Банкеръ Weekly



Despite the delay there is still a chance that the money for roads in Bulgaria would be unblocked, EU Regional Policy Commissioner Danuta Hubner announced in the beginning of the week, specifying that Brussels expects soon a second report from our country on the absorption of European funds under that item. It's really very late but I sincerely hope to accomplish that we have agreed, namely the implementation of an action plan and preparation of a second audit by KPMG whose report we hope to get this month. Now we expect the Government's last efforts on the plan, Hubner said. In her words payments can be resumed only after the EU experts are convinced that all actions projected in Bulgaria's plan have been applied. The EU Commissioner announced as well that our country has not presented a big road project yet although Brussel's new budget period has already begun and the other countries have given their applications.
Hubner's appeal seems to have startled the rulers who instantly began to prove that we have taken all measures and everything will be OK with the money for roads. A day later Transport Minister Peter Mutafchiev left for Brussels after he had personally promised Danuta Hubner that by the year-end Bulgaria will present two big projects - for the Maritza and Trouma highways. It was announced that the projects under the ISPA programme worth a total of EUR144MN should be finalized by mid-2009. Delays under the contracts for Danube Bridge 2 and Plovdiv-Svilengrad are about six months but Mr. Mutafchiev believes they would be overcome.
Again on Tuesday (October 7) after a working meeting with the management of the Road Infrastructure National Agency (RINA) Premier Sergey Stanishev said in public he was not satisfied with the work of that unit. According to the Government's press service, the report of RINA's Executive Director Dimiter Ivanov on the coordination of activities between the agency's management with the ministries of transport and of regional development and public works (which manage the funds under the Transport and Regional Development operational programmes) was assessed as unsatisfactory. The PM ordered in two weeks' term at the latest his deputy Meglena Plugchieva to work out a report on the agency's state which should reflect the undertaken concrete measures for efficient management of priority projects. Therefore, a team of deputy ministers of transport, finance and regional development and public works, will effect weekly control on RINA's activities.
Meglena Plugchieva herself was critical to the Roads Fund, saying that restructuring and the work at an administrative level has not been completed but practical activities for the management of projects under PHARE and ISPA and under operative programmes are being delayed. And in order to eliminate all doubts that the Cabinet is resolute to cope with RINA's problems, the Vice Premier appointed a special commission to carry out weekly control and monitoring over the agency's operation.
For the first time the agency itself publicly admitted that the structure has illegally conferred public procurement orders for 21 projects under the Regional Development operative programme, worth a total of BGN500MN-plus. The Chairman of RINA's Supervisory Board Ivan Atanassov has found that when the former management held tenders the set requirements for choosing candidates were the same as the criteria for their evaluation which was incorrect. The agency will cancel the choice of contractors for all the 21 projects under the Support for Rehabilitation and Reconstruction of Second Class and Third Class Roads scheme, for which BGN501MN has been earmarked under the Regional Development operational programme, and new procedures will be organized, Mr. Atanassov said.
Let's recall that the orders for the illegal tenders were assigned in the end of 2007, that is a little before the scam with the ex-head of the former roads fund - Vesselin Georgiev - broke out. Two of his subordinates were then found with a huge bribe and Georgiev himself resigned under strong pressure from Brussels due to public procurement orders exceeding EUR120M, assigned by him to a firm run by his brother. The scam resulted in ceasing all money for roads under the pre-accession PHARE and ISPA programmes and the Transport and Regional Development operational programmes. Under pressure from the European Commission the state has already revoked two contracts between the road fund and contractors, worth EUR64MN, closed under the Transport operational programme. They were for rehabilitation of the Kurdjali-Podkova road and construction of the Hemus-Ring Road junction. New tender procedures will be invited for these two projects.
RINA will also organize new tenders for projects under PHARE. One of them is for the repair of the road Razlog-Bansko-Gotze Delchev-Sadovo, which was assigned to the Greek company Prodeftiki. The Greeks, however, did not fulfil their obligations under the contract and therefore Bulgaria had not only lost the European financing for the project but will even have to return money to the EU. The other problematic project is for the Malko Tarnovo-Turkey road which is being constructed by the Czech company Reimo. It's worth EUR4.94MN, of which EUR2.314MN is under PHARE. The project had to be half completed by now, but only 7% of the work has been done so far.
Among the road projects under ISPA which have been delayed the most is the Lyulin motorway which is a key one for the capital city of Sofia. The Turkish company MAPA Genings which won the tender for the motorway with an offer worth EUR137.3MN, has so far absorbed more than 40% of the earmarked money, but a little more than 5% of all projected work has been done so far. Therefore, as of October 30, 2008 control over the construction of the motorway goes through the Transport Ministry. During the week it became clear that a team from the ministry is presently getting acquainted with the tender dossiers for the project. A meeting with the management of the road agency with the Turkish contractor should be held to map out measures for fulfilment of the contract and go on with the financing period. If the delay is not overcome defaults will be asked from the contractor, but if the period for financing is over the state will lose the the fund under ISPA, Transport Ministry insiders explained.

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