Domestic ferry tender offers revealed (1)
The Ministry of Economic Affairs has published the two offers made in the domestic ferry service tender a year ago, a procurement which caused much debate, corruption allegations and now a few court cases.
State-owned Port of Tallinn won the tender in October 2014, beating off Väinamere Liinid, which had provided the service the past two decades. Port of Tallinn will take over for the next 10 years in September 2016.
Väinamere Liinid contested the tender, as did the Ministry of Finance. Postimees recently published an article saying Reform Party politicians asked Vjatšeslav Leedo, the owner of Väinemere Liinid, for a large bribe, prompting one of the accused, Reform Party MP and Port of Tallinn supervisory board chairman Remo Holsmer to sue the newspaper. Leedo himself has taken Urve Palo, who was economic minister at the time, to court, for allegedly lying about the tender.
The Ministry of Economic Affairs has now released the two bids, with the Port of Tallinn offering a far cheaper annual rate, although the price of the ferries, which the state can buy out after 10 years, was more expensive.
In short, the annual rate of Väinemere Liinid's offer would have been 64 million euros higher over 10 years. Väinamere Liinid offered its ferries to the state for 41 million, Port of Tallinn for 106 million euros, although the state does not have an obligation to buy out the ferries, just an option.
The tender concerns two routes, mainland to Hiiumaa and mailland to Muhu, an island which is connected to Saaremaa via a bridge.
The price of an individual journey on the Muhu route was 219 euros by Väinemere Liinid and 208 by Port of Tallinn. The corresponding numbers for the Hiiumaa route were 628 and 634 euros per trip.
The fixed annual rate was 6.65 million for either line for Väinamere Liinid and 6.25 million for the Port of Tallinn. Up to now, fairly similar figures. The gap comes in the third fee, an annual fee subject to change from inflation and other factors such as staff salaries and passenger numbers.
The base, non-fixed rate offered by Väinamere Liinid was slightly over 12 million euros in the first year, while Port of Tallinn bid just under 8 million euros.
With slight inflation, salary, passenger number increases, the total price of the Väinamere Liinid offer was 381.8 million euros while the Port of Tallinn bid 317.5 million euros, over 10 years.
The price offered to the state to buy out the ships in 2016, when the tender finishes, was 41 million euros for Väinamere Liinid and 106 million euros for Port of Tallinn. The difference is somewhat explained by the age of the ships. Väinamere Liinid would have used three boats built in 2010 and 2011, ordering 1 more for 2016, while Port of Tallinn is building four new ferries, all due to launch next year.