BRATISLAVA, October 27, (WEBNOVINY) — Construction of four stretches of the D1 highway between Zilina and Martin in the length of almost 31 kilometers from private sources within the third PPP package and their operation for 30 years may be cheaper for the state than originally projected. The concessionaire company Zilinska Dialnica suggested a 30-percent reduction in costs on construction and operation considering the favorable development of interest rates during last talks with the Ministry of Transport on terms of financing of the project. Transport Minister Jan Figel (KDH) informed on the proposed reduction of costs after the Cabinet meeting on Wednesday and added that the deadline for the financial closure, which will expire on October 31, will be extended by several weeks, possibly by the end of November, so that both parties can come to agreement on the terms. According to the supplement to the concessionaire contract, the state is to pay the concessionaire EUR 177 million annually after completion of the highway construction, which would represent EUR 8.545 billion in 30 years, whereas construction works would account for EUR 1.99 billion ex-VAT.
“The difference is already interesting, serious and important for overall assessment and I also expect further reduction with regard to the development in interest rates. Slovakia can hedge the interest rate as of the date of conclusion of the contract and thus obtain a further reduction in the overall price for accessibility, i.e. annual payment,” said Figel.
The Transport Minister says that the 30-percent reduction in the project’s value is realistic and as the concessionaire assured, feasible. Figel admitted that the project might be financially closed by the end of November. “Construction could start in the spring. I will elaborate on details on time schedule or other aspects of construction after the talks are wound up. Presently effective supplement to the contract expires on Sunday but since the deadline was moved, it is a new situation,” added Figel.
“The concessionaire was willing to accept several steps on the way to optimization of the price and terms of construction of the most difficult stretch among all D1 sections near Zilina, which will be even more difficult because of construction of tunnels,” informed Figel. A letter from a concessionaire authorizes him respond with an offer for completion of talks in the course of November before the closure on Sunday. The minister says that details will be subject of further talks.
Figel said that construction of about 175 kilometers of highway stretches in semi-profile will start in the first year of this government’s term. He said that together 263 kilometers of highways and dual carriageways in semi-profile have been or will be completed in the 2006 – 2010 period. Prime Minister Iveta Radicova (SDKU-DS) stated that Slovakia has already discussed possibilities of approval of changes to allocation of EU funds for highway construction in Brussels.
In case of the first PPP package, through which the concessionaire company Slovenske Dialnice was supposed to build and operate five D1 highway stretches between Martin and Presov, the Ministry of Transport did not extend the sixth deadline for closure of the project due to unsecured financing. “Reduction in the basic price amounting to 3 percent at most was really very low compared with the price set in the fourth supplement when we consider the fact that deadlines were extended, terms softened, risks taken over, a state guarantee was defined, price for accessibility significantly increased,” explained Figel why the ministry did not accept the proposal for a price reduction also in the first PPP package. He said there were so many reasons for a significant price reduction that the ministry definitely defended legitimate interest of Slovakia so that it was advantageous for the state, not only for companies and banks. He said that since financing was not secured, the ministry did not want to take more risks, extend deadlines and thus delay the whole highway construction.
The tendered price for realization of the third PPP project on the D1 highway near Zilina stands at EUR 4.204 billion ex-VAT. The price includes road project design work, construction, financing, operation and maintenance of four highway stretches in the length of 30.7 kilometers: Hricovske Podhradie – Lietavska Lucka (11.3 km), Lietavska Lucka – Visnove (5.4 km), Lietavska Lucka – Zilina (5.9 km) a Visnove – Dubna Skala (8.1 km). The concessionaire was supposed to hand over the first two sections for temporary use in spring 2013, according to the schedule. The company planned to hand over the remaining two sections including the eight-kilometer long tunnel Visnove – Dubna Skala in the fall 2014.
SITA