The Audit Office and Treasury have attributed full responsibility for the termination of the Paphos-Polis road contract to the contractor, with documents revealing the audit office warned authorities about potential contract termination as early as December 2023.
In a memorandum submitted to the parliamentary audit committee, officials highlighted severe delays from the project’s outset, with only 4% of work completed after 47.6% of the contractual timeframe had elapsed—20 months into the planned 42-month schedule.
The audit office expressed “serious concern” to the Department of Public Works about these delays on December 20, 2023, urging immediate resolution of observed issues.
Officials doubted the project could be completed even by May 1, 2025, the contractor’s unilaterally proposed new completion date.
The Treasury noted that contract terminations typically result from contractors’ inability to complete works within public procurement laws or from financial difficulties.
Officials emphasised that contracting authorities should not be criticised for terminating contracts when contractors fail to deliver on their commitments.
The Department of Public Works had initially provided oral assurances in May 2023 that early difficulties, including third-party interference, had been resolved.
However, by November 2023, the contractor claimed contractual breaches by the department, prompting the audit office’s December warning about potential contract termination.
The project saw only 18% completion by January 2024, despite department claims of 30-35% completion. Payments to the contractor totalled approximately €16 million, including price adjustments, before the contract’s termination on November 11, 2024.
Questions have also emerged regarding performance bonds, with the audit office noting concerns about the timing of enforcement attempts.
The situation is further complicated by Greek court interventions preventing bond payments, despite the contracts specifically falling under Cypriot jurisdiction.
The audit office expressed concern about this legal precedent for future public contracts involving Greek banking institutions, suggesting it could impact future infrastructure projects’ guarantees.
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