ECONOMY

Construction firms need funds to tap lucrative road projects

Greek construction groups are in search of tens of millions of euros in order to secure a place in the consortia that are to build and operate Greece’s new roads under private/public partnerships. The local firms have an average 30 percent participation in the consortia that have already been selected or short-listed for seven large projects, budgeted at more than 6 billion euros. They will, therefore, have to meet their own share of the costs of construction with their own or borrowed funds. The need for liquidity is growing in view of the tight timetables for completion of the projects (4.5-6 years). Greek construction firms already have serious liquidity problems and fears are being voiced that they will have to restrict themselves to construction work alone, without being able to participate in the subsequent operation of the facilities. Their managements are aware that subcontracting agreements with foreign groups carry small profit margins. Most Greek contractors who collaborated with Hochtief in the construction of the Athens International Airport ended up with losses or meager profits. For this reason, participation in both the construction and operation phases is considered essential for most Greek groups. Recently, the tender for the Malliakos-Kleidi project in central Greece was delayed when Italy’s Impregilo withdrew due to economic problems. Now everyone is wondering what will happen with the Greek AEGEK group, which holds a 15 percent stake in the Aegean Motorway consortium that was provisionally declared the winner of the project a few days ago. The group has liabilities approaching 380 million euros. Germany’s Bilfinger Berger and Hochtief jointly hold 69 percent in the Aegean Motorway consortium. Greece’s Lamda Development and Athena have 10 and 7 percent stakes respectively. The latter is also said to be in urgent need of financing sources. All signs are that in the next nine months, the battle for the operation of Greece’s national highways will be fought between the two German firms, on the one hand, and French-managed giant Vinci on the other, whose local partners are Aktor and J&P Avax.

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