Bangkok's new bus fleet saga: why Scania, Volvo opt out

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Bangkok's new bus fleet saga: why Scania, Volvo opt out


In a file photo from 2013, Swedish Ambassador to Thailand Klas Molin (the tallest person) took part in the opening ceremony of the project "Ethanol ED95 Public Bus Line" at King Monkut's University of Technology Thonburi (KMUTT). Photo by Pichai Tinsuntisook

BANGKOK: -- The deadline for the submission of tenders to supply Bangkok Mass Transit Authority (BMTA) with a new fleet of 3,183 buses, was finally scheduled for January 2015. Conspicuously absent from the race to secure the orders worth about THB28.9 billion to deliver natural gas-fueled public transport vehicles were two major Swedish bus manufacturers, Scania and Volvo.

Lack of transparency in the drafting of the project’s terms of reference and multiple subsequent revisions by the BMTA did not bode well for the Scandinavian manufacturers of high-quality bus chassis and their bus assembly partners. The on-again, off-again procurement project had been dragged on for over eight years.

Politicians, who had supervisory control over the financially-ailing Bangkok city bus agency, did not seem to be able to agree on the simple task of drawing up a coherent and clear-cut TOR to ensure a fair bidding process. A process that would produce winners capable of delivering brand new city buses which are cost-effective to operate, meet high environmental standards and provide comfort to passengers.

Not to mention the fact that dubious changes made during the drafting and subsequent multiple revisions made to the TOR also gave rise to widely-publicized allegations that the whole procurement process has been rigged in favour of certain manufacturers.

Senior executives of both Scania and Volvo, in separate interviews with ScandAsia, stopped short of pointing an accusing finger at anyone. But both Scania Siam and Volvo Truck & Bus Co., Ltd. gave a number of compelling reasons why they have decided to opt out.

Mr. Phuriwat Rak-Intr, General Manager of Scania Siam Co., Ltd., said Scania Siam had been invited to a series of public hearings and present Scania bus products that met all the basic requirements, such as NGV-fueled powerhouses, low-floor bus chassis.

“We had full confidence in our products,” the Scania Siam executive said, adding that at that time the draft TOR was still more than a bit hazy.

Scania had held several meetings with the BMTA with the Swedish Embassy acting as a facilitator, following an official visit to Sweden by then-prime minister Yingluck Shinawatra in August 2013.

“When the TOR came out following a series of public hearings, we found ourselves facing insurmountable barriers. We could not go on,” Phuriwat said.

The TOR, among other things, requires bidders to have prior experience in Thailand, meaning having their products in use in this country on commercial basis, while at the same having prior experience providing repair and maintenance services on the said products, the Scania Siam general manager said.

“Scania never had NGV product in the Thai market before. But we have had our high quality city bus products, including those with NGV-fueled engines elsewhere, in Europe, for instance. Apparently that doesn’t qualify us to participate in this bidding process,” he said.

Phuriwat also said the median prices specified by the BMTA at THB4.5 million for air-conditioned, low-floor bus and THB3.8 million for regular, non-air-conditioned bus, are way too low for Scania Siam, which offers high quality bus products, to participate.

The Scania Siam executive lamented the fact that the BMTA clearly does not put enough emphasis on environmental standards or quality and reliability issues. The TOR does not specifically require quantifiable up-time and reliability, nor does it refer to high environmental standards as key criteria, he said.

“To appreciate the kind of value that Scania bus products have to offer, we challenge BMTA to look at total life cycle cost, which is the purchasing price plus fuel cost and maintenance cost over, say 10 or 15 years,” Phuriwat said. “The price of our finished city bus products that meet international emission standards, high fuel-efficiency, high up-time and durability would be in the tune of THB6.5 million.”

Scania city bus products, which meet the highest environmental standards, fuel-efficiency, reliability and durability, are popular among bus operators all over the world. In Asia, Singapore and Malaysia, city bus operators have purchase big fleets of Scania buses.

“Another thing we would like to tell the Thai public is: we have on offer cutting-edge technologies, including a diesel engine Scania bus running on ED95 (95% sugarcane or cassava ethanol plus an ignition improver). This could hugely benefit Thailand, which has great potential as producer of ethanol, which is a more environmentally friendly than diesel and more economical and sustainable than imported natural gas,” Phuriwat said, “If only Thailand had a more coherent national energy policy.”

Scania had been so hopeful of its fighting chance to supply the BMTA with its bus running on ED95 as alternative to natural gas that it sponsored a pilot projects in June and July 2011 and in mid-2013 to demonstrate the viability of its products in Bangkok together with King Mongkut’s University of Technology Thonburi, the Energy Ministry, Industry Ministry and PTT. But its hope was dashed when BMTA insisted in the TOR that initial purchase price of buses is to be the overriding factor.

