The cost of the project to build a new prison in Chisinau will increase from 56.8 million to 75.9 million euros, and the government's contribution will increase from 6.8 million to 25.9 million euros.
This is included in the draft ratification of Amendment No. 2 approved by the Cabinet of Ministers to the framework loan agreement between Moldova and the Council of Europe Development Bank (CEDB) on the project for the construction of a prison in Chisinau. The document was signed in the capital of Moldova on April 30, 2024. Amendment No. 2 to the agreement provides for the financial and administrative restructuring of the construction project of this prison, as well as the extension of the framework loan agreement. The budget adjustment is due to the fact that in February 2022, procurement of construction work for this project was suspended due to a significant increase in prices for construction materials (+60%) and a persistent funding gap. Thus, instead of 56.8 million euros initially approved, the cost of the project will increase to 75.9 million euros, while the government contribution will increase from 6.8 million to 25.9 million euros. According to the terms of the loan agreement, if the cost of the project increases, the government is obliged to cover the resulting financial deficit. At the same time, the capacity of the penitentiary institution will decrease from 1,536 to 1,050 people. It is planned that this will save tens of millions of euros. Another change concerns the timing of the implementation of the project - they were postponed for another 1 year, until the end of December 31, 2028. It should be noted that initially the new prison was planned to be built by 2018, and in 2022 the timing was postponed to 2027. Also, part of the responsibilities, Prison construction related to the implementation of the project will be transferred to the UN Office for Project Services. As noted in the Ministry of Justice, the approval of this amendment will help speed up the implementation of the project, ensure the quality and sustainability of construction, as well as attract sources of grants to compensate and reduce the state’s contribution to the project. It is worth noting that this is the second change in the project budget, and since the project was approved, its cost has almost doubled. Recall that on October 10, 2013, Moldova and the Council of Europe Development Bank signed a Framework Loan Agreement for 39 million euros for the construction of a new prison in Chisinau. The loan was provided for 20 years with a 5-year deferment on payments. The Council of Europe Development Bank agreed to allocate another 1 million euros in the form of a grant, and the government planned to contribute about 4.5 million euros to the implementation of this project. At the end of 2019, the government initiated Amendment No. 1 to the Framework Loan Agreement between Moldova and the Council of Europe Development Bank. The document provides for an increase in the amount of project financing from 39 million to 49 million euros. Then an increase in the loan amount by 10 million euros was required due to an increase in planned expenses and the annual increase in inflation in 2013-2018 - on average by 5.9%. A new penitentiary institution, meeting European standards, is planned to be built near the Bubuieci commune of the Chisinau municipality according to the project of a consortium of Dutch and Moldovan companies.// 05.06.2024 — InfoMarket.
