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Korean Consortium Could Lose US$2.5 Bil. Panama Metro Construction Project
Panama Annuls Part of Metro Line 3 Tender Evaluation
Korean Consortium Could Lose US$2.5 Bil. Panama Metro Construction Project
  • By Jung Min-hee
  • December 12, 2019, 17:44
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Panama Metro Line 1

A Korean consortium that has been selected as the preferred bidder for a US$2.5 billion metro construction project in Panama may be deprived of their preferential status as the Panamanian government has partially annulled the tender evaluation outcome.

In a resolution issued on Dec. 11 (local time), the Public Procurement Directorate of the Panamanian government has partially annulled the report of the evaluation committee in the tender of Line 3 of the Panama Metro and has asked for a new analysis of the proposals presented by HPH Joint Venture and China Railway Group.

The evaluation commission had awarded the Korean consortium HPH Joint Venture, formed by Hyundai Engineering & Construction and POSCO Engineering & Construction, the best total score (893 points), with an economic proposal of US$2.507 billion. Based on the evaluation report, Panama Metro selected the South Korean consortium as preferred bidder in November.

Yet the other three consortia that were in the race for the contract made up to five claims and Public Procurement decided to accumulate them.

In the resolution, Public Procurement ordered that the proposal of China Railway Group be reviewed so that the evaluation commissioners explain in greater detail the score assigned in certain evaluation criteria.

In addition, it ordered the commission to confirm that the financing structure presented by the HPH Joint Venture consortium is viable and favorable to the interests of the Republic of Panama.

Line 3 of the subway will connect Albrook, in the Panamanian capital, with Arraijan, in Panama Oeste, on a 25-kilometer route that will have 14 stations.

Industry observers say that the resolution from Public Procurement appears to have been issued under pressure from the Beijing government.

According to foreign media reports, the Beijing government has long courted Central American nations with infrastructure financing and investment, which angered Washington. Yet Panama’s new President Laurentino “Nito” Cortizo, who took office in July, has vowed a more balanced approach.

Among the four consortia that bid for the metro project, two were led by Chinese companies -- the ACPC consortium formed by Acciona Construccion of Spain and Power Construction Corporation China, and the China Railway Group consortium.

The ACPC consortium received 842 points (382 technical and 460 economic), with a bid value of US$ 2.518 billion.

Regarding the bid from China Railway Group, Panama Metro said in November, “The China Railway Group consortium did not reach the minimum technical evaluation score of 375 points, therefore its proposal is considered risky because it presents technical conditions with which it is materially difficult to fulfil the objective of the contract.” Its bid was valued at US$2.46 billion.

As Public Procurement has partially annulled the tender evaluation outcome and ordered a review of the proposal of China Railway Group, the Korean consortium could lose their preferred bidder status in the worst-case scenario.