ECONOMY

Down payments to revive stalled highway construction projects

The state has sealed an agreement with four consortiums that have undertaken a number of major highway projects which ground to a halt over two years ago.

Last December, the Development and Infrastructure Ministry had announced that the state would pay compensation of 280 million euros for having ceased funding the projects. However, according to sources, this figure is set to rise significantly. Some of the consortiums will get a deposit of up to 40 percent of the compensation. The next step now is for the consortiums to restructure their loans with their banks and the latter to start channeling cash toward the highway projects.

The state decided early last month to resolve the compensation issue by signing private agreements with each consortium. Sources say the content of the four agreements was finalized last Thursday and will offer significantly more money.

Olympia Odos, the contractor for the highway from Athens to the Peloponnese, is expected to receive some 130 million euros – against an original plan for 80 million – with a down payment of 60 million. As for the other highway contractors, Nea Odos will get a down payment of 40 million euros, and Aegean Motorway and Kentriki Odos will get 25 million each. Originally the three consortiums were to receive total amounts of 72 million, 73 million and 54 million euros respectively.

The construction groups have agreed to begin preparing to restart the projects as soon as they receive their compensation deposits.

Negotiations with banks are also under way in a bid to work out the details of how the projects will be funded. Though there aren’t any Cypriot banks among the 43 lenders connected to the projects, talks had stopped for a few days in March. However, the Development Ministry started hiring external consultants last week to assist state agencies in renegotiating a series of points in the contracts. They include the submission of data to the European Commission regarding each project after the restructuring of the financing model, the resolution of competition issues, updating the cost-benefit analysis and new traffic data. It is believed that a preliminary agreement has been reached with the banks and that they will contribute to the preparation of the applications to Brussels for the renewal of project funding and the management of any issues the Commission’s Task Force in Greece poses.