TERMMING rejects the way the Municipality of Staré Mesto wants to change the heat supplier

  • TERMMING, a.s. does not agree with the steps of the Old Town Municipal District, which are aimed at changing the heat supplier in a non-transparent way, bypassing public procurement.
  • At the same time, TERMMING, a.s. as the current supplier of heat for Staré Mesto, considers it extremely important to stop looking at the current situation through the lens of a case of so-called special consideration. It should be an effort not only of the Staré Mesto Municipality, but of all municipalities to make transparent public tenders for the operation of heat and energy facilities in order to obtain the most advantageous offers. One of the appropriate ways may be a concession.
  • The statements of the Old Town Municipality defending the non-transparent procedure by the difference in price are misleading, not based on facts and will not bring the declared savings to the residents.
  • TERMMING, a.s. will use all legal possibilities to defend the interests of its customers. Therefore, it has submitted complaints to the relevant authorities such as the Antimonopoly Office (PMU), the Office for Public Procurement (ÚVO) and the Supreme Audit Office (SAO) to review the procedure of the Staré Mesto Municipality.

The transparent solution is not direct award but public procurement

TERMMING, a.s., a member of the French ENGIE Group, a company engaged in the production and distribution of heat and hot water, is fully aware of the current situation with energy prices on the market and their impact on end users. Only a transparent public tender for a wider range of bidders can generate the best offer for cooperation for the production and supply of heat to institutions and households in the Bratislava – Staré Mesto district.

For this reason, we propose that the municipal district create space for the preparation and implementation of a public procurement with the aim of concluding a new contractual relationship for the production and supply of heat with the best conditions that the individual bidders are able to offer. At the same time, all technical, operational, legislative and development/environmental information can be incorporated into the tender conditions.

The public procurement of a concession for the operation of thermal energy installations for the production of heat and hot water seems to be a good step that takes all these attributes into account. This is a transparent way of obtaining the most advantageous offer. The signing of concession contracts with suppliers on the basis of a public tender is a proven example of good practice, which is also used by Slovak municipalities.

SAO criticises municipalities for incorrect use of so-called special considerations

The use of a case of special consideration is allowed by law to municipalities, but only exceptionally in cases where it is not possible to organize a competitive, market-based, transparent environment in the form of a public tender.

There is also a methodological guideline of the Ministry of Finance of the Slovak Republic, which says when the special consideration can be used. It only applies to transfers and leases of property for public utility purposes or to transfers and leases of property and land of low value or area.

In its opinion on the use of cases of special consideration, the SAO also pointed out[1]that in the case of immovable property, municipalities do not try to proceed in such a way as to sell or lease it as advantageously as possible. The conclusion of a 20-year contract, which also includes the supply of heat worth tens of millions of euros, by direct award (its approval as a case of special consideration) without a transparent tender procedure appears to be a fundamental circumvention and infringement of the Public Procurement Act. As such a procedure contradicts the above-mentioned opinion of the SAO, we turned to the SAO, as well as to other relevant bodies of the Office of Public Procurement and the PMU, with suggestions to review the actions of the Old Town Municipality.

After the evaluation of the transparent tender, TERMMING, a.s. is ready (in case it is not the successful bidder) to terminate the contractual relationship before the expiry date by agreement and to provide maximum cooperation to the future operator in the handover of the subject of the lease in order to ensure continuous and safe production and supply of heat to the end customers.

Information about the amount of the price difference is incorrect

The company TERMMING, a.s. más MČ Staré Mesto concluded a valid contract on the lease of technological equipment for heat production until autumn 2025. The management of the Staré Mesto Municipality proposed to the deputies to terminate and sign a new lease contract for 20 years with MH Teplárenský Holding, a.s. (MH TH) without competition. The management of MČ Staré Mesto defends this step with unsubstantiated and misleading claims about the amount of savings.

“Staré Mesto Municipality presents the price of heat from us as the maximum price approved by the Office for Regulation of Network Industries. This price does not take into account not only the actual costs (which will be lower), but also the annual discount of EUR 120,000 for residents, which was agreed between TERMMING, a.s. and the management of the Bratislava – Staré Mesto Municipal District,” says Roman Doupovec, CEO of ENGIE Services.

In addition, from 1 January 2023, a new regulatory period for the thermal energy business will start, which will determine new rules and the way of calculating the price of heat for end users. As the legislation in question is not yet in force, it is not possible at present to declare what the heat prices from individual suppliers will look like. The information presented by the Municipality of Staré Mesto is therefore not relevant at this point either.

It’s not just the price, but other parameters as well

In addition, the criteria for selecting a new energy supplier should not only take into account price, but also other factors such as the value of the investment in the development, the amount of rent for the heat and power equipment, green solutions with a low carbon footprint or other criteria that take into account the needs of the contracting authority.

Under the new contract, which it is trying to enforce by special consideration, the Old Town Municipality would receive a lower rent of almost EUR 11 000 per year, which would mean a reduction in income of EUR 220 000 over 20 years, which could be used for development projects.

Investments in thermal energy equipment leased by the supplier are also a significant benefit. TERMMING, a.s. is ready to invest in infrastructure and other innovations in the Staré Mesto Municipality, which will be reflected in the form of quality and environmentally friendly services for customers.

[1]Source: the SAO, April, 2021


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