ECONOMY

Major transport projects held back by government delays

Only three of the 14 priority road and railway projects in Greece approved by the European Union in 1994 as part of transnational networks have been completed to date, while several of the remaining 11 are still at the phase of initial study. The European Commission has pressed for a better utilization of available subsidies within a framework that will also involve private financial initiatives (PFI) in concession agreements. Two of the incomplete large projects are the highways from Patras to Athens, Thessaloniki and the Greek-Bulgarian border (PATHE), and the Egnatia Highway which is to run the length of northern Greece from the Ionian Sea to the Greek-Turkish border. The procedure for selecting the contractors who are to build certain segments of the two highways is more than two years behind. To be sure, most European transnational networks, particularly railway and cross-border projects have run up against reluctance or reservations in terms of financing from the private sector. This is not the case however with the Greek projects: A large number of European construction companies is participating in the tenders for the six concessions of segments of national highway, budgeted at around 6 billion euros. The delays appear to be mainly due to inadequate preparation on the part of the responsible ministries and the fact that they are low on the government’s list of priorities, as it is almost impossible for ministers to cut inaugural ribbons before the next elections. The short list of consortiums bidding for the six new projects was completed after a long period of hibernation a few weeks ago and a new department was set up at the Ministry of Environment and Public Works to deal exclusively with these concessions. The delays came once again into the spotlight after the recent accident at Tempe, in which 21 students lost their lives. The site of the accident, a section of PATHE, from the Malliakos Gulf to Kleidi, is one of the six concessions for which four consortiums have been short-listed. Another argument heard recently is that the delays are due to the fact that the prospective companies are already feverishly working on Olympic projects. «The construction companies want exactly the opposite,» counters Costas Kouvaras, deputy chairman of J&P – Avax, Greece’s second largest construction group which also participates in most concession tenders. «At the present pace, the financing arrangements for the projects will not be finished before the end of 2005,» says Kouvaras. «Therefore, the companies feverishly working on the 2004 Olympics projects will have to ‘stop their engines’ and wait for the new financing arrangements to be finalized.» He notes that most of the participating consortiums are controlled by foreign groups and, therefore, Greek firms have no reason to wish for delays. He further argues that some of the more urgent projects, such as the Malliakos-Kleidi project should receive priority. Apostolos Allamanis, chairman of Alfa Alfa Holdings whose subsidiary Alte participates in bidding consortiums, agrees, noting that ministries may be wary of going too fast, «wishing to avoid past mistakes that complicated procedures and led to excessive delays.» «The mergers of construction companies have affected procedures,» says Edward Sarantopoulos, a member of the board of directors of Pantechniki, which like J&P – Avax, is part of the two financing consortiums jointly building the Attiki Odos and the Rio-Antirio Bridge. He thinks the ministry needs to be better prepared to deal with complex procedures. Private funds a must Enlisting the participation of the private sector in financing the construction of large transport projects is now seen as indispensable. According to the European Commission, during the 1980s, member states spent an annual average of about 1.5 percent of GDP on transportation infrastructure projects. Today this has receded to less than 1 percent, or 15-20 billion euros for the completion of inter-European networks by 2010, a sum which is not considered nearly sufficient. The total requirement for all road and railway axes is estimated at around 400 billion euros, plus 100 billion for works in the new member states. «It appears that public funds – both from national and EU sources – are not being used efficiently. In the case of inter-European transport networks, they are often dispersed between a large number of projects, without due attention to priorities,» says a report by the European Commission.