PYRKAL Government Park: Colonial terms from contractors

• The 13+1 “outrageous demands” made by a specific contractor.
• The demands pertain to deadlines, studies, site decontamination, PYRKAL equipment removal, and archaeological excavations.
• They want to avoid paying penalties in case of delays in project delivery.
• They also demand compensation from lenders in the event of contract termination, even if it is their fault.
• They do not consider guarantee letters to be necessary.
• A major sticking point is the required 400-meter underground pedestrian passageway that the contractor must build to connect Government Park to the Dafni metro station.

By Aris Chatzigeorgiou

Interested parties in the public-private partnership (PPP) for constructing the “Government Park” on the former PYRKAL site have set forth a long list of burdensome terms for the state. PYRKAL operated in the former municipality of Ymittos for decades.

In 2024, the government aggressively moved forward with the ambitious project of creating a “mini Elliniko” just two kilometers from the city center. Despite public opposition and ongoing legal challenges related to the evacuation of nine ministries and 14,000 employees, as well as the anticipated strain on an area notorious for traffic congestion, the Hellenic Corporation of Assets and Participations (HCAP) is moving forward with the project. The project is currently in Phase B of the Competitive Dialogue process. Three consortia have expressed interest: GEK TERNA, AVAX-AKTOR Concessions, and METLEN-AKTOR. Binding offers are now expected. The selected contractor will be responsible for constructing and maintaining the project for 30 years for €522 million. In theory, contracts will be signed by 2026.

Recently, however, there has been a noticeable slowdown in the process. The Competitive Dialogue framework allows bidders to suggest terms that aim to provide greater guarantees, lower their costs, and transfer financial risk to the Greek state. Data Journalists have obtained an unofficial list of the terms set by one particular contractor. The conditions are so onerous for the Greek government that it suggests the bidder may not be genuinely interested in the project. We present them below:

1. The project should not begin, and the deadline should not start counting, until one year after the contract is signed.
2. Before the design and construction phases begin, the Contracting Authority (specifically the Ministry of Finance) must issue demolition permits for the 66 existing industrial buildings on the former PYRKAL site. These buildings have a total built area of 68,500 square meters.
3. Further investigations and completion of the relevant study are proposed regarding the decontamination of the site. The study should include a specific decontamination methodology and a detailed quantity estimation. The study should begin immediately and be finished before competing parties submit bids. This demand is clearly linked to the fact that the site previously housed a munitions manufacturing facility.
4. A re-evaluation of the spaces designated for staff from each public body is requested to take a more realistic approach to how many employees can be accommodated in each building. The publicly released master plan specifies which ministries—Finance, Development, Environment & Energy, Culture & Sports, Labor, Health, Interior, Tourism, and Rural Development—will occupy which buildings, as well as the Hellenic Corporation of Assets and Participations (HCAP). The plan also specifies the allocation of space for 14,000 employees. Taking a “realistic approach” to capacity may ultimately result in one or more ministries being excluded from the project.
5. The Contracting Authority is expected to conduct specialized laboratory and on-site diagnostic studies of the preserved buildings to minimize uncertainty regarding their current structural integrity. According to the initial plan, 24 preserved buildings with a total area of 47,704 square meters will be retained. These buildings were constructed during three architectural periods: 1890–1930, 1930–1950, and 1950–2000. The plan anticipates increasing the surface area by 55% through interior modifications following structural reinforcement and full renovation. The cost of structural reinforcement appears to be a major concern for the bidders.
6. A major sticking point appears to be the large underground pedestrian passageway that the contractor is required to build connecting Government Park and the Dafni metro station, located 400 meters away. The Contracting Authority is expected to provide more detailed information, including preliminary studies, geotechnical findings, and results of archaeological trenching. This information may incorporate data and studies previously conducted by Attiko Metro in the Dafni station area.
7. Negative experiences with Metro Line 4 projects have led to an additional demand related to the underground tunnel. Before excavation begins, the Ministry of Finance must relocate public utility networks, including those for water, sewage, electricity, natural gas, and telecommunications. Additionally, potential delays related to these relocations should not be included in the project timeline or trigger penalty clauses.
8. All PYRKAL equipment must be removed from the site before the contractor takes possession. Full removal is a prerequisite for the public-private partnership (PPP) agreement to commence.
9. A change is requested to a condition that will apply 30 years from now when the facilities are scheduled to be returned to the state. The current terms require full renovation, replacement, and modernization of systems before handover. However, the new proposal suggests returning the facilities to a condition that ensures uninterrupted operation for at least two more years rather than requiring full upgrades.
10. Archaeological excavations should entitle contractors to financial compensation and serve as grounds for exemption from liability.
11. The Special Purpose Vehicle (SPV) should not be subject to penalty clauses for delays in project completion until the project begins generating revenue, i.e., until the state starts making monthly availability payments.
12. In the event of a contract termination, lender compensation should be guaranteed, regardless of fault. This compensation should cover at least the principal debt and possibly a portion of the equity. Without these guarantees, the project would not be bankable.
13. The private partner (SPV) executing the project on behalf of the contractor should also be fully compensated if the contract is terminated due to the state’s fault, initiative, or force majeure. This compensation should cover all related costs, including termination expenses, third-party claims, loan repayments, and returns to shareholders.
14. The contractor should be compensated for changes in legislation, provided that a prior assessment is conducted to compare the new legal framework with the conditions in place when the bid was submitted.
15. 

Guarantee Letters

The requirement for guarantee letters is being challenged. The bidder who raised the issue states that, although they accept responsibility for securing the necessary financing, they believe there should be no obligation to provide a bank support letter, whether binding or non-binding. If the state insists on guarantee letters, the bidder requests sufficient time for banks to conduct a thorough evaluation of the project. This process requires specialized consultants and is, therefore, time-consuming and costly.

Regarding the number of guarantee letters, the bidder requests that they be reasonable and proportionate to the size of the project. To avoid additional costs, the letters should be structured in multiple tiers and gradually reduced in line with the project’s progress. They should also be returned to the contractor immediately upon expiration.