Large delayed infrastructure projects in Adjara
TI Georgia has studied large delayed infrastructure projects in Adjara and their progress. Similarly to the previous study, we have selected those projects whose implementation has started and relevant contracts were also concluded, although the dates of completion are still unclear despite a number of changes to the contracts.
Such projects are as follows:
- The Batumi bypass road;
- The segment of the Khulo-Goderdzi Mountain Pass of the Khulo-Zarzma highway of national importance;
- The training base for weightlifters in the settlement of Chakvi;
- The ice rink and swimming pool of Batumi;
- Residential apartment buildings in the so-called Dream Town;
- Gasification of high-mountain Adjara;
- Green Town in Kobuleti;
- Logistics service centers in the municipalities of Adjara.
As part of the study, we applied to the budget-funded institutions implementing the projects and requested public information from them. Three projects (construction of residential apartment buildings in the so-called Dream Town, gasification of high-mountain Adjara, Green Town in Kobuleti) are being implemented by the Ministry of Finance and Economy of Adjara, which has yet to provide us with public information we requested in February 2023. The other budget-funded institutions – the Roads Department of Georgia, Adjara Project Management Company LLC, and the Ministry of Agriculture of Adjara – have provided the requested information incompletely, which has been a considerable problem in the recent period.
The Batumi bypass road
The Batumi bypass road is supposed to be a two-lane highway from the Chakvi Tunnel to the Chorokhi River. Its works are funded by the Asian Development Bank. In 2017, the Turkish company POLAT YOL & MAPA was selected for the implementation of the project. The works started in 2018 and were supposed to be completed in 2020, although the process is still under way.
In 2020, the official reason named for the interruption of the works was the pandemic, and in the following years – the financial problems of the implementing company, while, according to the statement of the Roads Department of Georgia of November 16, 2022, the challenges in the construction of the Batumi bypass road have been resolved and the construction works have resumed. The total value of the project exceeds GEL 329 million, and the date of completion is still unknown.
The road of the Khulo-Goderdzi Mountain Pass
The Khulo-Goderdzi Mountain Pass is one of the segments of the Khulo-Zarzma highway of national importance, and the contract with the Mamisoni construction company that had won the tender was concluded on June 9, 2020. The total value of the tender was GEL 14,581,880. The supplier took the obligation to complete the works provided for by the contract by December 12, 2021.
With the supplier’s request, changes were made to the project, and the deadline for the completion of the works was set for June 15, 2022. In spite of this, Mamisoni still performed its obligations inappropriately, and the Roads Department of Georgia unilaterally terminated the contract on August 5, 2022. Prior to the termination of the contract, works worth GEL 8,031,382 had been performed and reimbursed, which is 55% of the total works. The supplier was imposed a penalty of GEL 220,186 due to delayed and inappropriate performance of the obligations.
In March 2022, the Roads Department of Georgia announced a tender with a value of GEL 30,00,000 which provided for the remaining construction/reconstruction works of the Khulo-Goderdzi segment of the highway together with the works of rehabilitation and periodic repair of roads in Adjara and Guria. This particular segment was supposed to be completed in two years, for which GEL 7,032,775 was to be allocated. This tender was won by New Road LLC without competition, and at this stage, the company has performed the works with a value of GEL 4,231,868.
The training base for weightlifters in the settlement of Chakvi
In September 2020, Adjara Project Management Company (formerly Stadioni LLC), which was founded by the Government of Adjara, announced a tender with the aim of procuring the construction works of a training base for weightlifters in the settlement of Chakvi. The tender was won by Saba Construction LLC without competition. The total contractual value of the construction works was GEL 4,406,083. Initially, the construction works were to be completed by December 12, 2022. Later, the project and cost estimation documentation of the training base and the timetable of the performance of the construction works was amended 8 times, and the validity period of the contract was finally extended to July 15, 2023. The Prime Minister of Georgia, Irakli Garibashvili, and the Chairman of the Government of Adjara, Tornike Rizhvadze, stated on April 3, 2022, that the construction of the base would be completed at the end of 2022, but the promise is yet to be kept and only 58% of the works have been completed. It should be noted that, by the decision of the Government of Adjara, Saba Construction LLC also received – without competition, through the direct sale method, for GEL 1 – the right to dismantle the previously existing amortized training base for weightlifters and to use the secondary construction materials/waste produced as a result of the dismantling, about which TI Georgia has written before.
The ice rink and swimming pool of Batumi
With the aim of construction of an ice rink and swimming pool in Batumi, in February 2018, Adjara Project Management Company awarded a contract worth USD 19,900,002 to the Canadian company Westincor Limited without a tender. According to the contract, the construction works were to be completed until the end of 2020. The company did not completely perform the obligations taken, so the contract that had been awarded to it was terminated.
