The government is facing a dilemma after only two bids made it to the final stage of the tender for the Malta south sewage treatment plant - and both were well over the budget.
The bids were opened over a month ago. But so far there has been no official notification by the Contracts Department as to what the next step will be.
The Malta south sewage treatment plant tender was split into two parts, the first for the provision of the plant and the second for its operation and maintenance for a three-year period.
Three bidders - Costruzioni Dondi Spa, China National Construction and Agricultural Machinery Import & Export Corporation and Keppel Seghers Belgium NV - were dropped, leaving Strabag AG-VA Tech Wabag and the Degremont Consortium.
However, their bids (€104 million and €84 million respectively), opened on April 8, were well above the budgeted amount of €57 million (Lm21.9m), determined by foreign consultants on behalf of the Water Services Corporation.
There are now two possible options. The tender envisages that if the solutions offered are more expensive than the budget, the process can be cancelled and a fresh tender issued. However, the WSC could also opt to reduce the scope of the contract to get it within the budget - or negotiate with one or both of the remaining bidders to bring the price down.
The sources said that this would be very difficult given the nature of the contract. "You either need a sewage treatment plant or you don't. There are not really any half measures."
When deciding how to proceed, the government also has to bear in mind that the EU will have a say, as it is providing over 70 per cent of the project funding.
This is the third largest sewage plant contract. The one in Gozo - built and commissioned by Degremont SpA and C+F Building - was so late that the EU may cancel €253,000 (Lm108,600) of its funding and the contractor may face damages claims from WSC. The Malta north plant - awarded to IBI and Polidano - has also been delayed.
The whole process also started mired in controversy. The contract for programme management and technical assistance for the Sewerage Master Plan was considered to be discrimatory by the European Commission because it specified that the bidders had to have regional or local experience.
The former chairman, Michael Falzon, had also been drawn into the picture when the Labour Party accused him of being a director on a company within the Polidano Group, which has won a number of WSC contracts and is the contractor on the Malta North Sewage Plant.