ECONOMY

A spate of legal suits holds back major projects

«There is a risk that not a single section of highway will have been completed in four years’ time,» say opponents of Environment and Public Works Minister Giorgos Souflias within the government. They, together with the political opposition and contractors who are facing difficulties because of the downturn in construction activity, lay the blame on Souflias for the delays in assigning large projects and the open fronts between construction firms. «The entanglements causing the delays in several projects could have been avoided had he not always wanted to have things done his way,» they claim. For his part, Souflias says that projects worth 5 billion euros were auctioned in 2005 alone, and attributes the delays – which he considers minor – to disputes between construction firms and the spate of litigation which traditionally accompanies every tender for a large project. And when contractors complain about delays in payments, he points the finger at the Economy Ministry. At any rate, it seems certain that ruling party’s deputies will have few opportunities to attend inaugural ceremonies for many projects in the next two years, for reasons often irrelevant to Souflias’s management model. This government’s first two years may have been very productive in terms of projects auctioned, but particularly poor in terms of assignments. The Thessaloniki metro project is to be assigned in the next few days to the consortium of Greece’s AEGEK and Italian firms, following the recent assignments for the two Athens metro extensions. But for almost a year, there has been virtually no other assignment for the Egnatia Highway across northern Greece. Mainly as a result of legal objections by rival contractors, the project timetables which the ministry issues are rarely observed. The Thessaloniki metro was delayed for almost a year, and the city’s other major project, the undersea coastal road artery, is still without an official winner although the consortium of Aktor with other Greek and foreign companies was provisionally nominated eight months ago. The results of the tender for the upgrade of the Malliakos-Kleidi section of the Athens-to-Thessaloniki highway were announced six months ago but who the final winner is still to be decided by the courts. ‘Mathematical’ sins Souflias occasionally appears to wonder about the reasons for the litigious war between contractors in the last few months. The answer is simple: Before the present, actually competitive, system was adopted by the present government, there were no lawsuits because the so-called «mathematical formula» of discounts employed favored collusive practices between contractors and the winner being more or less decided in advance. Still, engineers claim that the number of objections would have been limited had the ministry proceeded to a radical reform of the legal framework governing public works. They argue that this is plagued by the multiplicity of laws governing the relations between government and contractors, which usually favors the latter. Last week the ministry said that the projects for which contracts have been signed, or for which final winners have been declared under Souflias’s tenure, are worth a total of 4.3 billion euros. However, difficulties lie ahead as the deadlines set for a number of other important highways, Corinth to Patras, Ionian and the E65 in central Greece are drawing near. Handicaps In the last few months, the Environment and Public Works Ministry has had to deal with the lack of viability studies for projects to be constructed under public-private partnership (PPP) schemes – which was largely the fault of the previous government – and the almost complete absence of technical studies. Further, it now has to see to the difficult task of the extensions to the Attiki Odos extensions. These are also contested by the consortium that now holds the concession and, while the tender procedures are still in progress, it has offered to undertake the extensions at its own expense on condition the existing concession is extended by five to eight years. There are those who will say that Souflias was called upon to perform an impossible task: on one hand to assign the big projects, and, on the other, to avoid accusations of having failed to curb corruption. Whatever the case, the ministry was his own choice and now he has to face up to the difficulties.