June 1, 2021
For more than a year “RosAtomflot” has been trying to find a contractor for the construction of a floating dock, which is necessary for dock repairs of Russian nuclear icebreakers, including the new project 22220 ‘Arktika’ class, and nuclear support & maintenance vessels.
The replayed tender for the construction of a floating dock for nuclear icebreakers again ended with the recognition of only one bid – Turkish “Kyzey Star Shipyard”. The other two applications were rejected, including from China’s “Jiangsu Dajin Heavy Industry Co. LTD”, which last time filed a complaint with the Federal Antimonopoly Service of Russia (FAS). The Commission acknowledged that the Chinese shipyard “had not yet duly confirmed its experience and the availability of the necessary capacities and human resources”. Lawyers explain that now participants whose applications were rejected have five days to appeal, otherwise a contract with a single supplier could be concluded in June.
For the second time, Turkish “Kyzey Star Shipyard “ remained the only admitted applicant in the tender for the construction of a floating dock for almost 5 billion rubles. As follows from the minutes of the meeting of the Selection Commission, the tender was declared invalid. It was planned to sign a contract with “Kyzey Star Shipyard” in April. However, one of the applicants, the Chinese shipyard “Jiangsu Dajin” filed a complaint which FAS recognized as legal. As a result, “RosAtomflot” had to resume the tender and extend the collection of applications.
The dock must be built within 29 months from the date of signing the contract. The project expenses will be fully covered by “RosAtomflot” itself. Dock will have a length not less than 220 m, width – about 48 m, pontoon height – about 6 m, carrying capacity – about 30 thousand tons. The maximum contract price, including zero VAT, is RUB 4.983 billion (appr. US$ 78 millions).
Russian shipyards, including the United Shipbuilding Corporation (USC), did not apply for the tender. Sources of “Kommersant” in shipbuilding noted that Russian enterprises estimated the project price 1,5-2 times higher, explaining this by high overhead costs, the lack of a ready design project, high saturation and high metal consumption. In addition, there remained the problem of free capacities, ready to quickly and cheaply build a dock with a length of more than 200 m.
Initially, three applications were submitted for the competition – “Kyzey”, which offered a price of 4.981 billion rubles, the Turkish “Epic Denizcilik ve Gemi Insaat A.S.”, whose bid was 4.45 billion rubles, and “Jiangsu Dajin” for 4.57 billion rubles. “Kyzey” was considered as the main contender for this order. The shipyard is currently completing two LNG-fueled ferries for the Ust-Luga-Baltiysk line.
Following the processing of applications, “Epic Denizcilik” was excluded from tender. Two other bids were returned to “Kyzey” and “Jiangsu Dajin” for clarification. Later, “Jiangsu Dajin” was again denied participation following the re-examination of applications. The Commission refers to the inconsistency of the company’s application with procurement documents related to the confirmation of contracts for ship construction completed in 2018-2021, drawn up in accordance with accounting rules.
Industry sources feared that the need for a new survey of all participants and a complaint to the FAS would lead to a delay in construction. Mr. Vyacheslav Ruksha, deputy head of “Rosatom” and head of the Northern Sea Route Directorate, in an interview with “Kommersant” on December 15, 2020, said that a new dock was needed “exactly by the fall of 2024”.
According to Russian legislature, if several bids submitted for participation in the procurement, but only one admitted to participate, the procurement is declared invalid, but the law allows the possibility of concluding a contract “with a single supplier”.
Commentary.Situation seems to be a little strange. Obviously, the floating dock is badly needed for servicing nuclear-powered icebreakers, which are the core of Northern Sea Route year-round operations declared as top priority strategic goal for Russia. However, the contract price seems to be inadequately low for serious contenders to join the project. The Turkish company is clearly being pushed forward even if it does not have experience related to nuclear industry (the new dock must have very specific and sensitive equipment to deal with radiation, etc.). There may even be speculations on possible political reasons for this, that Turkey today is a more valuable ally for Russia than China. Sure, it is highly unlikely. Even so, the hidden motives and the conflict of business interests around this controversial deal may impede the progress of Russian Arctic strategy…