ECONOMY

Metro extension contractors unhindered in their claims for more money and time

The Italians constructed a 9.6 kilometer metro line in Turin with 15 stations at a cost of 600 million euros. In contrast, Attiko Metro, the Athens metro operator, estimates that a 4.3 kilometer extension, from Monastiraki to Aegaleo, with only three stations, will cost more than 700 million euros. What is more, the project, which should have been delivered in March 2005, has an uncertain finishing date, as the Greek-Italian consortium of Aktor and Impregilo has yet to submit a final timetable. The proposed Thessaloniki metro is also projected to cost about 40 percent more than Turin’s, although just 13 stations are planned for and its transportation capacity will be smaller; 18,000 passengers per direction and hour, against Turin’s 23,000. It is estimated to cost about 900 million euros. The Monastiraki-Aegaleo extension, which began during the tenure of the previous government, is also accompanied by an inexplicable hike in the budgeted cost of construction of the tunnel and the stations, from 123 million euros to 217 million in the signed contract, despite a cut in the number of stations from four to three. But this was only the beginning; 18 months after being assigned the project, the consortium asked for and was granted a 410 day extension for delivery. In February 2004 it asked for a new extension and submitted a supplementary application in June 2005. On the basis of today’s timetable, the Monastiraki-Aegaleo extension will be delivered in March 2008. Recently, the project’s electrical engineering contractors filed for compensation, although many of the studies should have been delivered two years ago. The move was blocked, evidently for fear of an uproar. The arguments for the delays in the metro projects in Greece are familiar and focus on the existence of antiquities and unstable ground. These cannot apply in the case of the Monastiraki-Aegaleo extension. It is clear that the contractors exploit legal loopholes and the inertia of public departments to win extensions and file for compensation. Even if these are not approved by the government, the contractors have good chances of them being approved by the courts, as the contracts are always in their favor. Legal weapon ignored Nevertheless, construction industry experts insist that Attiko Metro did have legal arguments that could have bound the consortium to the initial timetable. As the pace of construction slowed down, they say, Attiko Metro could have sent a Special Invitation to the contractors, inviting them to comply within 30 days. If the pace did not accelerate, it could have imposed fines. However, the Special Invitation was never sent and now Attiko Metro appears unable to face the construction consortium’s increasing demands in time and money. The other proposed extensions to the Athens metro, from Aghios Dimitrios to Hellenikon, from Aegaleo to Haidari and Agios Antonios to Anthoupoli, for which the same consortiums have been shortlisted, seem to be heading in the same direction of cost overruns. A second coincidence is that for none of the projects have the consortiums offered discounts greater than 5 percent. Despite the protests this has brought about (a consortium of Portuguese companies that was not shortlisted has filed suits against its exclusion), the process is proceeding on the argument that the cost of the extensions is much lower than in the past. They claim that they will cost 70 million euros per kilometer, compared with 110 million previously. But such an argument has been heard before; and the Turin metro cost just 63 million euros per kilometer.