company would be paid to the local and state budgets of Ukraine over
UAH 100 million. taxes and more than two hundred workers would have employment
and decent wages during the year.
For
reference - in recent years (including the crisis years 2019-2020), "Electron" Concern has paid more
than a billion hryvnias in taxes to local and state budgets of Ukraine.
Ukraine
is almost the only country in the world that does not use non-price criteria in
public procurement.
Neither the life cycle of the proposed machinery and
equipment, nor localization, nor employment, nor corporate social
responsibility, nor ecology are taken into account - nothing, only the price.
Nowhere else you will see it in the world. For example, in tenders in Poland,
the price is only 15%, the remaining 85% - the animation criterion, which laid
down all the above conditions. All successful states support their producers
because imports are jobs and taxes in other countries.
And now
the reality is that the Ukrainian public procurement market is open
unilaterally for about 80% of all countries.
Ukrainian
producers have to work in such conditions.
TAKING INTO ACCOUNT THE ABOVE, "ELECTRON" CONCERN
IS IN FAVOR OF CREATING EQUAL, NON-DISCRIMINATORY CONDITIONS FOR ALL PARTICIPANTS OF PUBLIC PROCUREMENT AND
OFFERS:
Firstly, Verkhovna Rada of Ukraine should immediately
consider and adopt in the second reading:
- draft
Law on Amendments to the Tax Code of Ukraine and Certain Legislative Acts of
Ukraine on Stimulating the Development of the Electric Transport Sector in
Ukraine (№3476);
- Draft
Law on Amendments to the Customs Code of Ukraine to Stimulate the Development
of the Electric Transport Sector in Ukraine (№3477);
- Amendments
to the Law of Ukraine "On Public Procurement” on creating preconditions for
sustainable development and modernization of domestic industry ”(№3739).
Secondly, National Bank of Ukraine, the Ministry of Finance,
the Ministry of Infrastructure should develop safeguards against the negative
consequences of unpredictable and speculative currency fluctuations.
Thirdly, the positive experience of the Cabinet of Ministers
of Ukraine on preferential lending to small and medium-sized producers should
be extended to mechanical engineering as a strategic sector of the economy.
Finally, the government urgently needs to review the terms
of the Free Trade Agreement directly with the Republic of Belarus and / or
other CIS free trade countries and exclude trolleybuses, buses, trams and
electric buses from the list of goods not subject to duty-free import into
Ukraine. In addition, it is necessary to revise or, if possible, denounce the
Rules of Determination of the country of origin of goods, which allow exporting
country independently to determine the criterion of sufficient processing /
alteration of goods and issue a certificate of origin for the provision of
goods to the free trade regime.
The implementation of these steps will make it impossible to
continue discriminating against Ukrainian producers in public procurement.
These issues are the responsibility of the state, not local governments.
"Electron” Concern has submitted its proposals to the
Government and Verkhovna Rada of Ukraine
and they have been waiting for their consideration for a long time.
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