A sales manager of Volvo Group’s Truck and Bus (Thailand) Co., Ltd., who is familiar with the BMTA bidding process, echoed Phuriwat’s sentiments, saying the specified low median prices were a major factor that prevented Volvo from competing.

“The TOR that the BMTA came up with made it impossible for high quality European manufacturers to participate. We simply cannot compete at those price points.”

Besides, the sales manager said Volvo had very few natural gas-fueled bus products as the company has concentrated its efforts in developing mainly diesel-fueled bus products that conform to the highest environmental credentials, from Euro 4, 5 and 6 emission standards and diesel/electric hybrid models or fully electric ones.

“Volvo Truck and Bus is not familiar with the bidding process that makes us feels like we have to compete with others to lower prices in order to get the contract. We would prefer submitting sealed bid and then to negotiate specifications with the buyer,” he said.

Source: http://scandasia.com/bangkoks-new-bus-fleet-saga-why-scania-volvo-opt-out/

-- ScandAsia 2015-01-06

[peptidebomber]

Didn't I read this same article last year?

[Somtamnication]

Yep, no transparency. Typical day in Thailand.

[robblok]

Didn't I read this same article last year?

I agree.. read the same last year here on Thaivisa.

[DLock]

I don't know buses...but who would be the likely winner and from what country?

China?

I'm guessing, as I really have no clue, but would be interested.

[LuckyLew]

Scania and Volvo make quality prooducts that last and that cost a little more

Thailand seems to prefer buying chinese crap at knock off prices

Whether by rail or by bus Thailand is going Chinese ... will soon enough turn into rusty garbage

really must be a slow news day inn Thailand as this was printed late last year

Edited January 6, 2015 by LuckyLew

[Just1Voice]

they want the cheapest bid so they can then "pad" it to add to their personal bank accounts.

[ezzra]

I don't know buses...but who would be the likely winner and from what country?

China?

I'm guessing, as I really have no clue, but would be interested.

And the winner is.... China.... Thailand is way too deep owing to China billions of dollars

in expert deficit, and one way to offset it is to buy everything China to make the Chinese

happy as they intend to invest billion in this country and guess who's favors they will need?

[Commerce]

I don't know buses...but who would be the likely winner and from what country?

China?

I'm guessing, as I really have no clue, but would be interested.

I worked for a Chinese coach manufacturing company. I assure you, you wouldn't want to buy a Chinese coach/bus. Materials are cheap, crash testing is non-existent, technology is 20 years old, and anything slightly new is copied (patent infringed, should I say).

As for Thailand, a Chinese source is a likely winner, however, because cheap, user unfriendly, unsafe, and crap quality matters not here. What matters, and what mattered to Volvo and Scania, are the bent takings by the offerers of bids. The undertable corruption was something the Western companies had no interest in being involved in, especially when they realised the graft was ultimately reducing, or projecting to reduce, their end sales prices.

Volvo nor Scania need Thailand as an entity or major market to compete worldwide, and so it is another loss to Thailand which keeps it years behind all the other developing countries. I think I made myself perfectly clear?

[lemonjelly]

People with distant relatives and connections in China nobbling the Swedes?...... will BKK end up with buses made by The Flying Pidgeon ?

[sweden4ever]

Maybe Scania and Volvo didn´t want to pay the kickbacks.

[dddave]

Both the EU nations and the USA have been actively pursuing domestically based companies that pay bribes to foreign officials to get plush government contracts. There have been a few high-profile trials resulting in some huge fines but no jail time AFAIK. I'm sure that is a major consideration for these European manufacturers.

Probably not even the tiniest of consideration for the Chinese who will pay whoever they need to pay on both ends of the deal.

[Cuchulainn]

Wise move to pull out and not lower yourself to the standards of politicians here. Scania & Volvo don't need the money. Politicians do, God bless their little, cotton socks.

[NeverSure]

(Shaking my head.)

[hansgruber]

Airport link all over again.

Buy cheap, pocket more, screw reliability and maintenance issues.

[worgeordie]

They don't want buses from European manufacturers,

because they have strict policies to prevent companies

offering" commissions" to get business,the low median

prices are in place so the winner will be China,where

"commissions" paid will not be a problem.

Thailand are taking a short term view,the Volvo,Scania

buses would outlast the Chinese made buses by years

plus the saving on down time and cost of spare parts.

I hope they will not be those Chinese gas powered buses

with those large bags full of gas on the roof,it would be

a terrifying site to see those barreling about on the streets

of Bangkok

regards Worgeordie

[Jeremy50]

Politician's son wants a lambo, so what's he gonna do? Scania buses will last years longer than the Chinese crap, but why should these idiots be interested, they can't even think weeks ahead. Volvo and Scania will be safer, but since when has road safety been of importance in Thailand.

