Infrastructure companies are working with the government on changes to the price indexation model used in state tenders, Construction Service founder Giorgi Gabunia said. He noted that experience has shown some companies were unable to effectively use the existing mechanism.
Gabunia said the new model should account for price changes in key materials. For road projects, for example, fluctuations in bitumen prices should be reflected in the indexation formula, as rising oil prices have pushed bitumen above $600 per tonne.
He said recent steps by the Infrastructure Ministry have raised expectations that the mechanism will be revised and better reflect market conditions. The aim should be to minimize losses for businesses carrying out long-term infrastructure contracts.
Under the government’s current rules, price indexation does not automatically apply to all infrastructure projects. It is available only for state contracts lasting more than 12 months, and can be used after the first 12 months of work have been completed.
