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New explosion of costs on the motorway: Shady dealings on the section Poprikusa – Nemila

Gradilište Poprikuše - Nemila
Photo: JP Autoceste FBiH
Construction site Poprikuše - Nemila

Fokus.ba is in possession of documents and statements: Cengiz has demanded additional payments of enormous amounts of money. Engineers were pressured, and one left the project due to threats. Dževlan and Grabovica are also mentioned

There has been explosion of costs on yet another section of the motorway on the territory of FBiH! It is the section Poprikuše – Nemila between Zenica and Žepče. This entire story, which has been investigated by Fokus, is contaminated with corruption, similar to the case of Vranduk-Ponirak section, which has been already the subject of investigation by the Prosecutor’s Office of Herzegovina-Neretva Canton.

The section is stretched over 5.5 kilometers. The contract is worth 208 million Euro or BAM 407 million, and was signed on November 16, 2020.

The beginning of works commenced in February 2021. The completion was scheduled for May 2024, thus in a little more than five months.

The decision of Autoceste FBiH

However, this section will neither be completed in May 2024 nor it will cost BAM 407 million. Instead, according to the decision of Autoceste FBiH of October 17, which was obtained by Fokus, payment of additional BAM 53.2 million (27.2 million Euro) and extension of the deadline for completion of works for additional 182 days were granted to the main contractor, Turkish company Cengiz Insaat!

The reason why an additional BAM 53.2 million is approved, as explained in the FBiH Autoceste’s decision, is the physical conditions encountered by the contractor, which he could not identify from the public data and contracted documentation. More precisely, it is stated that “the construction of the Golubinja tunnel on this section is being carried out in weak geological formations, which is confirmed by the deformations observed during the excavation, which led to the use of significantly heavier support systems”.
However, this is not even the final amount that Cengiz Insaat will charge additionally. In the document signed by the head of the project for this section, Reuf Kadrić, which is also in the possession of Fokus, it is stated that the sum of 27.2 million Euro does not represent the full payment of all costs.

– The contracted value of the works will be breached by acceptance of the engineer’s evaluation, and additional funds will have to be provided for the realization of the contract, including this claim and the price adjustment for the completion of the Poprikusa – Nemila contract, which will require around additional 83 million Euro without VAT. Based on the contractual provisions, it is necessary to prepare an annex to the contract – reads the document of the FBiH Autoceste.

So, instead already approved BAM 53.2 million Cengiz will receive additional BAM 162 million (83 million Euro), which is a total of BAM 215.2 million! This additional amount is awaiting the formal approval by the FBiH Autoceste’s management.

Copy of a portion of the document by head of the section project on additional 83 million Euro
That, however, is nowhere near the whole story. In the past months, according to the information of our portal, there was a frantic struggle to approve far more than what was finally (temporarily) approved to Cengriz. There have been pressures on the supervisory body, namely the Italian company IRD Engineering S.R.L., to grant Cengiz additional millions, due to the “unforeseen physical conditions” it has encountered during the execution of the works.

Namely, Cengiz has originally requested that the total amount for the works of BAM 407 million be increased by BAM 185 million (94.5 million euros), and the deadline for the completion of the works be extended by an additional 515 days! This means that this section, as originally envisioned by Cengiz, would only be completed in the fall of 2025.

What does the Italian supervision say

The supervisory body, the company IRD from Italy, as seen in their letter of June 3, which we obtained, presented a series of disagreements with Cengiz’s demands. This letter is signed by IRD project director Paolo Orsini.

In the letter, among other things, Orsini harshly denies statements of the Cengiz Management that the IRD engineer approved any increase in the cost of the section, emphasizing that the contractor (Cengiz) did not comply with the regulations and did not support its requests for the increase of expenses with adequate evidence and documentation.

Although Orsini in this letter addressed to Cengiz emphasizes the readiness of the IRD to consider all arguments related to the increase in costs, he nevertheless underlines in one part that they expected the contractor to immediately notify the engineer when faced with unforeseen and difficult conditions, and that the “unforeseen conditions” are adequately documented. Also, it is emphasized that Cengiz has already rejected IRD proposals that did not benefit it.

However, following several months of turbulence, the IRD gave in to the pressure in September and approved an additional payment of BAM 53.2 million to Cengiz.

In a short statement for Fokus, IRD’s engineer Džeko Skenderović, who was hired as the chief engineer for the project Poprikusa – Nemila section, confirmed that he was forced to leave this project due to enormous pressures and threats to comply with Cengiz's request.

