ECONOMY

Construction firms long for end to controversial rules

The construction sector is expecting government initiatives toward lifting the widespread climate of suspicion that surrounds it and for implementing steadfast rules concerning the assignment of public projects. The construction sectoral index of the Athens Stock Exchange shed 5.23 percent on Thursday after the Council of State on Wednesday decided to temporarily suspend certificates granting eligibility for participation in public projects to two firms, Aktor and Pantechniki, which were shortly due to sign major contracts for parts of the Egnatia Highway in northern Greece. The country’s highest administrative court ordered the suspension of the certificates – granted in line with a legal requirement that media company owners cannot hold interests of more than 5 percent in construction firms undertaking public projects – until it hears the owners’ case that family members who are majority shareholders in such firms are «economically autonomous.» The case is due to be heard on June 17. This was the second time that construction stocks came under pressure in a month, after earlier reports of difficulties in European Technical, Technodomi and Ergas. Analysts believe pressure is unlikely to let up, as the contentious point of economic autonomy is only one thorn for the sector; another is the now infamous so-called «mathematical formula,» which appears to enable firms to collude in bidding in order to allocate projects among them. One way or another, the change in government is expected to lead to an upset of balance in market shares that have largely emerged on the basis of such factors in recent years. Construction executives are well aware that the sector is sensitive to political changes, and expect that much will depend on the policies that new Environment and Public Works Minister Giorgos Souflias is to pursue and the speed with which the changes in the method of public projects assignments are introduced. Souflias has said abolition of the mathematical formula is linked to the ministry’s ability to plan the projects correctly. «We shall return to the method of assignment to the lowest bidder when the first project with a proper study is ready,» he said. Given the current climate of controversy, «the sooner, the better» is the consensus in the sector. Construction stocks are not expected to recover as long as the health and prospects of a number of firms remain unclear. The examples are not restricted to the firms mentioned above but extend to large groups, with heavy liabilities and falling revenues and profits. But with the government currently focusing on the completion of Olympic projects in time, the changes are not expected to begin materializing until after the Games.