The Skanste tram project was due to be completed by August 2023 and includes the upgrading of 3km of line, the construction of 3.6km of new line and the acquisition of 12 low-floor LRVs.
The total cost of the project is €97.4m, with €65.7m coming from the European Regional Development Fund.
In December 2018 the CFCA suspended the release of EU funding for the project amid an investigation into alleged corruption at RS.
The CFCA says the decision to terminate the contract was based on information submitted by RS, the updated project plan and a report by auditor Ernst & Young Baltic, as well as other information on RS activities.
“In justifying our decision, we point to unacceptably high risks that exclude the possibility of realising the project according to plan,” says CFCA director Mr Martins Brencis. “It is no longer possible to carry out all the activities foreseen in the project - procurement, construction, purchase of trams and so on - within the planned timeframe and achieve the planned outcome. In addition, the company is still struggling with problems in organising and managing the project and there is still suspicion of procurement fraud. There is a ‘zero tolerance’ approach to fraud in EU projects. The circumstances clearly show the project cannot be implemented using EU funds.”AC
The CFCA has the powers to unilaterally terminate EU-funded contracts if there is evidence of poor project management or failure to adhere to project deadlines.
The CFCA has so far paid RS €451,000 in EU funds for the project, which must be repaid by August 3.
