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Highways in Romania, three times more expensive than in Bulgaria, price variations higher than in region
The highways built in Romania in plain areas are three times more expensive than in Bulgaria, according to a recent review of the Competition Council. The difference between the minimum and maximum costs for highways built in plain areas is higher in Romania than in Poland and Bulgaria, according to the Council, which advises the authorities to avoid addenda to highway contracts.
These additions to the contract allow the bid winner, which offered the lowest price, to actually renegotiate a new value of the contract, which can be even higher than what the winner’s competitors has submitted in the bid. For the 96 contracts signed between June 2010- June 2011, authorities signed 203 addenda, and 23 contracts had their initial value changed. This does not only happen in Romania, it also happened in Germany, Greece, Poland and Spain between 2000 and 2013, when the cost of around half of the audited projects went up by more than 20 percent during execution, according to the Council.
The price per kilometer of highway varies in the plain area between EUR 2.68 million for the Fetesti – Cernavoda segment, and EUR 11.6 million for the Pitesti bypass. In Bulgaria, the price varies between EUR 2 million and EUR 2.8 million per kilometer of highway, while in Poland, between UR 4.6 million and EUR 12.4 million.
According to the report, the price variation in Romania is of 45.8 percent, higher than in Poland – 36.4 percent, and in Bulgaria, 14.2 percent.
On average, the price of building a kilometer of highway in the plain area is of EUR 23.3 million, while a highway in a hilly area is built for some EUR 20.8 million a kilometer. Both prices are above the standard costs, according to the Council, which analyzed data provided by the Romanian Highways Company (CNADNR).
The local construction market is dispersed, with around 640 active companies, but even so, in large infrastructure work bids, the same groups of companies apply, often by partnering up. “Even if this is legal public acquisition legislation wise, from a competition point of view, the associations trigger suspicions on the exchange of sensible information between participants and limits the possibility to compete as independent companies,” according to the Competition Council review. The Council suggests limiting interaction between bidders and avoiding concomitant bids on the same tasks, such as the bids for asphalting streets in all the six Bucharest districts.
When it comes to delivering on time, construction companies in Romania do not seem to be able to keep up with the deadline, the report suggests. For most highway segments, the delays were higher than 12 months.
The report was published on the Competition Council’s website and will stay for public debate for 30 days.