Банкеръ Weekly

Briefs

MINISTER GAGAOUZOV PRESENTS TWO REPORTS ON TRAKIYA HIGHWAY

Two reports on the Trakiya highway concession have been submitted to the Council of Ministers, Assen Gagaouzov, Minister of Regional Development and Public Works, said last week. The first one shows the six alternatives for completing the construction of the road between Sofia and Bourgas about which the BANKER weekly wrote in its previous issue. The second document describes in details the course of negotiations with the Portuguese companies MSF, Lena and Somague on the improvement of the parametres of the deal.
The main goal is to have Trakiya highway constructed as soon as possible, because any sort of protraction would result in higher cost of the project, the minister underlined. The highway should be ready by the end of the current government mandate, he added.
The fastest way to complete the highway is to build it by ourselves, Gagaouzov said. During the first half of 2007 when the construction of the section to Stara Zagora is expected to finish, parallel work on the rest of the route should start. The road will probably be divided in two or three sections with the construction of each assigned to a different Bulgarian company. Glavbolgarstroy and Moststroy already declared in public their willingness to finish the highway and they might also establish a special consortium.
According to Minister Gagaouzov, the financing will be provided by the budget along with a bank credit or resources from the Cohesion Fund of the European Union. In this case the entire highway will be owned by the state, it will be the one to collect transition fees and to guarantee the bank loans. Concession may be the other way of financing and it may involve various participants - old or new ones, Gagaouzov explained. He refused to specify which alternative is better, but according to experts building the highway with state funds will help avoid the long and clumsy tender procedure in accordance with the Concession Act.
As to the negotiations with the Bulgarian-Portuguese road concessionaire, they are at a dead-lock indeed, the minister admitted. How much the highway would cost has not been specified yet. Nor is it decided who will pay how for it and who will run the financial risk. The parametres that are not advantageous to the state are the additional payment in case of weak traffic and the undertaking of financial guarantees in front of the banks instead of the concessionaires. The cabinet will probably extend the talks with a week or two and in case of a potential negative development the Bulgarian-Portuguese company may ask for financial compensation for the profits missed because of the project delay.
The final decision will be made by the end of the current month or no later than November 10.

Five offers have been submitted in the tender for rehabilitation of the road from Pleven to Nikopol which will be financed under the PHARE program - Cross-Border Co-operation with Romania. The applicants are the Bulgarian PSI, Roads Holding Company, and AB - Engineering, as well as Austria's Strabag and Portugal's Lena Engenharia e Construcoes S.A - a partner in the Trakiya Highway company. The total length of the road is 45 km.
Eight offers were submitted for the construction of the road Novo Selo - Maritsa Highway at the beginning of the week. The total value of the project amounts to EUR11.2MN, of which EUR8.4MN is provided under the PHARE program - Cross-Border Co-operation with Greece, and EUR2.8MN - by the state budget.

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