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Cyprus

Nicosia municipality strikes back at Eleftherias Square contractor

By Constantinos Psillides

NICOSIA municipality said yesterday it would appeal the unilateral injunction orders secured by Eleftherias Square contractor Miltiadis Neopthytou, in an attempt to force the contractor to complete the project.

The injunction issued on Tuesday forbids the local authority to cash in two letters of guarantee worth 4.7 million euros the construction company issued in October 2011.

Contractor guarantees are considered standard procedure on large-scale public projects as they provide the authorities with a safety net in case complications arise over projects being completed. They usually cover 10-20 per cent of the total cost and are left untouched if the project is completed within the terms of the contract.

A legal representative of the municipality will appear before the Nicosia district court on Friday.

Both sides are blaming each other for the delays in renovating Eleftheria Square which was due to be completed by September 2014, already a year after the original deadline set in the initial agreement.

The two parties are now involved in a full-blown legal battle and it’s unlikely any compromised will be reached.

The work on-site had come to a halt after the contractor secured the injunction orders but has now restarted after the municipality announced that it would appeal the court orders. Termination of work without an interim order from the court constitutes a breach of contract.

The district court is expected to take two to three months to process the case.

If the contract with Miltiadis Neophytou is rescinded, the process of awarding a new tender is expected to take one to two years. A further 18 months will be required to complete the project.

If the injunctions are upheld by the court then the contractor will ask for an extension in completing the project and for the municipality to cover any additional cost.

In a statement released to the press yesterday, mayor Yiorkatzis repeated that completing the project is of paramount importance, “for the good of the town and its residents”.

The mayor stressed that the injunctions were unilateral and that the municipality will appeal because “they must be repealed”.

The mayor promised that he would do everything in his power to defuse the situation and move on with completing the project.

On Tuesday he said the contractor had chosen to withdraw from negotiations towards a friendly settlement between the two parties.

The contractor was not willing to comment yesterday. Contracts manager Stavros Aletras said the company “do not wish to enter a public debate with the municipality through the media”.

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