Public procurement

How was the state deprived of 30 million lei

Foto: CIJM
Author: Natalia Porubin, Elena Moldoveanu
04/07/2016 7834

The state paid 10 million lei for tons of equipment that languishes for years in the stock of an economic unit. The equipment was purchased for a treatment plant, which the authorities in Criuleni have been trying to build it for nearly a decade. The fate of the investment is uncertain while a part of the engineering networks installed were damaged. Meanwhile, the district council pays tens of thousands of dollars annually for storing equipment which nobody knows whether it will ever be used.  

Works performed by halves

The project "Evacuation of waste water from town Criuleni to water treatment station of Onitcani village" was launched in 2005 after the administration in Dubasari refused to receive waste water for treatment from Criuleni.  Initial value amounted to 21.5 million lei , but due to construction tergiversation, costs have doubled, and in 2008 they reached 43.3 million lei, reads a report of the Court of Auditors.

According to the administration of district Criuleni, a sum of 29.8 million lei was used so far for the construction, and the works have been completed at 65%.

The project was supposed to finish 7 years ago

The tender for construction works and installment of the water treatment plant was organized in 2007. Attending the tender were 3 economic units.  Two of them were disqualified because of their offers "minimum package of necessary documents missing", as shown in the report of the working group on procurement.

Stock Company  „Crio-Izvorul” won the contest. The company is managed by Petru Mițul  and was registered in December 1995. The sum of the agreement signed between „Crio-Izvorul” and district Council Criuleni amounts at 10 million lei and the works are supposed to be finished within a year. “Migor Plus” SRL was responsible for technical supervision of the project, based on an agreement signed in November, 2009 with the district Council Criuleni.

Initially, the project was supposed to cover both socio-cultural buildings and households in town  Criuleni and villages Onitcani and Slobozia-Dusca.  In the next stage, the authorities aimed to extend the number of beneficiaries and include in the project other localities: Cosernita, Boscana, Mardareuca, Hrusova, Chetroasa and Ciopleni. The first investments in the project were made from the state budget, and in subsequent years, the works were carried out gradually, from sources of the National Ecological Fund.

Equipment from Latvia dusts in stock

The equipment for water treatment plant was imported from Latvia by the company „RESETILOVS UN CO” IK, based on an agreement signed with S.A. „Crio-Izvorul” and district council Criuleni.

The waste water treatment plant will be built on a plot of 1 hectare that was owned by the former pig farm of the experimental didactic Station of the Agrarian University. In December 2006, the Cabinet of Ministers decided to transfer the land in possession of Onitcani village, at the request of Criuleni district administration. However, for the construction of the treatment plant, Criuleni district council ordered the forced alienation of agricultural land from at least two persons, who were returned money. So far, 16 km of engineering networks were installed, storage tanks were built and water treatment plant and sewage pumping stations were purchased.

The waste water treatment plant was brought to the country almost a decade ago but it was not installed. Since 2007 until present, the equipment is stored on the territory of „Crio-izvorul”, and the district authorities pay to the enterprise for security and storage up to 70 thousands lei, says Petru Mițul. Between 2012 and 2014, the District Council has not made the payment, which is why, the company has sued the authorities.

Works stopped 2 years ago

Meanwhile, the authorities sought possibilities to finish the project but the biggest problem is lack of money. One of the financing means of the project was the National Ecologic Fund. Thus, in 2009, 1 million lei from this fund was invested and the agreement was signed by the former minister of Environment Violeta Ivanov.  Two years later, a sum of 3 million lei was earmarked in 2011 with the help of the National Ecological Fund. The money was used to purchase equipment for 2 pumping stations. The current leadership of the district says that since the pumps were purchased and until several months ago, they were stored at the shop wherefrom they were bought by the economic unit. Currently, an agreement with an economic unit is necessary to be signed to keep it safe.  

Last investment in the project was in 2014 when a sum of 1,4 million lei was capitalized. This money was earmarked for the construction of an access road to the water treatment plant.

Pipes damaged and the plant’s  guarantee lost

Meanwhile, a segment from the engineering networks was damaged following some diggings performed by an economic unit. „ The pipe is damaged on a segment of about 200 meters. The materials are at the prosecutor for almost 2 years. We were said that a criminal case was initiated but it has not reached the court”, said Anton Crupa, interim head of the Division of community development, District Council Criuleni.

"Even if we can start the works, we will require technical expertise to detect the wear of equipment that has been installed and was not used for several years in a row. There have been several contracts, but assessments were not done because there was no need", says the specialist.

The worst thing is that the plant does not have guarantee from the producer and it expired in the period of 10 years since the construction started. „ Also, we are not sure if specialists from the factory will come to install the water treatment station, as we lack necessary specialists. Engineers who produced this plant must come to install it, commission it and train the staff to work with it. We want to finish the project because a sum of 30 million lei was invested in it. The equipment may be spent though it is made of stainless steel.  We hope it will not rust", said Iurie Andriuta, president of Criuleni district.

Economic unit: „We are at loss”

Petru Mitul, director of „Crio-izvorul” says that his enterprise is at loss because of this project implementation. „State owes to me one million lei because I paid VAT twice at the import of the equipment. The total value of the equipment is about 12 million lei. The state gave me only 10,5 million. VAT was paid twice at import ”, says the businessman.

