Contractor Halts Housing Project Over Dues from Government

On July 30, the semi-official newspaper Al-Watan published a complaint from applicants to the youth housing project in the Jazirah Al-Ashira (Tenth Island) section of the Qudsaya suburb in the Rural Damascus governorate. The complaint stated that the project contractor had ceased work and blocked with debris the entrances and exits of the project site in protest against the General Housing Establishment’s (GHE) failure to pay his dues. The applicants called for a resolution to the dispute between the contractor and the GHE to ensure they receive the apartments they signed up for nearly 20 years ago, especially since they have been consistently paying their monthly installments to the GHE.

The Director of the GHE, Rama Al-Zahir, described the incident to Al-Watan as “a case of executional disarray on the part of the contractor,” but confirmed that the GHE is not considering replacing him. She added that the GHE would work on “improving administrative mechanisms to deliver some of the buildings that already have a high completion rate during the next year.”

The Qudsaya suburb is an urban expansion area whose zoning study was conducted by the state-owned General Company for Engineering Studies. Implementation began west of Qudsaya City in the early 1980s under the supervision of the GHE and the Rural Damascus Governorate. The suburb includes residential plots allocated for housing cooperatives, to landowners of expropriated lands in the area, and to applicants to social housing projects. A group of public, private, and cooperative sector companies and institutions undertook the construction of the suburb, which spans 400 hectares and is divided into 16 “islands” containing 9,914 housing units. The completion of the suburb was delayed until the late 1990s, and people began moving in at the start of 2000. Most residents are public sector employees and low-income individuals who applied through housing cooperatives.

In 2002, the Council of Ministers announced the launch of subscriptions to youth housing projects as part of social housing programmes across all Syrian governorates. An expansion area adjacent to the Qudsaya suburb was chosen as the site for the youth housing project in Rural Damascus Governorate. To subscribe, applicants had to be registered as residents of Damascus or born and residing there, and pay an application fee of SYP 50,000 along with monthly installments. Approximately 10,000 housing units in the Qudsaya suburb expansion were allocated for youth housing, with subscriptions starting in 2002. The project was divided into four phases: the first phase was expected to be completed and delivered after five years, the second phase after seven years, the third phase after 10 years, and the fourth phase after 15 years.

In 2006, LAMA Contracting Company, part of the LAMA Investment Group previously owned by businessman Rami Makhlouf, began constructing the first phase of the youth housing project expansion in the Qudsaya suburb by contracting with the GHE. A correspondent of The Syria Report in Damascus reported that LAMA failed to adhere to the contract terms, including deadlines, the quality and quantity of building materials, and the finishing methods. However, due to the influence and power of businessman Makhlouf, cousin of the Syrian president, the GHE had no choice but to validate the construction of these buildings in 2010 and distribute them to allocated applicants, totaling 3,000 apartments. The correspondent noted that the delivered apartments required refinishing, forcing some applicants to sell them because they could not afford the additional costs. As a result, the GHE opted to engage other contracting firms to carry out the remaining phases of the project, in addition to public sector construction companies, without holding LAMA accountable.

After a hiatus from 2012 to 2018 due to the war, work on the project resumed, and the second phase was completed and handed over to applicants in 2023. The third and fourth phases are still underway.

The Syria Report’s local correspondent pointed out that the applicants’ complaint mentioned in the Al-Watan is against Al-Jallab Company for Reconstruction Import and Export, responsible for executing the Jazira Al-Ashira (that is, “tenth island”) of the youth housing project in the Qudsaya suburb expansion, within the project’s third phase. The completion rate in this phase has exceeded 70 percent. Al-Jallab Company is headed by businessman Amer Al-Jallab, a member of the Construction Contractors Union.

Applicants in the third phase were expected to receive their apartments early next year after a ten-year delay. The current work disruption is likely to extend the delivery deadline by several months. Applicants have been allocated their apartments and know their locations. However, they will not receive them until all construction work on site is completed.

A correspondent for The Syria Report highlighted that the current issue with Al-Jallab Company, which led to the halt of their work at the project site and the blocking of entrances and exits, stems from certain GHE employees deliberately complicating administrative procedures to delay the payment of dues owed to the company for previously completed work. Some payments are delayed between six months and two years, mainly due to artificial obstacles created by officials, which delay the formation of committees responsible for work supervision and handover of completed buildings. The aim of these obstructions is to pressure the private company into bribing those officials in exchange for facilitating the release of the company’s payments.

At the same time, Contract Law No. 51 of 2004 mandates that contractors receive their payments in Syrian pounds through a Syrian bank. However, these banks limit the contractor to withdrawing no more than SYP 15 million per day from their account, equivalent to about USD 1,000. Any amount above this requires approval from the bank’s management and an exception from the Central Bank. Consequently, the contractor’s due payments lose some of their value over time as the Syrian pound depreciates, and the GHE does not compensate contractors for exchange rate differences or inflation.

Meanwhile, contractors complain that while the GHE does not compensate them for delayed payments, it deducts 0.1 percent of the total contract value for each day the project is delayed, up to a maximum deduction of 20 percent. In cases of unjustified delays, the contractor can be dismissed, deemed in breach of contract, and the project can be completed at their expense.