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Contractors left unpaid for government projects

As the government’s coffers run dry it has no money left to pay companies that have completed construction projects and who are suffering from cash-flow problems and who may be forced to lay off staff.

THE Cyprus government has repeatedly said it was not going to default, but there are growing signs it is only paying salaries and leaving other debts unpaid.

Companies that have completed government jobs are still waiting for payment; others are still awaiting VAT refunds.

One big construction firm which built a road in Nicosia is still waiting for more than a million euros, despite completing the project 18 months ago.

The government found a pretext relating to the technical specifications to avoid payment and even after a compromise deal was reached, the state has still refused to pay.

But it seems to make no difference if a finished project complies with all requirements.

Work on the Paphos sewage project was completed and the government took delivery but it is still refusing to pay the contractor the final 5 per cent, it owes.

The authorities have told the company that it has no money and will settle the debt, with interest, when funds are available.

“The interest we will receive at some time in the future is no consolation,” said the company’s executive. “Our problem is cash flow. We need the money now to pay wages and our suppliers. Non-payment causes us huge problems.”

A smaller contractor that has been working on a government project in Dhali is now looking to secure a bank loan in order to complete it because he has run out of money and has received no payment from the government.

As a result he has been unable to pay his sub-contractors who had done part of the electrical engineering work.

The sub-contractor, who is owed €15,000 by the government, is now unwilling to run the risk of buying the electrical units he was contracted to install because he does not know when he will be paid for them.

“If tomorrow I am obliged to make redundant my three employees, because I have no money to pay their wages, whose fault will it be,” he asked.

Companies are also complaining about significant delays in getting VAT refunds.

The VAT service did not immediately respond to a call seeking comment.

In mid-October, court bailiffs seized seven vehicles belonging to the government at the behest of people owed money by the state for land appropriations it has yet to pay.

The application for the writs was filed by owners of land earmarked for the construction of the Paphos to Polis highway that has been put on hold by the cash-strapped state.

Bailiffs seized three vehicles belonging to the district’s public works department, one each from the forestry department and the land registry and two belonging to the electromechanical services.

Readers' comments

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  • Denton Makrell says:

    Update. Within 30 minutes of my last post, I happened to pass by the local creche in the village. The door was open and I could see the little tots and their teacher inside enjoying a singing lesson. To my astonishment, I realised that she was leading with a rousing rendition, backed by recorded music, of – wait for it – the Internationale!!

    So, even at the tender age of 3 or 4, children here are already being indoctrinated about the marvels of communism and the evils of neo-liberalism.

  • Steve says:

    Denton Makrell is looking in the right direction with his comments referring to “waffle on about the evils of neo-liberalism.” This is classic Russian communist clap-trap.

    South Africa is another country run by Russian-trained communists that also has a reputation for not paying its bills. However, the “comrades” always seem to get paid what they are owed, often in advance for work that is not completed properly – sound familiar?

  • Adrian says:

    I would like to welcome all the government contractors to our club, it is mostly private individuals who like you are at risk of losing everything they have.

    We could get together and if you could get our title deeds the government will get the transfer fees and you will get paid.

    Sorry but it will not happen soon because developers have not paid of the loans secured on land the has been paid for by the home buyer, so no title deeds. But welcome to the club anyway!!

  • Denton Makrell says:

    A sure sign the country is on the final slippery slope. No wonder recent press articles have talked of a potential run on the banks in the near future. All the fantasists and ‘flat earth’ believers at the helm can do is waffle on about the evils of ‘neo-liberalism’. No doubt the country’s 840,000 intellectuals (all social and political scientists to a man) who make up the population will immediately understand what neo-liberalism means and will fight it to the last breadcrumb on their table and euro in their pocket while singing the Internationale.

    Me, I’m just an ignorant peasant who still believes in not living beyond my means and not expecting other countries’ taxpayers to subsidise me if I recklessly spend beyond my means.

  • Costas Apacket says:

    Dear Government Contractors and Sub-Contractors, perhaps you should ask the Government why it is still an active participant in a process that delays the transfer of circa 130,000 Property Title Deeds, worth an estimated €1.3 billion in collectable transfer tax revenue?

    Yes that’s correct, €1.3 billion!

    I’m sure that this latent untapped revenue stream would go a long way to freeing up funds which could in turn be used for payment of the many outstanding bills for work you have all carried out in good faith for our wonderful and trustworthy Government.

    You may wonder why it is that on an island with a population of circa 800,000 people there are still circa 130,000 property title deeds that remain un-issued.

    Go on, I dare you to ask the question!

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