Tamnava Mine Deadline Broken Without Explanation

While the draining of the Tamnava mine is running months late, EPS says the consortium has fulfilled its contract and will not be charged penalties.

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Serbia’s state electricity provider, EPS, signed three annexes to the original contract with the consortium hired to dewater the Tamnava mine, allowing extensions to the deadline, a written reply sent to BIRN on February 24 said. The annexes to the contract allowed two extensions to the deadlines.

The job of pumping out the water and the mud from the mine became the focus of media attention after BIRN released an investigation on the award of the contract to Energotehnika – Juzna Backa and its Romanian partner, Ness.

They won a contract worth roughly €15 million for pumping out 187 million cubic meters of water and mud from the Tamnava mine.

The consortium was selected because it offered the shortest deadline and the lowest price per cubic meter of pumped out water and mud.

Among other things, the investigation also revealed that although the bidders were required to have at least one relevant reference for the job of pumping out large quantities of water, neither member of the winning consortium had such experience.

The investigation also revealed that the consortium engaged a Dutch company, Van Heck, to carry out a part of the works.

BIRN wrote that the delay of several months, while the tender was carried out and while the work started, cost Serbia around a million euros per day. This was the estimated cost of the purchase of extra imported electricity and coal. 

The investigation also revealed that the director of the Serbian company, Dragoljub Zbiljic, is on trial for tax evasion in the town of Kragujevac.

In its reply to BIRN of February 24, EPS also said that EPS and Energotehnika – Juzna Backa had honoured all legal procedures in the tender procedure and its realization.

Click here to see full article in English. This text is a literal translation into English of the original in Serbian which has not been edited or adapted in any way to suit an English-language readership.

Under the contract the selected consortium, a Serbian company, Energotehnika – Juzna Backa, and its Romanian partner, Ness, were to complete the task of pumping out water and mud from the mine by December 17.

In its written reply to BIRN, EPS said that with the permission of the World Bank – one of the funders of the project – Annex 2 was signed on December 23, 2014, extending the deadline for completion of services by 40 calendar days, that is, until February 1, 2015.

As the work was not completed by this deadline, EPS said that – again with permission from the World Bank and at the request of Energotehnika – Juzna Backa – Annex 3 was signed, further extending the deadline.

In its reply, EPS did not say what the latest deadline was, and no information was given on when the mine will be fully drained. The company says about 20 million cubic meters of water still need to be pumped out.

The first Annex to the contract, signed on September 11, 2014, agreed that an advance payment of €1.5 million would made to the consortium instead of the €750,000 envisaged in the tender documentation.

EPS also maintained that the consortium had met its contractual obligations.

EPS told BIRN that the water from Tamnava – West Field was first being pumped into the Tamnava – East Field and after that into the river Kolubara.

“This solution uses the existing structure of the pipelines, which have an adequate cross section area and were installed in the previous period for the purposes of realizing the pumping-out process,” EPS’s reply said.

The letter did not explain why the water is not being pumped directly into the Kolubara, or whether this selected method of de-watering has affected the price of services.

EPS said the contract obliged Energotehnika – Juzna Backa to pump out at least 80 million cubic meters of water within 90 days of possession of site and the start of works, although this is not in conformity with the contract that EPS previously showed to BIRN.

It said some 144.5 million cubic meters of water were pumped out from the start date of work on September 17, 2014 to February 23.

Of this figure, some 92.5 million cubic meters was pumped out by Energotehnika – Juzna Backa and about 52 million by RB Kolubara.

It did not explain whether, since the contractual obligations have been met, the annexes agreed additional payments for additional work.

Although the deadlines for pumping out the water expired two months ago, EPS told BIRN that Energotehnika- Juzna Backa would not be charged any penalties for the delays because the company was not held responsible for them.

EPS did not answer BIRN’s questions about when the mine will finally be drained, what precise role Ness plays in this task and what this company is doing right now.

BIRN requested, but to date has not received, documentation that EPS was obliged to submit under the Law on Free Access to Information of Public Importance, which could show why the completion of works is running late.

In its request, dated February 3, BIRN asked EPS for the certified monthly reports and log books that Juzna Backa was obliged to submit to EPS.

Having in mind that the deadline to complete the works expired on December 17, 2014, BIRN also asked EPS to supply documentation that would explain the basis for extending the deadlines for Juzna Backa.

BIRN also asked for copies of any orders for the temporary suspension of the pumping out of the water and mud, if EPS issued any such an order to Juzna Backa.

BIRN did not receive any of the requested information and documents by February 26, when the legal deadline for EPS to act on this request expired.

Earlier, on February 10, BIRN filed a complaint with the Commissioner for Information of Public Importance on the grounds that EPS had failed to submit information and documentation on the tender to dewater the mine within 26 days of the request being issued.

“In the course of the realization of the contract there were a number of unforeseen circumstances in the field … that resulted in a justified need for the extension of the contractual deadline for the realization of the service,” EPS said.

The company said “plateaux” had appeared underneath the installed pipelines, which “caused the pontoons carrying the pipelines to run aground”.

It also cited “lack of adequate access roads for machines that would be used to extend the pipelines and repack the pumps, stopping the pumps in order to prevent possible pipeline breakdowns” and the construction of an onshore section of the pipeline.

EPS said the consortium did what it had been hired to do. “When preparing the competition documentation EPS and RB Kolubara primarily had in mind the fact that it was necessary to create, in the shortest possible time, prerequisites for the launching of the production process of mining coal.

“Therefore, expectations have been fulfilled because the [mine] production process resumed according to plan, that is, already in December,” EPS wrote.

The contract that EPS previously submitted to BIRN envisages that, if contractual obligations are not met, Juzna Backa is to pay 0.5 per cent of the value of the contract [about €75,000] in a penalty for each day of delay.

Unforeseen circumstances, such as force majeure, that the contracting parties could not influence, are also envisaged, so such situations are not subject to penalties.

Juzna Backa has refused to answer questions from BIRN regarding the de-watering of the Tamnava mine.

Tamnava mine in October, 2014. | Photo by BIRN
Tamnava mine in December, 2014. | Photo by BIRN
Tamnava mine in February, 2015. | Photo by BIRN



This article is also available in: Bos/Hrv/Srp