The inaction of the Armenian government in regard of monitoring the investment project of North-South highway, cost the taxpayers 0,5 million USD

As of June 1 of the current year the Armenian government paid the Asian Development Bank 163,685.99 USD as interest rate, out of which 156,564.89 USD was paid for Project 1 and 7,121.1 for the second stage of the project.

As a response to the question of 168-Zham the public relations office of the ministry of finances informed that as of today no late payments or delays were recorded. But the important thing is not the interest rate because those are logical in the framework of the project. It is more important to note that up until now the Armenian government paid ADB (170 million USD loan) 425,026.4 USD as interest rate. Because of the delay the money is still on the accounts of the Asian Bank. But this means that the Armenian government still has to pay an annual 0,15% interest rate.

The loan contract of the second trench was adopted on December 21, 2010. Up until now the interest rate amounted to 425,026.4 USD. This figure promises to go up because the deadlines of the highway construction have been infringed. Because of the recent findings of the Audit Chamber most probably the re-launch of the project will again be delayed.

The contract between the Armenian government and the ADB for the construction of North-South highway was adopted on September 15, 2009. The deadline of the project implementation is 2017. Almost half of the project is in the past but in reality none of the segments of the highway has yet been exploited and it is not known when the full construction will be conducted because we are moving so slow.

The more the completion of the project is stretched the more the Armenian taxpayers will pay for delay. The length of the highway should be 556 kilometers. Because of the recent findings of the Audit Chamber most probably the re-launch of the project may again be delayed.

There is no guarantee that the contracted construction companies will work better and will complete the highway construction during the highlighted reasonable terms. If there is the need to conduct a new bid, then the construction of the highway will be delayed for another 6 months. Recently the Armenian Premier Tigran Sargsyan attempted to prevent this by ordering the government members to negotiate with the Asian Bank to cease the payments of interest rates.

But in reality it is impossible because by itself the contract is a trade document and thus cannot be waivered or edited. In the beginning of this month a reporter of 168-Zham addressed a question to a representative of the Asian Development Bank David Dole.

He was asked to comment on the findings of the Audit Chamber and whether it would be possible to edit the agreement between Armenia and the ADB to waiver the debt. But Mr. Dole hasn’t answered these questions yet. But in reality it is impossible because by itself the contract is a trade document and thus cannot be waivered or edited. Indeed, the Armenian government is well aware of this as well.

But why would the Premier order to start negotiations with the ADB? This is probably a new method of cheating the nation. The leader speaks angrily and demands to change the situation. The same practice was applied years ago when the foreign debt of Armenia was drastically increased and stated that they would negotiate with the IMF and other grantors to moderate the loans and the interest rates.

The same practice was applied when the Armenian president expressed his anger about the kickbacks before the presidential elections. After these performances the actual problems are forgotten. The board of supervisors and the shortcomings of the constructor, declaring at the same time assured that the companies fully comply with the requirements of the law of selection competitions this case. It is important that the company failed to allow for such activities from the very beginning.

The Transport and Communications Minister Gagik Beglaryan responded to 168 Zham as to what explains the North-South highway construction works for an international competition to companies such good work was done.

He said that there are flaws in all activities, even in a small cabin build now there are shortcomings, which are being restored. These amounts are not paid for defects, and if there are no fees, so there are no abuses.

To our question that maybe the contractor was not selected right, Beglaryan responded, “We follow the work, we have a 1-month deadline given to them, and follow the contractors. If the work quality is not improved, we will organize other means, but I’m very confident that they will restore the deficiencies.” Silva Adamyan, a representative of the oversight forum of ADB projects, told us that there is another problem.

“The company did not participate in any international competitions, despite the fact that everyone is well aware that, if the construction is done, then it should serve the citizens of the Republic of Armenia.

Forum members are alerted ADB Manila office, which mediated between the ADB the oversight group,” she said. “We have demanded that the bidder companies are Armenian and we do not understand why the money should be given to Spanish or French institutions.

But the banks wish to work with international companies and not Armenian,” she said. Let’s add that as a result of merging of two Spanish companies in 2004 – Corsan Koviam and Izolux Vat – a new company was established and named Izolux-Corsan. The latter receives 250 million USD for the reconstruction of Yerevan-Ashtarak, Ashtarak-Talin and Yerevan-Ararat highways. Safej company and Eptisa, which won the bid to monitor the construction will receive 6,98,7 mln USD.

By Gayane Khachatryan