On Wednesday, 18 January, a construction supervision meeting of the New Riga Theatre (JRT) will take place, where SJSC "State Real Estate" (SRE) wants to agree with the general partnership "SBSC" ("Skonto Būve" and "Skonto Construction") on specific deadlines for handover of the construction, informed Jeļena Gavrilova, the SRE Member of the Board.
According to the contract, the completion date is 11 March of this year, but the builder has publicly stated that it is unlikely to be able to meet this deadline, as only 70% of the construction work is currently complete.
"It is important for us that the New Riga Theatre regains its home as soon as possible. Therefore, so far, understanding both Covid-19 and the unforeseen consequences of the Russian war in the construction sector, the SRE has used all available instruments to confront SBSC and to ensure that we are able to deliver JRT on time and in the amount. Unfortunately, we have now exhausted all the funds, so we appeal to both the contract and the contractor's good faith to get the remaining work done as quickly as possible. At today's meeting, we expect the general partnership SBSC to give us a concrete deadline when JRT will be ready for handover," Gavrilova emphasized.
It should be noted that if SBSC does not hand over the site by 11 March of this year, a penalty of 30,000 euro per day will be calculated according to the contract.
Gavrilova reminded that the general partnership "SBSC" has repeatedly approached the SRE with various demands, which the SRE has provided. In addition, all invoices submitted by “SBSC” have been paid on time and in full. "We have been actively involved in the management of the contract - we have looked at options and found a solution to compensate the builder for the additional inflationary price increase of 2.18 million euro, and upon “SBSC” request we also granted an advance of 1 million euro. After all, invoices submitted by the builder for payment of the actual work are paid several times a month within one to two days of submission, instead of once a month within 30 days as originally foreseen. All these steps have been taken to ease the builder's situation," said Gavrilova.
The SRE has repeatedly told the builder that the deadline will not be met if the pace is not increased. Around 100 people currently work at the site. In order to complete the work within the specified period, according to the initial work execution program of the builder “SBSC”, approximately 240 people were planned, the builder has not reached such intensity of work so far.
“SBSC” has now requested an additional advance, but this can only be paid if the builder provides the necessary evidence for the cost increase. The Central Financial and Contracts Agency (CFCA), which was consulted by the SRE on the possibilities of increasing the amount of the advance and its disbursement, also concluded that in the CFCA opinion, the disbursement of a larger advance with the arguments provided by “SBSC” so far would create more favorable conditions for the construction company compared to the terms set during the procurement, which could affect the pool of tenderers and change the economic balance in the interests of the selected tenderer.
"Our priority is to take care of the needs of our client - the New Riga Theatre, as well as to protect the state budget and comply with the law," added the SRE Member of the Board.
Representatives of the SRE, “SBSC” and JRT, as well as experts from the Ministry of Culture and the Ministry of Finance of the Republic of Latvia will participate in the JRT supervisory Meeting.
On the restoration of the New Riga Theatre complex
The aim of the renovation and construction project of the New Riga Theatre is to create a modern theatre of European standards. The development of the construction project started from 2018, and the construction – from 2020. The construction of the New Riga Theatre is contracted to the general partnership “SBSC” for EUR 32.4 million (including indexation or payment for the increase in construction costs). Cooperation with the builder – general partnership “SBSC” takes place according to the “Design and Build” principle, which means that the contractor has overall responsibility for the construction work and allows technical challenges to be resolved more quickly.
