Business • 12 March, 2020

Business Ombudsman deals with issues of Road Association

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Business Ombudsman Rustam Zhursunov received representatives of the Kazakhstani Road Association.

The Transport Prosecutor's Office has filed lawsuits in court against entrepreneurs demanding that additional agreements to adjust the cost of contracts for road work for a total of KZT 9.5 billion be declared invalid.

In 2014, KazAvtoZhol National Company JSC, KazZherStroy Joint Venture LLP, KazakhDorStroy LLP, ABK-Avtodor NS LLP, UNISERV LLP, IVRUS LLP, KAZPACO LLP, Iveta Co LLP signed agreements on the reconstruction of roads in the Akmola, Karaganda and Aktobe regions.

In 2017-2018, the parties concluded additional agreements to these contracts to adjust the value of the contracts for KZT 9.5 billion.

However, according to the prosecutor's office, because during this period the rules for implementation and financing of works on construction of highways № 1038 were already abolished, contractors were not entitled to adjust the value of even those contracts that were concluded during the period of the rules.

"We are talking about such projects of Nurly Zhol State Program as Astana - Pavlodar, Pavlodar - Semey, Aktobe - Makat, Astana - Karaganda. Contractors of the work were faithfully executed. These companies have provided guaranteed maintenance of these roads for 5 years. But in 2019, the courts were initiated from the position of the main transport prosecutor's office. Which, in our opinion, does not comply with law enforcement and law. The consequences of this decision for the company will be fatal: bankruptcy awaits them," explained Aigul Andabekova, Head of Legal Department of BI Infra Construction LLP Group of Companies.

The appeal of the contractors will be considered on March 12 in the court in Nur-Sultan. A representative of the Business Ombudsman will also take part in the process. Then, on March 16, the Karaganda Regional Court will consider the contractor's appeal.

It is assumed that after the entry into force of these judicial acts, the bank accounts of road companies in the framework of the enforcement proceedings will be arrested for a total of KZT 9.5 billion.

"Today there are almost 20 large Kazakhstani companies in our Association. These are the leading companies in the country, which over the past 10-15 years have been working at all levels of road construction. These companies have been building the "Western Europe - Western China" roads. Concerning the situation with these trials, there are many controversial points. The contracting companies were acting on contracts. The contracts haven't been changed, they haven't been cancelled. Escalation (contract value adjustment – author’s note) was provided for. For some reason, the prosecutor's office is based on Regulation 1038, which is no longer in force," said Baglan Baimagambetov, President of the Road Association of Kazakhstan.

After listening to the entrepreneurs, Rustam Zhursunov instructed the staff of the Business Ombudsman's Office to ensure the protection and representation of contractors in courts of all regions and authorities.

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