SKM Warsaw withdraws Pesa train contract

SKM Warsaw, the Polish capital’s suburban railway operator, decided to cancel the train contract signed with Pesa Bydgoszcz due to non-compliance with the delivery dates specified in the schedule
The delivery timeline was one of the most important criteria for assessing the offers in terms of obtaining the EU funding.
Under the contract for 13 Elf2 EMUs, by the end of 2019 Pesa should deliver 10 trains ordered by SKM Warsaw. Currently, Pesa faces a delay of 87 days for the first train, 56 days for the second one, and 25 days for the third train.
SKM Warsaw says that it has right to withdraw the contract or a part of it, if the delivery is delayed by 30 days. In the event of withdrawal of the contract, SKM is entitled to a contractual penalty of 20% of the entire contract, that was signed in 2018, under at a value of PLN 310.5 million (EUR 72.3 million). The firm order called for the delivery of 8 five-car and 5 four-car Elf2 trains. The contract also included an option for 8 additional EMUs, of which one four-car train and seven five-car trains which would be delivered by the end of 2023.
Poland’s Centre for EU Transport Projects (CEUTP) informed SKM that a change in the vehicle delivery timeline and in some other terms of the contract may result in the retention of EU funding for 25% of the contract value. This represents a suspension of over PLN 100 million (EUR 23.3 million) in funding and in addition, it could require SKM to refund PLN 20 million (EUR 4.65 million) from EU funding under this project. In this situation, the SKM Management Board had to consider primarily the potential financial losses.
The contract cancellation was preceded by numerous actions to develop the most optimal solution for both parties. In this regard, legal details, business analyses were commissioned, and negotiations were conducted between SKM, Pesa, the Polish Development Fund, the Ministry of Infrastructure and CEUTP.
SKM Warsaw announced that is analysing the most effective terms and options to launch a new tender for the procurement of new trains.

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