Identifier
Created
Classification
Origin
09ASHGABAT1570
2009-12-07 09:55:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Ashgabat
Cable title:
TURKMENISTAN: BIDDING ON GOVERNMENT TENDERS; TRICKY
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UNCLAS SECTION 01 OF 02 ASHGABAT 001570
SENSITIVE
SIPDIS
STATE FOR SCA/CEN; EEB; NEA/IR
ENERGY FOR EKIMOFF/BURPOE/COHEN
COMMERCE FOR EHOUSE, DSTARKS
E.O. 12958: N/A
TAGS: ECON EINV ETRD KCOR PGOV TX
SUBJECT: TURKMENISTAN: BIDDING ON GOVERNMENT TENDERS; TRICKY
BUSINESS
REF: ASHGABAT 1249
ASHGABAT 00001570 001.2 OF 002
UNCLAS SECTION 01 OF 02 ASHGABAT 001570
SENSITIVE
SIPDIS
STATE FOR SCA/CEN; EEB; NEA/IR
ENERGY FOR EKIMOFF/BURPOE/COHEN
COMMERCE FOR EHOUSE, DSTARKS
E.O. 12958: N/A
TAGS: ECON EINV ETRD KCOR PGOV TX
SUBJECT: TURKMENISTAN: BIDDING ON GOVERNMENT TENDERS; TRICKY
BUSINESS
REF: ASHGABAT 1249
ASHGABAT 00001570 001.2 OF 002
1. (U) Sensitive but Unclassified. Not for public Internet.
2. (SBU) SUMMARY: Bidding on Turkmen Government tenders
requires an understanding of both the official process, as
laid out in the regulation on tenders, and the unwritten
rules. Under the table payments to state officials can
reportedly amount to 10-15 percent of the contract value. The
Turkmen Government considers the procurement of high quality
goods and services a priority, but also considers which
companies or countries are in favor with the president. For
several years, the Turkmen Government has favored Chinese
suppliers for political reasons, and because they provide good
post-sales service and cheap spare parts. END SUMMARY.
3. (SBU) The Turkmen Government in the 1990s established
consistent and somewhat transparent procedures, as described
in the regulation on tenders, to ensure competition in bidding
on procurement and project tenders. The tenders are announced
regularly in local newspapers and on government websites,
including the Oil and Gas Ministry website. Tender
application packages must include a price quote that specifies
delivery terms; a statement on the applicant's financial
status, issued by a bank; a detailed technical description of
the proposed equipment or materials; brief background on the
manufacturer; a written commitment on precise delivery terms;
and an agreement to accept payment on delivery. The Supreme
Control Chamber and the Commodity and Stock Exchange of
Turkmenistan scrutinize the bids' authenticity and
feasibility. The Director of Technical Procurement at state-
owned companies like Turkmengas and Turkmenoil is generally
the person who makes the official, final decision about which
company wins the tender. However, according to contacts in
the Turkmen Government, the Director often solicits input from
the engineers and technicians that will use the equipment or
work on the project.
4. (SBU) A tender bidder must pay an entry fee of $200 for
procurements, or up to $2500 for major project tenders.
Companies frequently engage a local representative to deliver
the proposal package to the tender commission. According to
companies that have experience bidding on Turkmen Government
tenders, companies, or their representatives, usually pay
money under the table to tender commission officials and even
end-users, like technicians and engineers. Such payments,
usually between 10-15 percent of the contract value,
do not guarantee a win; they just keep the bidder in
the running. The Turkmen Government also frequently requests
discounts from the companies whose proposals they are
considering. Experienced companies take this into account
when writing their proposals and inflate the initial
price.
5. (SBU) Government officials have told tender bidders that
product quality is the most important factor in selecting a
winner for a tender, although price matters. Political
motives also influence Turkmenistan's choice of suppliers,
particularly when President Berdimuhamedov has made a comment
favoring a certain company or country. For several years, the
Turkmen Government has favored Chinese manufacturers, although
that preference may be ending (reftel). Chinese companies
provide post-sales service and maintenance as well as cheaper
spare parts. In general, manufacturers, or their authorized
dealers, have a higher chance of winning tenders than
middlemen because the Turkmen Government insists on
availability of post-sale service and repair within
Turkmenistan.
