Paata Trapaidze, CEO of Caucasus Road Project, says construction cost indexation will be applied to infrastructure projects amid rising fuel and material prices. The mechanism follows three months of consultations between the Infrastructure Builders Association and clients.
Trapaidze considers indexation more effective than reducing excise tax, arguing that fuel price increases affect overall construction costs, including wages and materials. Preliminary estimates indicate that indexation will cover 60% of contract value, with January 1, 2026, prices serving as the baseline for existing contracts.
Geostat will determine the percentage change in construction costs. The mechanism works both ways, providing compensation when prices rise and adjustments when they fall.
The government has expanded the indexation rules to cover projects within the Ministry of Infrastructure system and procurement involving state secrets. Suppliers have until December 10, 2026, to submit applications.
