ECONOMY

OSE, shipyard at odds over carriage-building contracts

A long-simmering dispute between the Hellenic Railways Organization (OSE) and the new owners of Hellenic Shipyards at Skaramangas, west of Athens, has broken to the surface again, with the shipyard looking to sign a new contract for building railway carriages with a new timeline for completion and OSE insisting on being compensated for the delay in getting the carriages. It may sound strange that a shipyard would close a deal with a railway company, but this is the way state intervention works – or doesn’t. Faced with having to sell the shipyard – a heavy loss-maker – and finding that all interested buyers demanded a steep reduction in the work force, many of them skilled workers experienced in shaping steel and other metals, the government arranged for OSE and ISAP – the Piraeus-Kifissia electric railway line – to sign contracts for train carriages with Hellenic Shipyards. A total of seven contracts – six with OSE and one with ISAP – were signed in 1997-98. The contracts were worth a total (in current terms) of 145 million euros and called for the construction of 19 different types of carriages, a total of 500 vehicles. The shipyard received a 15 percent downpayment (21.75 million euros) to cover urgent operational costs. The carriages were to be completed in stages, beginning in 2000. So far, the construction program has fallen hopelessly behind and the shipyard’s new owners, Howaldtswerke Deutsche Werft (HDW) – Ferrostaal, itself now a subsidiary of US investment firm One Equity Partners, want to renew the contracts, with the last of the carriages to be delivered in 2005. For its part, OSE urgently needs new carriages, mainly for the new Athens suburban railway, still under construction, which will serve as important transportations for the Athens Olympics next year. Armed with the punitive clauses in the existing contracts, OSE refuses to renew them. Hellenic Shipyards has proposed to OSE to either pay the penalty, currently estimated at 9.5 million euros, or to arrange for OSE to get «substitute carriages.» OSE, on the other hand, wants to receive both the penalty amounts and the substitute carriages, something which Hellenic Shipyards steadfastly refuses to do because the cost would therefore increase to between 40 and 50 million euros. Since the shipyard did not have a know-how for carriage-building, HDW has already subcontracted three of the seven contracts to well-known firms, such as Bombardier, Siemens, Temoinsa and Stadler, and is in negotiations to subcontract a further two contracts. The shipyard itself, before its privatization, had subcontracted one project to Siemens, which is also expected to undertake to build OSE’s substitute carriages. Siemens has also built the carriages for the Athens metro. The shipyard itself will honor the contract with ISAP, with the last carriages to be delivered by the end of the year. According to well-informed sources, OSE’s board will meet tomorrow and the renewal of the contracts is part of its agenda. Some of the board members complain that the whole issue may lead to OSE’s being legally liable for squandering public money and refuse to consider a renewal. HDW says it is not its fault, and that the contracts were not completed in time by the previous administration.