Baltstroy loses remaining contracts for $24.7m

Baltstroy loses remaining contracts for $24.7m
Dmitry Mikhalchenko has lost the largest contracts in St. Petersburg

Billionaire Mikhalchenko’s company has been suspended from the reconstruction of the Conservatory on Teatralnaya Square.⁠

The construction department of the Ministry of Culture has terminated contracts with Baltstroy, the company owned by billionaire Mikhalchenko, also known as Governor 24/7. As reports, the Ministry has already demanded that the company return the unspent advance.

Prior to the criminal case against Deputy Minister of Culture Grigory Pirumov, Mikhalchenko's structures were actual monopolists in the restoration market. Therefore, in late 2014, the North-Western Directorate of the Ministry of Culture concluded three contracts with Baltstroy for the reconstruction of the conservatory building on Teatralnaya Square totaling 1.4 billion rubles (818 million, 455 million, and 125 million rubles ~ 14.4 million, 8 million, and 2.2 million dollars, accordingly). The company was to erect a glass dome over the courtyard, install iron canopies over the entrances, replace engineering systems, etc. The completion of repairs was planned for the end of 2018.

However, in 2016, a corruption scandal broke out; Mikhalchenko and Pirumov were detained as part of the Restorers’ case. The new leadership of the North-Western Directorate, represented by Natalya Volynskaya, decided to examine the results of Baltstroy's work. It turned out that by April 2017, the company had completed only one third of the work, spending about 500 million rubles (8.8 million dollars). In total, the company received over 800 million rubles (14.1 million dollars), including advance payments.

As a result of the check, Volynskaya suggested that Baltstroy's Ivan Afanasyev peacefully terminate the contract by agreement of the parties. One of the conditions for this progression of events is the return of the unspent advance amounting to 330 million rubles (5.8 million dollars) until April 20, 2017. In case this does not happen, Volynskaya will apply to the court.

The North-Western Directorate still hopes to complete the work in time. A tender for 616 million rubles (10.8 million dollars) is already being prepared for publication. According to the expectations of the Directorate’s staff, the winner will immediately proceed to work execution.

Another major contractor of the Ministry of Culture, which has lost its contracts for 1.4 billion rubles, is Remstroyfasad (RSF). It was responsible for the repair and restoration of the Quartermasters' Warehouses (the building of the Kriegs Commissariat) on Glinka Street, where the Directorate itself was to move. A new tender will also be held for these works. It is worth noting that the company has already received about 600 million rubles (10.5 million dollars). At the same time, the RSF has been constantly shaken by scandals related to non-payment of wages to workers and non-performance of works.

At the moment, experts and representatives of the construction industry are closely watching the new tenders, as their results will reveal the new favorites of the Ministry of Culture.



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