After rough ride, Romania takes the concession route to build its highways

The first concession contract to build a highway in Romania was signed last week, more than two years after the idea was proposed. The 55-kilometer road, which connects Comarnic to Brasov, is a premiere in Romania also because it will be built in a mountain area. The highway, which will be constructed by Vinci and Aktor, should be ready in 2014, one year after the ongoing 415-kilometer Transylvania highway is due to reach completion. After that, Romania will have four highways, totaling almost 800 kilometers, similar to the amount that France had 30 years ago.

Corina Saceanu

French construction company Vinci and Greek contractor Aktor have signed the EUR 1.2 billion contract to build the Comarnic-Brasov highway, which should be finished within the next four years. The pair have also won the concession contract to maintain the highway for another 26 years after it is finished. This is the first concession contract for the building of a highway in Romania. For the ongoing Transylvania highway project, construction company Bechtel is in charge only of construction works.

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The Romanian state will spend EUR 4.8 billion on the Comarnic – Brasov project over the next 30 years, out of which the cost of the main loan will be EUR 3.1 billion, the expenses involved in the subordinated loan EUR 670 million, and the cost of running the highway EUR 323 million. Taxes and other financial costs will reach EUR 584 million, while inflation will add another EUR 146 million to the tab. The cost of operating the highway will however be higher, and the remainder should come from the concession taxes.

Overall, the Romanian state will pay around EUR 87 million for each kilometer of road. The construction cost alone is EUR 21.8 million per kilometer, which, according to the Ministry of Transportation, is among the lowest in Europe. For comparison, the price per kilometer of a similar highway in France was EUR 46 million, and in the UK, EUR 32 million.

The 55-kilometer highway will be built in a mountain area and will have 16 bridges and viaducts, with five main traffic nodes along the way in Comarnic, Sinaia, Busteni, Predeal and Rasnov. Out of the 55 kilometers, 30 kilometers will be made up of tunnels.

The two construction firms and their sister companies Vinci Concession and Aktor Concession beat two other consortia, which had also placed offers, to the contract. The first was made up of Strabag, Egis Projects, Eurovia Construct International and Housing & Construction Holding, while the second involved Bilfinger Berger and Porr. The consortium led by Strabag contested the result of the bid, which delayed the negotiations stage and the signing of the contract by six months, until November last year.

The winning consortium was represented by local law firm PeliFilip and Linklaters, which have worked for more than a year on the public acquisition project. Following the signing of the deal, the consortium needs to find financing for the project, while they also have one year to complete the technical studies and draft the technical design. “We are interested to know whether they can find financing, as they could come and tell us they are giving up. But we believe that since they are such a powerful consortium, they will find a solution. European Bank for Investments (EIB) representatives said they were interested in covering some of it,” said transport minister Radu Berceanu.

Vinci Group posted a turnover of over EUR 35 billion worldwide in 2008, while its total investments in Bucharest have exceeded EUR 450 million. Aktor Concessions & Aktor are members of the Ellaktor group, which in 2008 had a consolidated turnover of more than EUR 1.9 billion.

It took six years from the signing of the contract for the first 42 kilometers of the Transylvania highway to be completed in December last year. The deal was inked in 2004 but the project was delayed due to a renegotiation along the way and to expropriation issues. During the period, Romania changed five ministers in charge of transportation. The 415-kilometer-long highway, which will connect Brasov to Bors, in the west of Romania, close to the Hungarian border, will be built at an average cost of EUR 11 million per kilometer.

Romania currently has 261 kilometers of highway, according to the National Highway Company (CNADNR), while the entire network of roads in the country reaches 200,000 kilometers. The proportion of highways out of the total road network is 0.13 percent, and will grow to 0.4 percent when both the Comarnic-Brasov and Transylvania highways are finished.

By comparison, Germany’s inter-urban road network has a total length of more than 231,000 kilometers, out of which motorways make up around 12,550 kilometers and federal highways around 40,700 kilometers. Highways make up 23 percent of the total length of roads in the country.

corina.saceanu@business-review.ro