Canary Islands Government Grants €13.7 Million for Erjos Tunnel Contract Cancellation
The construction projects have now reached 60% of their completion and are anticipated to be finalised in the first quarter of 2027.
SANTA CRUZ DE TENERIFE, Nov. 6 (EUROPA PRESS) –
The Minister of Public Works, Housing and Mobility for the Government of the Canary Islands, Pablo Rodríguez, along with the General Director of Road Infrastructure, Rosana Melián, announced today that an agreement has been reached with UTE OHL amounting to €13,777,496.74 to fulfil the ruling of the Superior Court of Justice of the Canary Islands, which annulled the contract awarded by the previous administration for the Island Ring construction between El Tanque and Santiago del Teide, located on Tenerife.
The minister emphasised that “the recent ruling from the TSJC has confirmed the feasibility of the bid submitted by OHL, which was initially awarded, which compelled the Ministry to comply with the High Court’s decision, ensuring actions that uphold public interest and guarantee responsible, transparent, and efficient management of public resources.”
He further indicated to journalists, “It is undoubtedly in the public interest, and aligns with the legitimate rights of the parties involved, to reach a settlement agreement in favour of the UTE-OHL, compensating them for the damages suffered, in exchange for their relinquishment of the contract and the commitment of UTE-FCC to continue the works without any interruption.”
Moreover, the minister outlined that once the final ruling was obtained, the Ministry set two objectives: to ensure the continuation of the work, vital for connectivity and mobility on the island of Tenerife, and to avoid any delays in performance.
Rodríguez also underscored “the necessity to safeguard public interest and to minimise the additional costs arising from the High Court’s ruling for the Government of the Canary Islands.”
In her remarks, Rosana Melián explained that the agreement, which has already been presented to the Contentious-Administrative Chamber of the TSJC, involves the UTE OHL’s resignation from the contract award and the ongoing execution of the project.
“This guarantees that the works will not be halted, preventing damage to public interest, and allows the continuation by UTE-FCC, which has formally shown interest in pursuing its completion,” she noted.
Additionally, Melián elaborated on the implications of executing the judgement “to its full extent,” particularly regarding contractor changes.
“Firstly, we would have had to terminate the UTE FCC’s contract, which has been executing the works for five years, leading to a cessation of the project. Following that, we would have needed to award the contract to UTE OHL, which the court indicated should have been the winning bidder,” she explained.
In this context, the general director pointed out that this process “would not have been straightforward, as the situation created by the works completed by UTE FCC, in accordance with its project, would differ from the offer originally submitted by UTE OHL.”
Melián clarified that pursuing the aforementioned process “would incur significantly higher economic costs” compared to the agreement reached.
“We estimate the entire procedure would have required at least three years, leading to considerable economic, environmental, and social repercussions due to the significance of this project,” she stressed.
The agreement takes into account various elements, such as the loss of profits that would have been realised if the contract was awarded, essentially calculated based on the work plan from UTE OHL’s offer, as well as default interest.
The expenses incurred by the consortium during the bidding and special resource related to contracting have been duly recognised and justified.
CHRONOLOGY OF EVENTS
Pablo Rodríguez recalled that the contract was awarded in June 2019 to UTE OHL, while he was still serving as Minister of Public Works, with a budget of €213.4 million, excluding IGIC, after the Ministry’s technicians concluded there were no irregularities in their offer.
However, UTE FCC later lodged an appeal arguing that OHL’s offer was non-compliant with labour and social regulations.
The Administrative Contract Court ordered OHL’s exclusion, leading the Ministry to subsequently award the contract to another UTE in October 2023, under the supervision of the former advisor of the previous administration.
This March, the ruling from the First Section of the Administrative Litigation Chamber of Santa Cruz de Tenerife, dated March 14, 2024, was communicated, overturning the Resolution of the Administrative Court of Public Contracts of the Autonomous Community of the Canary Islands and the order from the former Minister of Public Works and Transport, which had validated UTE-OHL’s offer and awarded the contract.
The project is currently well underway, exceeding 60% completion of the initial budget, with expectations for finalisation during the first quarter of 2027.
