The City of Kaunas is cancelling the contract with Kayi Construction, a Turkish company reconstructing a stadium, following workers' strike over unpaid wages.
Kaunas Mayor Visvaldas Matijošaitis said the company had “exhausted the credit of confidence” the city had given it.
“We gave them enough chances and time to resolve the problems so that works could continue smoothly, but we see that they have failed to make use of that. Now the city is taking over the initiative,” the mayor said.
The city's priority is to finish the stadium reconstruction in time, he added.
“We'll need some time to find a new contractor, but we will do everything to make sure that the unavoidable interruption of the works is as short as possible,” he said.
Gintaras Černiauskas, a lawyer for Kayi Construction, told BNS that the company was considering contesting the city's decision in court.
“We are analysing and evaluating the grounds for the termination of the contract [...]. We'll then decide whether or not to go to court,” he said.
In December, 52 Turkish construction workers reconstructing the stadium went on strike over pay arrears.
Kaunas Municipality said on Friday it had notified Kayi Construction about the contract termination, quoting the contractor's failure to adhere to schedule as one of the reasons.
The municipality said the company had contracted to bring 400 workers and most of the necessary construction equipment from Turkey. However, the contractor still does not have the construction capacity and leases construction equipment from Lithuanian subcontractors.
Moreover, creditors claim that the Turkish company has failed to pay for building materials, designing work and other services, according to the municipality's statement. The contractor even failed to pay for food supplied to its workers.
Kaunas Municipality directly settles with the majority of subcontractors under trilateral contracts and has fully paid the Turkish company for all the work completed to date, it said.
The city will claim 2 million euros from the contractor for its failure to comply with the essential terms of the contract.
Kayi Construction to decide on next step
Alper Dedeoglu, a deputy project manager at Kayi Construction, told BNS they had no official information about the cancellation of the contract yet.
“I am also checking from the media; we didn't receive the official information yet. I think we will soon, because I've got this news from many channels,” Dedeoglu said.
“We will see what the next step is,” he added.
The deputy project manager said the work on the site had stopped recently due to technical problems.
“We had meetings with the municipality last week and this week; we know the problems. Also, two days ago we stopped works because of technical project problems,” he said.
New contract to be found within months
Kaunas Municipality signed the 34.95-million-euro contract for the reconstruction of the Darius and Girėnas Stadium with Kayi Construction in June 2018.
The stadium was originally scheduled to be completed in the spring of 2020, but the date was pushed back to later this year after it became clear that some of the existing structures will have to be rebuilt.
According to the municipality, only one-fourth of all work has been completed to date. Workers have demolished the stadium's structures, installed utility lines, and started building an underground car parking area and VIP boxes.
“The Turkish company's inability to manage the processes had a direct impact on the pace of construction. It is a shame that precious time is wasted because of that. We cannot wait any longer,” said Vilius Šiliauskas, the director of administration at Kaunas Municipality.
“We hope that the new contractor will do the remaining work well and as quickly as possible,” he added.
The city expects to find a new contractor within a few months.
The renovated stadium will have 15,000 seats, up from 9,500, and will comply with the UEFA category 4 requirements.