[Whale]

But this is strange........................

“Volvo Truck and Bus is not familiar with the bidding process that makes us feels like we have to compete with others to lower prices in order to get the contract. We would prefer submitting sealed bid and then to negotiate specifications with the buyer,” he said.

If the specifications are part of the bid document, then they cannot be negotiated after. The idea is that the specifications are used to "level the playing field" so you can get a comparable price for that specification. I am confused by Volvo's statement.

and again here................

"..................the bidding process that makes us feels like we have to compete with others to lower prices in order to get the contract" is that not the whole point of bidding? To get the lowest price for the spec?

Edited January 6, 2015 by Whale

[ChrisY1]

But this is strange........................

“Volvo Truck and Bus is not familiar with the bidding process that makes us feels like we have to compete with others to lower prices in order to get the contract. We would prefer submitting sealed bid and then to negotiate specifications with the buyer,” he said.

If the specifications are part of the bid document, then they cannot be negotiated after. The idea is that the specifications are used to "level the playing field" so you can get a comparable price for that specification. I am confused by Volvo's statement.

and again here................

"..................the bidding process that makes us feels like we have to compete with others to lower prices in order to get the contract" is that not the whole point of bidding? To get the lowest price for the spec?

I think you'de find that companies bidding on a project such as this, prepare their bid which would cover in main, the specification in the tender documents.

Most bidders specs. would differ in some regard to the tender documents, as the tenderer may not be able to match exactly what is required......so generally, and in most cases, a spec. of similar standard would be submitted........then if successful, this part of the bid could then be negotiated.

Eg:....BMTA may specify 32" wheels which Volvo don't use.....they would offer a suitable alternative.

I think that's what Volvo are suggesting.

[Loles]

Very big show business, as usually ...

[jacky54]

Those Chinese buses that they already have are cheap crap

[sup3r1or]

Yes they will probably go for that Chinese crap Golden Dragon or whatever its called. I remember when I studied in BAngkok they put one on 545 route. After 6 months it looked like it was 100 years old with parts and panels hanging on the sides. Cheaper price rest goes in the pocket.

[chainarong]

The major players in the marketplace for international bus contracts I would say has politely suggested to the BMA and the political hangers on to shove it where the sun don't shine , quite obvious that some people like to protect their international image from being involved in any underhand skullduggery that Thailand might like to pull, noticed Mercedes isn't mentioned , Transparency under PM Prayut-O has really improved.

[rheinwiese]

I don't know buses...but who would be the likely winner and from what country?

China?

I'm guessing, as I really have no clue, but would be interested.

I worked for a Chinese coach manufacturing company. I assure you, you wouldn't want to buy a Chinese coach/bus. Materials are cheap, crash testing is non-existent, technology is 20 years old, and anything slightly new is copied (patent infringed, should I say).

As for Thailand, a Chinese source is a likely winner, however, because cheap, user unfriendly, unsafe, and crap quality matters not here. What matters, and what mattered to Volvo and Scania, are the bent takings by the offerers of bids. The undertable corruption was something the Western companies had no interest in being involved in, especially when they realised the graft was ultimately reducing, or projecting to reduce, their end sales prices.

Volvo nor Scania need Thailand as an entity or major market to compete worldwide, and so it is another loss to Thailand which keeps it years behind all the other developing countries. I think I made myself perfectly clear?

You are spot on!

[smedly]

I don't know buses...but who would be the likely winner and from what country?

China?

I'm guessing, as I really have no clue, but would be interested.

Did you honestly have to ask that question ? Take the blinkers off

Here's a clue, "Table" a place they hold the meetings, "Under" below - out of sight - beneath

[ggold]

corruption!

[Jim walker]

China hates foreigner’s muscling in on their territories they will undercut any price.

[elgordo38]

they want the cheapest bid so they can then "pad" it to add to their personal bank accounts.

Business as usual forget the change in government. To put such a low floor price per bus automatically eliminates the quality suppliers. I would called this a rigged bid. You only get what you pay for.

[bobmac10]

Politicians, who had supervisory control over the financially-ailing Bangkok city bus agency, did not seem to be able to agree on the simple task of drawing up a coherent and clear-cut TOR to ensure a fair bidding process.

that's enough reason to keep away from the whole project

[h90]

Scania and Volvo make quality prooducts that last and that cost a little more

Thailand seems to prefer buying chinese crap at knock off prices

Whether by rail or by bus Thailand is going Chinese ... will soon enough turn into rusty garbage

really must be a slow news day inn Thailand as this was printed late last year

Not all from China is crap and a lot European products (maybe not Volvos and Scania) are just assembled from Chinese parts in Europe.