VZCZCXRO9224
PP RUEHIK
DE RUEHAH #1570/01 3410955
ZNR UUUUU ZZH
P 070955Z DEC 09
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC 3852
INFO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 5960
RUEHBJ/AMEMBASSY BEIJING 3654
RUEHKO/AMEMBASSY TOKYO 3513
RUEHIT/AMCONSUL ISTANBUL 4202
RUCNDT/USMISSION USUN NEW YORK 1289
RHMCSUU/CDR USCENTCOM MACDILL AFB FL
RUEHVEN/USMISSION USOSCE 4144
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RHEHNSC/NSC WASHDC
RUEKJCS/SECDEF WASHDC
RUEKJCS/JOINT STAFF WASHDC

UNCLAS SECTION 01 OF 02 ASHGABAT 001570 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR SCA/CEN; EEB; NEA/IR 
ENERGY FOR EKIMOFF/BURPOE/COHEN 
COMMERCE FOR EHOUSE, DSTARKS 
 
E.O. 12958: N/A 
TAGS: ECON EINV ETRD KCOR PGOV TX
SUBJECT: TURKMENISTAN:  BIDDING ON GOVERNMENT TENDERS; TRICKY 
BUSINESS 
 
REF: ASHGABAT 1249 
 
ASHGABAT 00001570  001.2 OF 002 
 
 
¶1. (U) Sensitive but Unclassified.  Not for public Internet. 
 
¶2. (SBU) SUMMARY: Bidding on Turkmen Government tenders 
requires an understanding of both the official process, as 
laid out in the regulation on tenders, and the unwritten 
rules.  Under the table payments to state officials can 
reportedly amount to 10-15 percent of the contract value.  The 
Turkmen Government considers the procurement of high quality 
goods and services a priority, but also considers which 
companies or countries are in favor with the president.  For 
several years, the Turkmen Government has favored Chinese 
suppliers for political reasons, and because they provide good 
post-sales service and cheap spare parts.  END SUMMARY. 
 
¶3. (SBU) The Turkmen Government in the 1990s established 
consistent and somewhat transparent procedures, as described 
in the regulation on tenders, to ensure competition in bidding 
on procurement and project tenders.  The tenders are announced 
regularly in local newspapers and on government websites, 
including the Oil and Gas Ministry website.  Tender 
application packages must include a price quote that specifies 
delivery terms; a statement on the applicant's financial 
status, issued by a bank; a detailed technical description of 
the proposed equipment or materials; brief background on the 
manufacturer; a written commitment on precise delivery terms; 
and an agreement to accept payment on delivery.  The Supreme 
Control Chamber and the Commodity and Stock Exchange of 
Turkmenistan scrutinize the bids' authenticity and 
feasibility.  The Director of Technical Procurement at state- 
owned companies like Turkmengas and Turkmenoil is generally 
the person who makes the official, final decision about which 
company wins the tender.  However, according to contacts in 
the Turkmen Government, the Director often solicits input from 
the engineers and technicians that will use the equipment or 
work on the project. 
 
¶4. (SBU) A tender bidder must pay an entry fee of $200 for 
procurements, or up to $2500 for major project tenders. 
Companies frequently engage a local representative to deliver 
the proposal package to the tender commission.  According to 
companies that have experience bidding on Turkmen Government 
tenders, companies, or their representatives, usually pay 
money under the table to tender commission officials and even 
end-users, like technicians and engineers.  Such payments, 
usually between 10-15 percent of the contract value, 
do not guarantee a win; they just keep the bidder in 
the running.  The Turkmen Government also frequently requests 
discounts from the companies whose proposals they are 
considering.  Experienced companies take this into account 
when writing their proposals and inflate the initial 
price. 
 
¶5. (SBU) Government officials have told tender bidders that 
product quality is the most important factor in selecting a 
winner for a tender, although price matters.  Political 
motives also influence Turkmenistan's choice of suppliers, 
particularly when President Berdimuhamedov has made a comment 
favoring a certain company or country.  For several years, the 
Turkmen Government has favored Chinese manufacturers, although 
that preference may be ending (reftel).  Chinese companies 
provide post-sales service and maintenance as well as cheaper 
spare parts.  In general, manufacturers, or their authorized 
dealers, have a higher chance of winning tenders than 
middlemen because the Turkmen Government insists on 
availability of post-sale service and repair within 
Turkmenistan. 
 
ASHGABAT 00001570  002.2 OF 002 
 
 
 
¶6. (SBU) COMMENT: Construction and energy sector tenders are 
the most numerous and attract the most bidders, in part 
because the government has a better record of payment for 
large-scale projects.  Other sectors, including machinery, are 
not as competitive because there are fewer companies that 
could provide the required equipment or parts.  As with most 
transactions in Turkmenistan, there is both an official 
procedure for bidding on tenders, and unwritten rules that are 
just as important.  If the unwritten rules are not followed, a 
company generally finds itself at a serious disadvantage.  END 
COMMENT. 
ECKSTROM