News2020.05.21 16:14

Vilnius ordered to terminate national stadium contract

BNS 2020.05.21 16:14

Lithuania’s public procurement watchdog has ordered Vilnius municipality to terminate the 156-million-euro contract to build a national stadium in the Lithuanian capital.

The construction of an international stadium in Vilnius began in 1987, several years before Lithuania regained independence. Construction works were later resumed in 2008, but had to be halted as the funding was discontinued amid the global economic crisis.

Read more: Vilnius to sign €156m national stadium deal this month

The city planned to sign a concession agreement with Axis Industries, part of the Icor group, for the construction, but the deal was challenged by prosecutors.

On Thursday, the Public Procurement Service (VPT) said the project’s funding model had been changed, leaving the state and municipality alone to shoulder all the risk of the project. As such, it could no longer be considered a concession agreement. The VPT ordered Vilnius to terminate the contract it planned to sign with Axis Industries.

“We looked into the last procedures, negotiations and their results and determined that the very essence of a concession, meaning that the private sector should take all or a major part of the risk, has been lost,” Jovita Petkuvienė, the acting head of the VPT, told BNS.

“The negotiations with the sole concessionaire led to a situation where a major part of the risk was put on the public sector. Meanwhile, a concessionaire's usual risks are gone, which does not meet the essence of a concession,” she said.

Vilnius Mayor Remigijus Šimašius says the city will challenge the VPT’s decision.

“Of course, we will lodge a court appeal, but realising the length of the process, we have no illusions. […] We are already moving with more energy towards drafting a new stadium plan, as Vilnius will have one in any case,” the mayor posted on Facebook.

Šimašius also told reporters that Vilnius would consider building only a stadium, without other planned facilities, and would also consider other locations for it.

“We are weighing other options [besides a] multifunctional complex,” he said. The previously planned stadium had “over a dozen sports facilities, where around 2,000 people, especially children, could do sports”.

Once the decision on building a stadium is finalised, the city would call a public procurement tender, rather than a concession tender, to find a developer, Šimašius said.

Following several years of negotiations, the Vilnius authorities had planned to sign the contract with the tender's winner Axis Industries and the project's investor Baltcap in March. It had already been approved by the municipal council and the government.

The VPT, however, blocked the signing in March in response to prosecutors' request as they wanted to look into whether the increase in the concession value during the negotiations was legitimate.

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