Our View: Terminating contracts comes at a high price

New Transport Minister Evie Tsolaki, confirmed on Friday that the resumption of work on the construction of the Paphos-Polis highway, which stopped two years ago after the public works department terminated the agreement with the contracting firm, Intrakat, will stay on hold for the foreseeable future. This was because the tenders submitted by the two firms interested in completing the project were considered too high by the Tenders Board. Tsolaki said that one company had been rejected because a vital document was absent from the paperwork it submitted, while the second tender was much higher than initial valuation of the state authorities. Both tenders were more than 35 per cent higher than the initial estimate of €90.2m. One tender was €34.5m higher and the second €38.7m. The minister underlined that the government’s intention was for the project to proceed although she failed to explain how this would happen. All she was prepared to say was that “we are studying other ways to bring it to completion.” The highway was supposed to have been completed in January 2026, but the contract with Intrakat was terminated in November 2024, because of the company’s continuous disputes with the public works department over its time and cost claims. All work was stopped so that a new tenders’ procedure could be arranged. In March 2026, the then transport minister Alexis Vafeades, said he expected the new tenders’ procedures to be completed, and the contract awarded by October. The procedure was completed on time, but no contract will be signed, returning us back to square one. Not exactly, as 30 per cent of the project is said to have been completed. The big question now is what ways the government will use to bring the project to completion and how many more years would be needed? Former Disy leader Averof Neophytou made a strong point on ‘X’ about the practice of terminating contracts, which, he argued, resulted in higher costs for the taxpayer. In the case of the highway, if the government agreed to the contractor’s financial demands the new total cost would have been €98.2m (€72m plus demand of €25.2m) and the project would have been completed in 2029 (contractor had asked an extension of 59 months). It is now looking at a total cost between €125 and €129 million. This is the third public contract terminated by the Christodoulides government (Pentakomo and the Vasiliko gas terminal). Tenders have been submitted for the completion of the Vasiliko gas terminal and it will be interesting to see what the lowest bid will be. We suspect it will be significantly higher than the total amount, including add-ons, the Chinese consortium was demanding. The public works department and supervisors of these projects should also factor in the substantial cost of the delays (several years) when they terminate a contract. Neophytou is right to point out that terminating contracts is much more costly than solving disputes with an existing contractor.