Petru Mițul says that the equipment stored on the territory of the enterprise causes problems and does not enable him to develop his business. „ I asked them many times to take this equipment as we need to use these rooms. Many people come and say that they need room for production. I understand that they cannot take the equipment as they do not have room for storage. The owner will decide on it. When I say, owner I refer to the district Council, it is his property. Who can take the decision?!”, says the businessman.

Photo gallery: storage of the equipment paid from public money for waste water treatment plant from Criuleni

At least a sum of 15 million lei is necessary for project finalization

In turn, the president of the district says that the project was not finalized because of lack of financial means. According to Iurie Andriuta, currently, they discuss 2 variants of project finalization. First, the authorities have to install the water treatment plant in village Onitcani. Another solution is to connect the pipe of waste water evacuation to the waste water treatment plant from Vadul lui Voda. In the first case, a sum of about 15 million lei is necessary to finish the project and the authorities in Criuleni hope to attract money based on a public-private partnership. In the second case, district Criuleni can become partner of S.A. „Apa-Canal”. 

The sums proposed by the authorities are approximate as an expertise to this effect was not performed. The biggest difficulty is that the equipment is spent and the authorities do not know the situation of the engineering networks that were installed.

Iurie Andriuta fears that the equipment could be damaged. " Wells, concrete pipes are destroyed quickly if they are not used. That's why, I do not know what to expect when we start to load water pipes. We have many questions: how wells will react, will they be hermetic, they will resist or not. It may be necessary to install them again, and that means extra expenses", says president of district Criuleni.

Meanwhile, the town Criuleni is dependent on the water treatment plant from Dubasari. In spring current year, the fee increased from 11 to 46 lei and the Government and the Bureau for Reintegration intervened to settle the problem.

The report of the Court of Accounts shows that the tergiversation of the construction of the plant has a negative impact on the environment, conditions the physical and moral ageing of the purchased equipment. Except it, the unfinished project generates bearing of some financial means for services of waste water treatment services in town Criuleni, that in 2014 totaled 320,9 thousands lei, writes the document.  

Public Procurement Agency: problem relates to multiannual agreements

Authorities and representatives of the civic society say that such situations are registered not only in Criuleni but also in the so called multiannual agreements, when the funding is provided gradually. Ghenadie Grib, deputy director of the Public Procurement Agency says that in majority of cases such situations relate to the agreements for construction works. „Each contracting authority plans its needs to their liking, this is the main rule and this is stipulated by best practices, including European practices. The Law on public procurement has the notion of multiannual agreements- an international practice. Though we admit that we do not have financial means, considering some technological proceedings, the agreement can last more than one year. 99,9 percent of situations of this kind happen because of the agreements for works. Unfortunately, this is the practice, we have the budget annually, we do not have a legislation that will stipulate the planning of the multiannual budget for capital investments”, said Grib in the Club of Investigative Journalists dated June 19 current year. Also, he said that the procedure of public procurement cannot develop by stages. „Abstractly talking, if we need to build a kindergarten that costs 10 lei, it does not mean that if we have 3 lei for current year we can organize a tender for 3 lei. It is not possible that an economic unit builds a wall and another economic unit installs the roof. The procedure is performed for the whole need but the contracts are executed in the limit of earmarked financial means- this is the rule. The fact that there is no money and money is not assured for next year, does not relate to the procurement procedure. It relates to the state policy on this segment”, said the deputy director of the Public Procurement Agency.

Expert: „Money is spent in vain, but the result is not the expected one”

In turn, Olesea Stamate, president of the Association for Efficient and Responsible Governance (AGER), says that there are many situations when the projects are partially funded in many settlements of the country.

„We have discussed with local authorities and they always gave example of projects funded by the National Ecologic Fund. For example, they apply to the fund for a project and they get 10% from the project value, after that the financing stops for the next 5 years. 10% of completed work either loose from relevance, quality and in some cases, it is useless to continue the work. It is better you offer 100% for a project in a settlement, next year-  you provide the whole sum for other project, than to give 10% for many settlements. After all, the money is used in vain and the result is not the expected one”, said Olesea Stamate.

Ministry of Environment: National Ecologic Fund needs reformation

Minister of Environment Valeriu Munteanu, has previously declared in a material of the Center for Investigative Journalism that the current form of National Ecological Fund organization is inefficient. „ We must institutionalize this fund, establish an agency, as in Romania, Poland and other European countries. They have been speaking about it for 5 years, but the former ministers rejected the proposal to keep the status quo-o, perhaps for own benefit”, says Valeriu Munteanu.

Asked why the ministers who have previously managed the Fund (some of them were his party colleagues) lacked political will for such reforms, Munteanu replied: „I do not know why they did not do it. I try to restore people’s trust in our capacity to improve some fields”. According to him, in the first months when he led the Ministry, he discovered at least 20 projects that were funded but were not implemented or finalized.

The investigation was accomplished under the Campaign „Public Money Is My Money Too”, carried out by the Centre for Investigative Journalism (CIJM) and the Association for Efficient and Responsible Governance (AGER), within a project funded by the European Union and the National Endowment for Democracy.

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