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Deal 5: Tallinna Linnatranspordi Chairman of the Board Deniss Borodits on Purchase of Compressed Gas for Buses

Deal 5: Tallinna Linnatranspordi Chairman of the Board Deniss Borodits on Purchase of Compressed Gas for Buses

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On May 7, 2020, CEE Legal Matters reported that Sorainen had represented Tallinna Linnatranspordi Aktsiaselts, a company fully owned by the City of Tallinn, in its purchase of compressed gas for natural gas-powered buses. We spoke with Deniss Borodits, Chairman of the Board at Tallinna Linnatranspordi, to learn more about the deal.

CEELM: To give our readers a bit of background, please tell us a few words about Tallinna Linnatranspordi Aktsiaselts.

Deniss: Tallinna Linnatranspordi Aktsiaselts (TLT) is a public transportation company owned 100% by the city of Tallinn. Our mission is to provide public transportation service that is: accessible, reliable and safe for all customers, environmentally friendly.

After the merger of the Tallinn Bus Company and the Tallinn Tram and Trolleybus Company in July 2012, the public transportation company started its operations under the new name. The main activity of Tallinna Linnatranspordi Aktsiaselts is providing bus, tram, and trolleybus services.

TLT serves 75 urban bus routes, used roughly 101 million times each year. There are four tram lines in Tallinn with around 30 million passengers per year, and four trolleybus lines with close to 11 million passengers per year.

At rush hour, there are 500 public transportation vehicles belonging to Tallinna Linnatranspordi AS on the roads of Tallinn, including 423 buses, 45 trams, and 32 trolleybuses. The total length of public transportation lines serviced by Tallinna Linnatranspordi AS: buses total 608 kilometers of coverage, trams total 33 kilometers, and trolleybuses total 59 kilometers.

Tallinn’s city routes belong to common ticket system, and since January 2013, all public transport has been free of charge for people registered as living in Tallinn.

CEELM: According to Sorainen, "the procurement also included building and operating two compressed gas stations." Why did you choose to have these included in the same procurement process as opposed to being tendered up separately from the busses themselves?

Deniss: According to the investment strategy, all the company's old diesel buses are to be replaced by city buses that run on natural gas. In the coming years, TLT plans to upgrade its fleet properly. The big goal is that by the year 2025 not a single drop of diesel fuel will be used in public transport in Tallinn. For this, TLT has already signed a contract where the city-owned company will procure 350 gas buses over the next five years, the first 100 of which will reach Tallinn this year. The new buses will help the city save EUR 1.5 million a year on fuel and maintenance.

Tallinna Linnatranspordi AS has ordered 60 Solaris Urbino 12 buses and 40 Solaris Urbino 18 articulated buses. The 12 meter long version will have capacity for 80 passengers, including 31 seated, while the 18 meter vehicles will have capacity for 150 passengers, including 41 seated.

Due to the implementation of the current order, Estonia will become the 14th European country to which Solaris will deliver its compressed natural gas buses. Nearly 1,200 low-emission Urbino using CNG fuel outside the domestic market of the manufacturer went to, among others, Germany, Norway, Sweden, the Czech Republic, Italy, the Netherlands, Spain, and France.

The low-floor buses will all be fitted with a Cummins ISLG6C320 239 kW engine and five roof-mounted gas storage cylinders with a capacity of 315 litres each. In addition to a cold start function that enables the engine to start at low temperatures, the vehicles will be equipped with air-conditioning, USB sockets, a passenger information system, and five internal and two external CCTV cameras.

Biogas buses are already widely used all over Europe. In order to replicate this solution, however, some aspects must be considered: In order to achieve efficiency and savings, the gas fueling station needs to be in proximity – it is not reasonable for a bus driver to get additional fuel from the other side of the city. We decided to build two gas stations on the territory of our enterprise. The contract for the construction of gas stations was signed on April 30 with Bioforce Infra OU, CNG Fuels LTD, and ICP Solutions OU, which submitted a joint application for the tender. The contract worth about 80 million euros was concluded for a ten-year term.

In two terminals it will be possible to refuel up to 400 gas buses per day. They will have a standard connection to natural gas, and gas compression (compression) will be carried out on site

CEELM: Sorainen also announced that it represented TLT in three disputes arising from the procurement process. What were the main claims and why were they dismissed?

Deniss: The public procurement process for the supply of compressed gas and the construction of gas filling stations was announced in June last year and its winner was announced in October, but Eesti Gaas's subsidiary, Bussitanklad OU, disputed the results of the process. To date, all Estonian courts have declared TLT's procurement process lawful and confirmed to Eesti Gaas' subsidiary Bussitanklad OU and to the public that the innovations made in recent years in TLT's management and procurement systems are fair competition and correct. After proceedings at the complaints board, two court instances and Public Procurement Dispute Committee, it was decided that the contracting authority had done everything correctly from the beginning. These proceedings have only delayed the purchase of economical and environmentally friendly buses for the people of Tallinn for six months. Fortunately, today everything is behind us and as a result of the procurement contract, TLT, in cooperation with the joint bidders Bioforce Infra OU, CNG Fuels LTD, and ICP Solutions OU, will build biomethane-based gas filling stations at the Kadaka tee and Peterburi tee bus terminals, where new compressed gas buses will be supplied with environmentally friendly fuel over the next ten years.

CEELM: According to Sorainen, its "legal and tax experts prepared and conducted the public procurement proceedings." How long did the whole process take and what did you find to be the most complex aspect of it all?

Deniss: The preparation of the project leading up to the conclusion of the contract took more than one and a half years. As a result, two compressed gas refueling units will be built on the territory of our enterprise, which will serve the compressed gas buses procured by TLT, which will arrive in Tallinn this summer. A project of this scale has not been implemented in the Baltics states before. The procurement directly contributes to the improvement of the environment of the city of Tallinn.

The focus of the company's renewed strategy is the development of environmentally friendly public transport, which contributes to a cleaner urban environment and a gradual increase in passenger numbers. With a long-term perspective, the company has started the first pilot projects to increase the competence to use electric buses to keep up with technological developments and to be ready to use electric buses to service the lines. The goal is that by 2035 at the latest all Tallinn public transport vehicles are powered by electricity.

Environmental issues have become particularly relevant in the context of global warming. TLT AS has based its development strategy on offering an environmentally friendly, yet convenient and safe public transport service. The largest bus procurement of all time in Estonia is a strong expression of this strategy. After the arrival of the first 100 new buses, the average age of the fleet will improve by four years and the impact on the urban environment will be similar to the removal of approximately 1,000 cars from the streets of Tallinn.

CEELM: Why did you opt to have Sorainen run both the public procurement process and manage the related disputes?

Deniss: Sorainen's team prepared -- with TLT's collaboration -- procurement base documents and helped conduct the public procurement procedure, thus this continuation was logical. We acquired a cooperation partner who can prepare procurement documents and represent clients in litigation.

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