Foreign-Led Construction Projects Face Audit
Foreign-Led Construction Projects Face Audit
The Turkmen authorities are planning a review of construction work carried out by foreign companies to check whether contracts are being fulfilled.
At a December 5 cabinet meeting, President Gurbanguly Berdimuhammedov told officials to run an audit on all contracts that the state has signed with foreign construction companies, to ensure that project implementation, deadlines and quality standards are being met.
The president added that from now on, international tenders needed to be placed under careful scrutiny to ensure they complied with the law.
Construction is an important industry in Turkmenistan, but most major projects are in the hands of foreign firms, which are able to bring more modern technology to bear. The industry received a further boost in 2007, when a new urban and rural redevelopment programme was launched.
While foreign investment provides a much-needed way of lifting the Turkmen economy, many analysts are concerned at the murkiness and confusion which surrounds the tendering and contract process.
Before his death in late 2006, President Saparmurat Niazov signed contracts with foreign firms and awarded them preferential tax and customs tariffs at his own discretion.
Some observers report that the same is happening under Berdimuhammedov. For each new project, the president personally signs a document appointing the contractors and approving contract value, start date, and completion deadline. Only then does he instruct the relevant ministries to sign the contract and supervise its implementation.
Annadurdy Khajiyev, a Turkmen economic analyst based in Bulgaria, says this procedure has been applied in contracts worth 4.5 billion US dollars in the two years since Berdimuhammedov came to power.
Among the companies that have won major contracts to build office and apartment blocks and five-star hotels are Turkey’s Polimex and the French firm Bouygues.
“Niazov… made a practice of exempting firms from various taxes and customs duties, whereas Berdimuhammedov has taken to excluding value-added tax from contracts,” said Hadjiev.
The economist says the forthcoming audit of contracts has become necessary because the body of law is so complex, with many official decrees and resolutions carrying the weight of law without being part of the legislation. There are, for example, no laws governing the conduct of tenders and contracts.
A civil servant in Ashgabat took a similar view, adding that once the audit has been done, the authorities should push through a package of legislation designed to rationalise and improve procedures. He said the time taken to draft contracts should be reduced, better feasibility studies should be carried out, and no more than 30 per cent of a project’s workforce should be foreign nationals.
“It would be great if the authorities drew similar conclusions after the audit,” said the civil servant.
An economist in Ashgabat said the current international economic environment, in which the prices of cement, steel, wood and other imported building materials are falling, could be good for Turkmenistan. Project contracts could be reviewed and overall costs reduced.
(NBCentralAsia is an IWPR-funded project to create a multilingual news analysis and comment service for Central Asia, drawing on the expertise of a broad range of political observers across the region. The project ran from August 2006 to September 2007, covering all five regional states. With new funding, the service is resuming, covering Uzbekistan and Turkmenistan.)
At a December 5 cabinet meeting, President Gurbanguly Berdimuhammedov told officials to run an audit on all contracts that the state has signed with foreign construction companies, to ensure that project implementation, deadlines and quality standards are being met.
The president added that from now on, international tenders needed to be placed under careful scrutiny to ensure they complied with the law.
Construction is an important industry in Turkmenistan, but most major projects are in the hands of foreign firms, which are able to bring more modern technology to bear. The industry received a further boost in 2007, when a new urban and rural redevelopment programme was launched.
While foreign investment provides a much-needed way of lifting the Turkmen economy, many analysts are concerned at the murkiness and confusion which surrounds the tendering and contract process.
Before his death in late 2006, President Saparmurat Niazov signed contracts with foreign firms and awarded them preferential tax and customs tariffs at his own discretion.
Some observers report that the same is happening under Berdimuhammedov. For each new project, the president personally signs a document appointing the contractors and approving contract value, start date, and completion deadline. Only then does he instruct the relevant ministries to sign the contract and supervise its implementation.
Annadurdy Khajiyev, a Turkmen economic analyst based in Bulgaria, says this procedure has been applied in contracts worth 4.5 billion US dollars in the two years since Berdimuhammedov came to power.
Among the companies that have won major contracts to build office and apartment blocks and five-star hotels are Turkey’s Polimex and the French firm Bouygues.
“Niazov… made a practice of exempting firms from various taxes and customs duties, whereas Berdimuhammedov has taken to excluding value-added tax from contracts,” said Hadjiev.
The economist says the forthcoming audit of contracts has become necessary because the body of law is so complex, with many official decrees and resolutions carrying the weight of law without being part of the legislation. There are, for example, no laws governing the conduct of tenders and contracts.
A civil servant in Ashgabat took a similar view, adding that once the audit has been done, the authorities should push through a package of legislation designed to rationalise and improve procedures. He said the time taken to draft contracts should be reduced, better feasibility studies should be carried out, and no more than 30 per cent of a project’s workforce should be foreign nationals.
“It would be great if the authorities drew similar conclusions after the audit,” said the civil servant.
An economist in Ashgabat said the current international economic environment, in which the prices of cement, steel, wood and other imported building materials are falling, could be good for Turkmenistan. Project contracts could be reviewed and overall costs reduced.
(NBCentralAsia is an IWPR-funded project to create a multilingual news analysis and comment service for Central Asia, drawing on the expertise of a broad range of political observers across the region. The project ran from August 2006 to September 2007, covering all five regional states. With new funding, the service is resuming, covering Uzbekistan and Turkmenistan.)