– The pressure was particularly exerted by Asmir Dževlan (executive director of Autoceste for design and construction, author’s remark). I had loudly and clearly told the management of Autoceste that the entire story about increase of the costs is irregular, and that I cannot comply either with the requests of Cengiz or the unprofessional way in which the increase of costs was requested and deadline exceeded. I have experienced pressure and threats and that was the reason I had decided to leave the project – said Skenderović.

Sarajevo Tower and Meganet

Asmir Dževlan, as well as the rest of the new management of Autoceste headed by Denis Lasić, were appointed on May 18 by the FBiH Government, and the Supervisory Board confirmed the appointment on May 26. SDP supported Dževlan for the position of acting executive director for design and construction.

Just before his appointment to this position Dževlan had gave up the position of Director General of a well-known construction company Ans Drive, which is behind the Sarajevo Tower project, due to the possible conflict of interest.

Several sources from Autoceste FBiH have confirmed to us that the former SDP director of Elektroprivreda BiH, Elvedin Grabovica, also plays a role in this story. He established the company Meganet d.o.o. Sarjevo in October 2015. Grabovica is still registered as the founder of Meganet in the official court registry of business entities.

Just before Dževlan will be appointed acting executive director of Autoceste, Ans Drive and Meganet have agreed that the company founded by Grabovica will acquire ownership of a 110-square-meter office space on the 1st floor of Sarajevo Tower.

This is proved by the official excerpt from the condominium apportionment project, which is in the possession of Fokus. Furthermore, Meganet, as unofficially confirmed to us by the company Euro-asfalt, is the supplier of tunnel reinforcement material and foil to this company, and it is also involved in Poprikuša – Nemila section project with a smaller job.

The director of Euro-asfalt, Jasmin Bučo, confirmed for Fokus that this company is carrying out a small segment of artisanal works on the Poprikuše – Nemila project. As a subcontractor, namely to the Turkish Cengiz, Euro-asfalt is also involved in the Medakovo – Ozimice section, which is also under construction.

The total value of that section is 361.7 million Euro. Autoceste FBiH sent an official information to Fokus that Cengiz has on “on November 6, based on comments from the supervision, submitted a supplemented request for the approval of Euro-asfalt as a subcontractor” for that section.

Who responded and who didn’t

On the section Putnikovo brdo – Medakovo (167 million Euro), Euro-asfalt is the main contractor, and the IRD is engaged as a supervisory authority on that section as well.

When it comes to the company Meganet, according to the official financial data maintained by the rating agency Dun & Broadstreet, the total revenues of this company have grown rapidly in the past years. They amounted to BAM 1.3 million in 2020; 1.7 million in 2021, and in 2022 they increased to even BAM 5.7 million! Capital grew accordingly, as did net profit.

Fokus.ba has on several occasions officially asked the company Meganet to give its view on all of this, but there was no response to our inquiry. If we receive any response we will publish it later. We have, inter alia, asked about the relationship between Grabovica and Dževlan, and about other details.

We also did not receive any response from the company Ans Drive or from Cengiz, where we have sent official inquiries to the leader of the Poprikuše project- Nemil Evren Utko Goku (who used to be the director of Cengiz), as well as to his associates on this project.

We sent a series of questions to the FBiH Autoceste management, whose member is Dževlan, about the said section, and we also confronted them with allegations of pressure, as well as the actions undertaken by Dževlan.

In their response to Fokus, Autocest FBiH stated, among other things, that the entire management and its member Dževlan are “working dedicatedly to close all open issues with the contractors, and to establish and restore the damaged relationships of all participants in the construction process”.

Whilst criticizing the work of the previous managements, as well as the previous ones headed by Elmedin Voloder, Autoceste FBiH also note that the previous way of contracting was anything but open and transparent.

They expect a decisive response of the institutions

They say that the new management has informed the competent institutions about all the irregularities found so far that deviate from the signed contracts, creditors’ requirements and applicable laws, and they expect a decisive reaction from those institutions.

Due to its volume we are publishing the response of Autoceste FBiH regarding the actual findings on the Poprikuše – Nemila section on the following LINK.

It should be noted that this section is also financed with funds from the European Bank for Reconstruction and Development (EBRD) in the amount of 70 million Euro, then the European Investment Bank (EIB) in the amount of 90 million Euro, and with grants from the European Union in the amount of 41.1 million Euro, which are provided within the framework of the Connectivity Agenda – Western Balkans Investment Frameworks (WBIF).

Infografika: Fokus.ba