Complaints set to pay off for Greenbrier with new PKP tender
After losing out on a 1999 tender to supply zl. 1.3 billion ($333 million) worth of coal wagons to Polish State Railways (PKP), The Greenbrier Companies is expected to win the railway's latest call to supply $80 million worth of coal wagons, the Business Journal has learned.
In early February PKP announced a tender to supply 1,000 rail cars. The railway intends to lease the cars and should name a tender winner within the first half of the year. Sources close to the tender, however, could not state specifically who the other participants were.
The fate of those other bids is somewhat predetermined, said a source close to the railroad. The source said that the U.S.-based Greenbrier will likely win the latest contract after failing to get a piece of a larger tender for coal wagons issued in April 1999 by rolling stock company Konsorcjum Taborowe on PKP's behalf. The consortium is wholly owned by PKP and consists of Fabryka Wagonow Gniewczyna, Fabryka Wagonow Ostrow-Wielkopolski, and Zastal Wagony.
"This was done to calm Greenbrier Companies," the source said.
On May 25, PKP awarded the 1999 tender to the consortium members. A press release issued last week by Greenbrier stated that it felt PKP had drafted the tender in a way as to specifically cut the U.S. firm out.
Dariusz Czerniak, marketing and sales manager for Greenbrier, which owns more than 60% of freight rail-car producing facility Wagony Swidnica, located in Swidnica near Wroclaw, noted that the 1999 tender called for a specific type of rail car, which only the facilities at Gniewczyna and Ostrow-Wielkopolski were capable of producing. Although Wagony Swidnica could have designed a rail car that conformed with tender stipulations, time limits were too tight.
"We need, for example, six to eight months to design and deliver the first wagons," Czerniak said. "They closed the tender in May, and in the same month they expected delivery."
Rajmund Hajdrowski, press secretary for PKP's management board, said that the wagons Greenbrier was building were not up to PKP's technical standards. He also said that the railroad decided to reduce the order from 4,500 to 3,500 wagons, hiving off the remaining 1,000 cars into a separate tender. That is the tender PKP is issuing now.
One requirement for the new wagons is that they be used for the cross-border shipment of coal. "Polish wagons do not fulfill technical specs to go to the West," the source said. "Such wagons will be necessary."
While Greenbrier might win the tender, whether the company will ever actually see any money from the deal is an open question. PKP's dire financial predicament has many in the railroad industry scoffing at any plans or tenders announced by the railroad. One example is a tender for high-speed tilt trains, which PKP cancelled in December due to a lack of funds.
PKP's 1999 losses came to approximately zl. 2.27 billion ($554.8 million). The railroad's debts are currently running at approximately zl. 6 billion ($1.46 billion), and PKP is facing threats by utility companies to cut its power supplies in various regions around the country. Banks have also been unwilling to lend to the railroad.
That hasn't daunted Greenbrier, though. "There was talk about buying, and here is talk about leasing," Czerniak said. Leasing is seen to be more financially viable for the railroad as it would likely not require any upfront payment.
Another reason that the deal could go through is that Greenbrier may help foot the bill or at least help to arrange financing. "We would be in a position to organize this leasing for PKP," Czerniak said.
He declined to specify, though, exactly how the company would be involved whether it would provide a guarantee for a loan or not.
Although coal production levels have dropped as a result of restructuring of the sector in recent years, moving fuel can still be a profitable business for PKP, industry watchers said. To take advantage of that, though, PKP needs to have the right rolling stock in place. And bankers may be willing to lend if PKP can show signed contracts.
"If there are some fixed contracts, and somebody is sure that the contract might be concluded, then it might be possible" to get project financing, said one banker, who asked not to be identified.
