Rzeczpospolita: Roads to EURO 2012

By EURO 2012 the Ministry of Transport is planning to allocate over PLN 22 billion for roads and motorways required for hosting of the tournament in Poland.

Costs of investments
Total expenditure for road projects requiring implementation before the football championships will exceed PLN 100 billion. Over PLN 22 billion out of that amount the ministry of transport is planning to allocate to the investments that were accelerated in connection with the hosting of EURO 2012 (earlier they were planned to be completed as late as in 2015). The ministry is preparing, amongst others, construction of the “number five” express  road connecting Poznań and Wrocław. Costs of the construction of this 175-km. section were estimated at PLN 4.2 billion, i.e. approx. EUR 6.3 million per kilometer. Also other additional road expenses surfaced, which will amount to the total of over PLN 14.6 billion.

Data from the Ministry of Transport suggest that one kilometer of an express road will cost in the forthcoming 5 years between EUR 4 and 6 million, while a kilometer of a motorway – between EUR 5.5 and 7 million. However Adrian Furgalski, the director of the Team of Economic Advisors TOR, assessed the above estimates as underrated. He stressed that already today construction of a motorway costs approx. EUR 8 million per kilometer, and of an express road – approx. EUR 6 million.

Sources of financing
Financial expectations of the investment contractors are higher and higher due to – amongst other things – rising prices of building materials. Experts estimate that within a year, depending on specifics of a given tender, value of bids jumped from 30 do 70 percent. The Ministry of Transport claim that it verified the cost estimates and made them realistic. However the ministry’s experts assumed that prices would go up by no more than 30 percent.

According to industry experts, the government’s plans are barely realistic. Moreover much depends on when the implementation of government plans starts. If all tenders are announced at the same time and all investments are deployed simultaneously, there may be shortage of both materials and labor force and prices will go up. Moreover it is not certain whether the government finds money to finance its plans. The ministry of transport assumed that most money would come from EU assistance funds allocated to Poland by 2013. Almost PLN 76 billion is to come from the program "Infrastructure and environment", over PLN 20 billion is to be secured by the budget, and PLN 13 billion is to come by 2015 from the National Road Fund (KFD). The missing money is to come from loans, amongst others.

Financing from KFD is not fully certain, however. Revenues from the fuel charge coming to the Fund are divided between road and railway management. The latter would like to receive for their investments more the current 20 percent of revenues.

The ministry of transport also assumed that additional PLN 14.6 billion would be found for new roads in the budget. The Ministry of Finance has the final word on that issue.

Legal status
Apart from money, the current legal status in Poland is important. Janusz Piechociński, a former chairman of the Sejm Infrastructure Committee, stressed that it was necessary to significantly simplify regulations and procedures related to tenders. He added that the government should have done that immediately after announcement of the UEFA decision.

Source: "Polish Roads EURO 2012", Agnieszka Stefańska, Andrzej Krakowiak, "Rzeczpospolita", 12th June 2007