On February 7, 2022, with the aim of obtaining new project and cost estimation documentation for the ice rink and swimming pool, Adjara Project Management Company announced a competition with an estimated value of GEL 743,400. The competition was won by BWC LLC, which was awarded a contract worth GEL 719,800. According to this contract, the supplier was to provide the procurer with project and cost estimation documentation until November 2, 2022, which it has not done to this day. Therefore, it is unknown when the ice rink and swimming pool of Batumi will be built.
The so-called Dream Town
For the construction of a multi-apartment residential complex in Dream Town, the Ministry of Finance and Economy of Adjara announced a tender worth GEL 39,488,000 on December 27, 2019. The tender was won by Dagi LLC for GEL 38,745,999. According to the contract, the last, forth phase of the construction works were to be completed by July 14, 2021, but the contract has been amended five times since then. By the final amendment to the contract of April 13, 2022, the total value increased by GEL 494,177, and the deadline for the completion of the works was set for October 8, 2022. In spite of this, the project has yet to be completed, and the works with a value of only GEL 33,970,090 – i.e., 87% of the total works – have been performed.
Gasification of high-mountain Adjara
With the aim of procuring the construction works of a natural gas pipeline in high-mountain Adjara, the Ministry of Finance and Economy of Adjara announced a tender with a value of GEL 33,797,000 in May 2019. The tender was won without competition by Energy Invest 2009 LLC for GEL 27,037,601. According to the contract, the final, fourth phase of the construction works were to be completed by June 11, 2021, but the contract has been amended six times since then and only 77% of the works have been performed so far.
The budget of the Autonomous Republic of Adjara allocated GEL 6,000,000 for the said works for 2022, which was not fully spent, and works with a value of only GEL 3,161,300, i.e., 53% of the plan for 2022, were performed. The reason named for the failure to implement the project was the construction works of the Khulo-Zarzma highway. According to the final wording of the contract of November 30, 2022, the construction works are due to be completed by August 2, 2023.
Green Town in Kobuleti
On March 21, 2019, the Government of Adjara sold a land plot with an area of 180 hectares in Kobuleti to Green Resort LLC for GEL 6,040,265 through the direct sale method. The market value of this land plot was GEL 32,333,544. According to the contract of sale, the buyer was supposed to start the construction of the Green Town in Kobuleti project until June 2021 and complete it until October 2025.
The project envisages the construction of a hotel with no fewer than 250 rooms, a conference hall, a restaurant with no fewer than 100 seats, a golf course, a parking space for no fewer than 500 cars, a helicopter landing area, a training pitch and a running path with FIFA standards, no fewer than 2 clay tennis courts and no fewer than 2 hard tennis courts, a sports/wellness and/or rehabilitation center, and no fewer than 100 villas. No less than 70% of the land plot is to be devoted to recreational area. By the contract of sale of the land plot, the company took the obligation to invest GEL 250 million, although at the presentation of the project, GEL 500 million was named as its investment value. The company received a scoping report from the Ministry of Environment Protection and Agriculture in March 2020, and it was obligated to make an environmental decision – on the basis of which a construction permit is issued – until March 2022. The company failed to fulfill this obligation and the scoping report was also abolished. Therefore, no construction permit has been issued. In spite of this, the Government of Adjara extended the deadline for starting the construction by 30 months – until December 2023. The real time frames for the implementation of the project are still unknown.
Logistics service centers
With the aim of bringing together the transportation, packaging, warehousing, storage, and sale of produce produced by the region’s farmers in one space, in 2018 the Ministry of Agriculture of Adjara started the construction of logistics service centers in the municipalities of Kobuleti, Khelvachauri, Keda, Shuakhevi, and Khulo, and completed it in 2020. In addition to the costs of maintenance of these centers, GEL 2,538,726 was spent from the budget on their construction and equipment, but the centers have not operated in reality. On November 21, 2022, the Government of Adjara announced a conditional auction with the aim of privatization of these centers and related immovable/movable property, with the starting price of GEL 3,500,000: the buyer was to retain the profile of the facilities for at least 10 years. The auction was not held. After that, separate auctions were announced with the aim of privatization of each logistics center, but again without any results. Repeated auctions announced with a discount were also not held on May 25, 2023. All the foregoing confirms that there was no demand for logistics service in the region, and budget funds were spent needlessly and ineffectively, without any prior preparatory work.
TI Georgia calls upon the Government of Adjara and the Roads Department of Georgia to take maximum measures for completing the delayed projects quickly; we also call on the Anti-Corruption Bureau of the State Security Service to study the need for the construction of the logistics service centers and the lawfulness of the expenditures incurred.