MRTA in talks with Ital-Thai for decreased bidding price

Construction News

The Mass Rapid Transit Authority of Thailand is entering negotiations with Italian-Thai Development with a view to the company lowering the bid price for the Purple Line’s sixth contract from Bt4.14 billion. The current bid price is higher than the median price of Bt3.66 billion.

Expecting negotiations to be completed in two weeks, MRTA acting governor Kritiya Sumitnand yesterday said that if Ital-Thai refused to lower its price, she would submit the current bid for Cabinet approval.

Of the eight contracts for the Purple Line electric-train route, the sixth is the only one that has not yet been awarded.

The contract signing was expected last July, but the MRTA has delayed the consideration process given that Ital-Thai was the only qualified bidder in the first round. Sino-Thai Engineering and Construction was disqualified.

Left with just one bidder, the MRTA has questioned whether the contract-awarding process could be challenged on legal grounds.

The Japan International Cooperation Agency (JICA), which is financing the Purple Line, confirmed in October and April that Ital-Thai was a qualified bidder and that the MRTA must open its financial bid as soon as possible, so that the contract could be signed and further repercussions, such as increasing costs, avoided.

An MRTA source said he expected the board would call on Ital-Thai to negotiate a discount to get the final bid more in line with the limit set by the agency.

However, if the company refuses to adjust its bid price, or if any offered reduction is too small, the board will forward the final bid to the Cabinet for ministers either to accept the price or terminate the bidding process,

he said. In either case, the setback would further complicate the construction of the Purple Line, because the tender has already been delayed for almost a year. Because of the continued delay, the MRTA has had to pay a commitment fee to the JICA, amounting to 0.1 per cent of the loan allocated but not yet drawn upon.

In fact, the source said the rail-work construction for the sixth contract should have had a higher median price. However, the government had transferred some of the budget for the whole project to Ch Karnchang and Sino-Thai Engineering and Construction, which won the bidding for the first and second contracts respectively, to upgrade the construction work.

As a result, the budget for the sixth contract was trimmed, too.

The budget for the entire Purple Line project is set at Bt36 billion. Because of the budget transfer, the money available for the last contract to be signed is now only Bt3.66 billion.

The source also said that if Ital-Thai offered a reduction in its bid price to meet the initial maximum level, it could result in a reduction in the specified quality of the rail work, which might cause problems in the long run. The MRTA already has to pay a delay fee to the contractors for the first and second contracts, whose construction work is complete but which are now merely waiting for the rails, which are not yet ready.

“The problems surrounding the Purple Line reflect the failure of the MRTA management and the political interference of the MRTA board,” the source said. “Apart from the increased budget burden, the work might not get done as per the quality specifications that were requested at the outset. All these preventable delays have meant that the government has had to pay a commitment fee to the JICA and delay penalties to existing contractors.”


Leave a Reply