In April, Latvian state company Latvian State Roads (LVC) received letters from all major construction companies engaged in road construction procurements. Construction companies outlined in letters they are unable to do their jobs at the prices that were proposed before February 24, when Russia invaded Ukraine.
The offers received in procurements in March and April are already 10% to 15% more expensive than previously planned.
To resolve this situation, once the Procurement Monitoring Bureau (IUB) published guidelines for reviews of contract costs, LVC started working on a contract review principles. Multiple meetings were organised with the sector’s association – Latvian Road Builders association and its members. Currently LVC contract review method is formulated and the company plans to submit it to IUB for approval soon. Once the bureau’s report has been received, LVC will start reviewing the contracts submitted prior to February 24.
There is also the possibility of entrepreneurs terminating contracts signed before February 24. This means it will be necessary to resign contracts for specific construction projects.
So far LVC has received one application for termination of a contract – A.C.B. Group reports it plans to terminate the contract for construction work on the state road leading from the Russian border (Grebneva) – Rezekne – Daugavpils – Lithuanian border (Medumi) (A13). Once the contract is terminated and once other contracts signed after February 24are reviewed, a new procurement will be planned for construction work on A13 section of the road. (BNN/Business World Magazine)