Банкеръ Weekly

Briefs

THE NEW INFRASTRUCTURE STRATEGY: DEJA VOU FEELING

Although it may sound paradoxical, the drafting of strategies is what brings closer the policy of Bulgarian governments with the country's infrastructure in the last dozen of years. The water and sewage sector is probably the record-breaker. Any minister of regional development since the mandate of ex-premier Ivan Kostov has worked out his own panacea for solving the accrued problems. The same was noticed in the sphere of transport projects, motorways and roads. The only difference between the heaps of documents is the amount of money, necessary for putting the respective sector in order. The size of needed money was invariably increasing and going beyond the real possibilities of both the State's budget and the European funds. There is hardly any need of talking about the outcome. The state of Bulgaria's infrastructure is presently comparable only to that of Albania or Moldova. And the main reason is that in none of the strategies drafted so far our rulers said what should begin to be done right away, in what terms it would be completed, and where from financing would be ensured. Even non-experts realize there is no way to change the sewage network within a year or two, deal away with the holes on roads, build four-lane motorways all around the country, or repair the broken railways. What is worse is that it cannot be seen how order could be put in at least one infrastructural element.
The incumbent Government has also taken up to solve that difficult equation. The rulers decided they would put an end to the practice of working on a piece-rate basis and prepare an overall plan, including not only roads and transport, but also the energy sector and communications, at that by the year 2015. Therefore, back in December 2005 a council for coordination, control and implementation of projects of national importance, was set up, including the ministers of economy and energy, of the environment and waters, of finance, of regional development and public works, of agriculture and forestry, and of the State administration.
By the document we are preparing now we aim to lay the beginnings of continuity in the policy of constructing the country's infrastructure, Transport Minister Peter Mutafchiev told the BANKER weekly. After almost five months of work the draft strategy was presented to the public in the end of last week. However, the results are deviating considerably from the initially declared ambitions. In the first place it should be noted that the presented document does not deal with the issue of oil pipelines that will be built on Bulgarian territory. Most probably, because of the disagreements they cause between the ministries of Mr. Roumen Ovcharov and of Assen Gagaouzov. The two ministries have not specified yet who will undertake the control over the Bourgas-Alexaandroupoli and the Bourgas-Vlyora oil conduits. At the same time, the projects have not been arranged with regard to their priority, but a heap of ambitious tasks have been planned, which it will be difficult to fulfil.
More than EUR3.3BN will be necessary for the construction of the Trakiya, Lyulin, Maritsa, Strouma and Cherno More motorways. It is said that the money will be insured by the budget, the EU Cohesion Fund, and public-cum-private partnership, but in no way it becomes clear which motorway on what principle will be built, and what percentage of the funds will come from the EU, from the Treasury or from a concession. On top of all, the construction of the Hemus motorway seems to have dropped altogether from our rulers' plans. It's good that at least the terms have been set (it's another question if they will be observed). The 114-km long Maritsa motorway is expected to be ready in 2009 and about EUR360MN will be necessary for its construction. The Lyulin highway that will facilitate the traffic along the Sofia ring-road is to be completed by the same time. The construction of the Strouma motorway is pre-estimated to cost some EUR600MN and be finished by end-2012, and the year 2017 is the deadline for the completion of Cherno More.
The EUR1.1BN which Bulgaria will get from the EU funds won't be sufficient to compensate the wearing out of our road infrastructure. That means that the State should invest, use the opportunities of its budget, and attract a credit resource. We will never have good roads otherwise. We should also double our present efforts... We have to orientate the budget's priority to infrastructure, the Minister of Regional Development and Public Works Assen Gagaouzov told the BANKER weekly.
Under the mega strategy new roads will be constructed and existing ones will be modernized, with a total length of 175 km. That will coast EUR395.5MN. Another EUR457.4MN will be invested in the rehabilitation of 1,453.8 km of highways, and EUR80MN will be invested in the construction of ring-road sections in population centres. Simple calculations show that 2,000 km of the entire 190,000-km-long republican road network will be reconstructed in that way. At the same time, it is underlined that by the end of its mandate the incumbent Government will modernize 913 km of road infrastructure, with European transport corridors being a priority.
All in all it turns out that around EUR4.3BN (EUR33.BN for the for motorways and almost EUR1BN for the republican road network) will be necessary for building and reconstructing the motorways and roads. Only BGN1.1BN of that amount is certain at present, to be received by the EU funds after Bulgaria joins the European community.
Large scope without financial ground characterizes the railways, too. EUR251.56MN will be invested in the railway infrastructure by the end of 2009. The amount will grow by EUR1.3BN by 2013. In 2009, the second bridge on the Danube should be ready, too. It will cost EUR226MN. Among the other old projects are the completion of the Sofia Airport by the end of 2006 and the expansion of the Sofia underground from Mladost 1 to Mladost 4 quarter in 2012. The airports in Rousse, Gorna Oryahovitsa, Targovishte and Plovdiv will be given on concession. The concession of the airports in Varna and Bourgas are in their final stage.
The sea transport appears to be most injured by generous promises. Twenty-nine ports and port terminals are to be given on concession. Besides, the cabinet planned the investment of EUR160MN in the Bourgas port and the construction of a navigation management system along the Black Sea coast by 2009. EUR154.8MN will be spent on equipment of the kind along the Danube by 2013.
As to the measures planned in the water supply sector, they seem quite confusing. There are plans for construction of 363 new waste water purifying stations and completion and enlargement of the existing ones in the coming years. Forty of them will be reconstructed and modernized and the sewerage network of 424 towns will be completed. The implementation of these plans requires about EUR2.2BN which in fact is two or three times less than the amounts planned in past strategies for the sector. Fifteen depots for public waste will be finished by 2009 and four regional ones will be enlarged. How these plans will be financed remains a mystery.
The strategy will be presented to the business, the local authorities and the international financial institutions soon. It will be curious to see how they will react. Simply because the strategy promises something huge which unfortunately is something that we already know quite well.

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