In late May, construction work resumed on a section of the M-06 highway between the 129th and 151st kilometers—for the first time in almost five years. The Infrastructure Restoration and Development Service in Rivne Oblast has concluded three contracts with Turkish group Onur for the completion of Zhytomyr's northern bypass. The total amount exceeds 2.28 billion hryvnias: the first stage 313 million, the second 548 million, the third 1.42 billion (the latter is still awaiting signature).
What Sinohydro Left Behind
Chinese company Sinohydro Corporation Limited entered the project in November 2017. The contract was financed by EBRD and EIB funds and provided for the reconstruction of 22 km of road by June 2020. During the allocated period and its extension, the contractor completed approximately 49% of the work—and most of it with serious quality concerns. Technical supervision by Italian company IRD Engineering documented the destruction of concrete pavement due to failure to follow construction methodology.
In October 2020, Ukravtodor initiated contract termination and collected bank guarantees for 10.3 million euros. However, Sinohydro challenged the decision—and won.
«The contract termination by Ukravtodor is recognized as unlawful. The 10.3 million euros collected under bank guarantees must be returned to the contractor»
Decision of FIDIC arbitrator Mahadev Gopinath, March 2021
Ukravtodor disagreed with the decision and announced arbitration—but the unfinished road meanwhile continued to erode roadside verges and flood summer cottage areas near the village of Soniachne.
Who Is Onur and Why Is It Here
Turkish group Onur Group has been operating on the international market since 1981, implements projects in 13 countries, and declares a fleet of over 7,000 units of equipment. In Ukraine, the company is already present on several road projects. It enters the Zhytomyr site not as the winner of a tender under new conditions, but as a contractor that received all three stages of one project—a structure that requires separate explanation from the customer.
What This Means in Practice
- The new contractor will build over and alongside the previous contractor's work—part of the defective concrete will have to be either demolished or incorporated into the new structure.
- The arbitration case regarding 10.3 million euros, judging by public data, has not been publicly concluded—the state may simultaneously build a road and pay a debt to the contractor who failed to build it.
- Three stages with one contractor without an open competition between stages—standard practice or a forced decision in wartime conditions?
It is notable that the project was financed by European loans rather than grants: EBRD and EIB funds are repaid. How much of that money went to work that now needs to be redone has not been publicly calculated.
If Onur completes the first stage on time and without technical supervision remarks, this will become the first real argument that the problem was with the contractor, not with the system that selected him. If not—the question of arbitration debt to Sinohydro will take on a new, decidedly uncomfortable context.
