Overseas construction contractors in Turkmenistan are still experiencing problems pertaining to payments for work completed.
In October 2018 it became known that two construction companies Turkey-based Sece Inşaat and Germany-based Unionmatex Industrieanlagen GmbH had filed lawsuits at the International Court of Arbitration.
Both lawsuits are related to a breach of contractual obligations by Turkmenistan in the construction area.
Unionmatex, which completed the project to build flour mills, demanded that Turkmenistan pay the outstanding bill of 32 million euro plus interest.
Additionally, Turkmenistan-based state-run companies “Turkmenneft”, “Turkmengas” and “Turkmengeology” have all experienced problems with unsettled payment for work completed. The Belarus-based construction company “Belgorkhimprom” is now being constrained with the same problem.
Let us recall that in 2010 “Belgorkhimprom” secured a contract to build a state-of-the-art potassium fertilizer facility valued at over $1 billion. The facility was commissioned on 31 March, 2017.
A source close to the Belarussian company told “Chronicles of Turkmenistan” that, thanks to the Belarus-based company, Turkmenistan had managed to become a leader in potassium fertilizer production in the region. However, in the course of the project implementation, which gave strong potential to Turkmenistan, catastrophic mistakes are being made.
According to him, the Turkmen state holding “Turkmenkhimia”, which acts as a customer, owes over $150 million to “Belgorkhimprom” for the completed project.The Turkmen state holding refuses to finalize payment or grant “Belgorkhimprom” staff access to the plant to carry out technical support works.
It appears that “Turkmenkhimia” is searching for other contractors or the aforementioned engineering services.
It has been previously reported that the facility produces only 2% of the projected output. According to the source close to “Belgorkhimprom”, this is most likely linked to the fact that Turkmenistan is trying to align the factory performance on its own by rejecting the services of highly-qualified specialists.
On 5 November 2018, the President of Turkmenistan Gurbanguly Berdymukhammedov expressed extreme discontent with the fact that the plant is not operating at the projected capacity and charged Deputy Prime Minister responsible for industry Kerim Durdumyradov with the task of preparing documents to file a petition to the International Court of Arbitration.
Sources close to “Belgorkhimprom” claim that the company does not intend to become another victim of business practices by Turkmen customers who are ousting contractors from the country without paying for services rendered by the latter. As far it is known, “Belgorkhimprom” will protect its interest using all available legal means.
“The unhealthy atmosphere of uncertainty is rampant in the project as “Turkmenhimia” unlawfully holds on to “Belgorkhimprom” property on the construction site, including its construction equipment and machinery, and even requested compensation”, a source close to Belarus-based company said, and added that “Belgorkhimprom” is seriously concerned about the state of the plant in Turkmenistan and fears that it is not being properly operated.
The company considers it necessary to warn other contractors who Turkmenistan might contact that they could be treated in the same manner.