“Hiding Behind the Law”: How Yerevan Bus Bought Diesel Fuel for AMD 545 per Liter

168.am reveals the details of a transaction that raises questions not so much about the letter of the law as about how Yerevan Municipality manages public funds.

The story of “Yerevan Bus” CJSC’s purchase of diesel fuel is a striking example of how formally following a procurement procedure does not necessarily guarantee that public money is being spent reasonably.

According to a report by 168.am, on May 6, the municipal company purchased approximately 500,000 liters of diesel fuel at AMD 545 per liter, while the retail market price at the time was AMD 510–520 per liter. Moreover, this was a large-volume purchase, which under normal market conditions should have been priced below the retail price.

According to the outlet’s calculations, this price difference could have resulted in a loss of approximately AMD 60 million for the Yerevan community.

How Was This Price Set?

“Yerevan Bus” says that three open and competitive procurement procedures had previously been conducted. However, none of them was successful because the only bidder was “CPS Energy Group,” which offered a price of AMD 550 per liter, while the estimated price had been set at AMD 500.

The company then proceeded with a single-source procurement procedure, citing the urgency of the purchase.

Of the seven potential bidders, two submitted offers within the specified deadline: “CPS General,” at AMD 550 per liter, and “Premium Oil,” at AMD 545 per liter. The latter was selected because it offered the lowest price.

On the face of it, the explanation appears straightforward: of the two bids, the lower one was selected.

But this is where things get more interesting.

The Price Dropped by AMD 45 the Next Day

Just one day after the decision to award the contract was announced, one of the companies that had participated in the procurement contacted “Yerevan Bus” and offered to supply diesel fuel for AMD 500 per liter.

In other words, the offer was AMD 45 lower than the price at which the municipal company was preparing to purchase the fuel.

This is particularly noteworthy in the fuel market: this was neither a long-term contract nor a sudden collapse in prices. The lower-priced offer appeared literally the following day.

That is precisely why simply pointing to compliance with the formal procurement procedure does not answer the main question: Why wasn't the market price investigated before the contract was signed?

The Law Exists. But What About Responsibility for Public Money?

168.am considers the issue in a broader context: Is it enough for a municipal company to formally comply with procurement procedures if, as a result, it purchases a product at a higher price than an available offer?

If the law allows a company to select the lowest bid from two offers, that does not mean its management is relieved of the responsibility to assess the economic rationale of the transaction.

Otherwise, the system becomes rather convenient: as long as a few procedural requirements are followed, whether the community’s money was spent reasonably can simply be left out of the equation.

So Who Ultimately Pays for This “Efficiency”?

Ultimately, this is about the money of Yerevan’s residents.

It was their money that authorities previously cited when explaining the increase in public transport fares due to insufficient funds, and it is they who are now expected to hear claims that, supposedly because people do not pay their fares, the city cannot afford to purchase new buses.

Against this backdrop, purchasing a large quantity of diesel fuel at a price higher than the market price appears particularly inappropriate.

Even if there was genuinely no corruption in this particular transaction and the legal requirements were formally followed, that still does not make it an example of efficient management. The responsibility of a municipal company is not simply to formally comply with procedures, but to ensure that community funds are used as reasonably and efficiently as possible.

And in this case, the formal justification that “everything was done within the law” does not sound convincing.