ASHGABAT 00001570 002.2 OF 002
6. (SBU) COMMENT: Construction and energy sector tenders are
the most numerous and attract the most bidders, in part
because the government has a better record of payment for
large-scale projects. Other sectors, including machinery, are
not as competitive because there are fewer companies that
could provide the required equipment or parts. As with most
transactions in Turkmenistan, there is both an official
procedure for bidding on tenders, and unwritten rules that are
just as important. If the unwritten rules are not followed, a
company generally finds itself at a serious disadvantage. END
COMMENT.
ECKSTROM
SENSITIVE
SIPDIS
STATE FOR SCA/CEN; EEB; NEA/IR
ENERGY FOR EKIMOFF/BURPOE/COHEN
COMMERCE FOR EHOUSE, DSTARKS
E.O. 12958: N/A
TAGS: ECON EINV ETRD KCOR PGOV TX
SUBJECT: TURKMENISTAN: BIDDING ON GOVERNMENT TENDERS; TRICKY
BUSINESS
REF: ASHGABAT 1249
ASHGABAT 00001570 001.2 OF 002
1. (U) Sensitive but Unclassified. Not for public Internet.
2. (SBU) SUMMARY: Bidding on Turkmen Government tenders
requires an understanding of both the official process, as
laid out in the regulation on tenders, and the unwritten
rules. Under the table payments to state officials can
reportedly amount to 10-15 percent of the contract value. The
Turkmen Government considers the procurement of high quality
goods and services a priority, but also considers which
companies or countries are in favor with the president. For
several years, the Turkmen Government has favored Chinese
suppliers for political reasons, and because they provide good
post-sales service and cheap spare parts. END SUMMARY.
3. (SBU) The Turkmen Government in the 1990s established
consistent and somewhat transparent procedures, as described
in the regulation on tenders, to ensure competition in bidding
on procurement and project tenders. The tenders are announced
regularly in local newspapers and on government websites,
including the Oil and Gas Ministry website. Tender
application packages must include a price quote that specifies
delivery terms; a statement on the applicant's financial
status, issued by a bank; a detailed technical description of
the proposed equipment or materials; brief background on the
manufacturer; a written commitment on precise delivery terms;
and an agreement to accept payment on delivery. The Supreme
Control Chamber and the Commodity and Stock Exchange of
Turkmenistan scrutinize the bids' authenticity and
feasibility. The Director of Technical Procurement at state-
owned companies like Turkmengas and Turkmenoil is generally
the person who makes the official, final decision about which
company wins the tender. However, according to contacts in
the Turkmen Government, the Director often solicits input from
the engineers and technicians that will use the equipment or
work on the project.
4. (SBU) A tender bidder must pay an entry fee of $200 for
procurements, or up to $2500 for major project tenders.
Companies frequently engage a local representative to deliver
the proposal package to the tender commission. According to
companies that have experience bidding on Turkmen Government
tenders, companies, or their representatives, usually pay
money under the table to tender commission officials and even
end-users, like technicians and engineers. Such payments,
usually between 10-15 percent of the contract value,
do not guarantee a win; they just keep the bidder in
the running. The Turkmen Government also frequently requests
discounts from the companies whose proposals they are
considering. Experienced companies take this into account
when writing their proposals and inflate the initial
price.
5. (SBU) Government officials have told tender bidders that
product quality is the most important factor in selecting a
winner for a tender, although price matters. Political
motives also influence Turkmenistan's choice of suppliers,
particularly when President Berdimuhamedov has made a comment
favoring a certain company or country. For several years, the
Turkmen Government has favored Chinese manufacturers, although
that preference may be ending (reftel). Chinese companies
provide post-sales service and maintenance as well as cheaper
spare parts. In general, manufacturers, or their authorized
dealers, have a higher chance of winning tenders than
middlemen because the Turkmen Government insists on
availability of post-sale service and repair within
Turkmenistan.
ASHGABAT 00001570 002.2 OF 002
6. (SBU) COMMENT: Construction and energy sector tenders are
the most numerous and attract the most bidders, in part
because the government has a better record of payment for
large-scale projects. Other sectors, including machinery, are
not as competitive because there are fewer companies that
could provide the required equipment or parts. As with most
transactions in Turkmenistan, there is both an official
procedure for bidding on tenders, and unwritten rules that are
just as important. If the unwritten rules are not followed, a
company generally finds itself at a serious disadvantage. END
COMMENT.
ECKSTROM