Saturday, February 09, 2008

Romania’s absence of motorways has been holding the country back from speeding up its progress

Along with Poland and Bulgaria, Romania is at the bottom of the pile in the EU in terms of its number of kilometres of motorways. While Romania has only 298 km of motorways built, Germany has almost 9,000 km, France 8,000 km, while Great Britain has around 3,000 km.The lack of road infrastructure has bad consequences for the country’s economic development. Foreign and local companies, investors and businessmen cite the poor road infrastructure as the single biggest impediment to growth. Romania has lost countless foreign investment deals due to its bad transport system. Many other firms have set up shop in the country, building their strategy around the nation’s targets for road development.But when these transport plans are not realised, the businesses wonder why they bothered coming.In 45 years of ruling, the Communist regime constructed 130 km of motorways, while the remaining 170 km have been constructed after 1989. In the 1970s the Bucuresti-Pitesti A1 motorway of 110 km was the first to open. Then, in 1987, the Ceausescu dictatorship opened 18 km of motorway between Fetesti and Cernavoda on the road to the seaside. In the first 15 years of the post-revolutionary democracy the Government finished no new intiatives enlarging the country’s motorway network. A portion of 100 km from the first Romanian motorway, the A2 ‘Sun’ Motorway, was opened in 2004. Since then another 50 km of this motorway were completed by 2007. The remainder will be finished by the end of 2010, authorities claim.“Our priorities are first the areas of heavy traffic and then the Trans-European Transport Network,” Mihai Grecu, general director of the National Company for Motorways and National Roads (CNADNR) tells The Diplomat.The Government’s master plan claims that by the end of 2013, Romanians will see 1,800 km of motorways nationwide. Last year, only 14 kilometres of motorways were fully completed. This was the ring-road to Pitesti. Another 40 km were partially finalised and opened. These were Giurgiu-Adunatii Copaceni on the route of the ninth pan-European corridor and the Fetesti-Cernavoda sections on the Sun Motorway.Part of the problem for the failure to build road infrastructure is the lack of will from the people in charge. Grecu believes that not only the Government, but also the Parliament should become more involved in establishing Romania’s priorities for road infrastructure. “Except for delivering perspectives on motorways and express roads for the next 50 years, nothing else has been done,” says Grecu. “Priorities and financing sources should be established clearly.”

Concessions: controversial novelty

Around 12.8 billion Euro is scheduled for investments in road infrastructure in the next seven years. From this figure, almost 1.5 billion Euro are European funds and 600 million Euro are external loans. Most of the money, 6.5 billion Euro, will come from the state budget.But for the sections of motorways which are not a European priority and cannot receive EU cash, the Government has found what it hopes to be the perfect solution - concessions worth up to 4.2 billion Euro.A ‘concession’ is a private finance initiative. It means privatising road transport by renting out a motorway to a firm. A company agrees to construct a section of a motorway or an entire motorway with its own money. In return, the state agrees to allow the company to administrate the road. The investor should recover the cost of the construction works and turn a profit by charging drivers a toll, the level of which the private firm negotiates with the Government. Presently there are no tolls on Romanian motorways. The average tax charged in the European member states is around ten Euro per 100 kilometres. Romanians should expect to pay a similar amount of money if they want to reach a certain location faster. The speeds they can expect to clock up will not be more than 130 km per hour. For those who cannot pay the tax for the motorway, they can use the national roads, which allow drivers to accelerate up to only 90 km per hour.

Expropriation: cause of delay

Romania’s seven-year construction plan for the national motorway network means the Government needs to expropriate 9,000 hectares of land. This is the main cause of delays in construction works.In the beginning land owners refused to sell to the state their land on areas where motorways were planned. To help the Government speed up construction work, the Parliament adopted a law stating that owners of such territories must pledge their lands to the public transport system. The National Association of Evaluators assesses the value of lands and, under these conditions, the owners cannot negotiate a different price with the state. “Serious problems appear when nobody knows who are the owners of the land or if a piece of land is under legal dispute,” says Mihai Grecu. This creates a mountain of paperwork.“The expropriation process is difficult because it involves approvals from a large number of state institutions,” adds the general director within the Ministry of Transport. “And Romania is known to have one of the worse bureaucratic systems in the EU.” Romeo Botocan, executive manager for German construction company Max Boegl Romania, says expropriations mean higher costs because, instead of constructors building one end of the motorway to another in a smooth linear fashion, the works have to take place on sections where there are no legal discrepancies over ownership. This creates a piecemeal motorway. “The entire initial concept of an infrastructure project is sometimes totally damaged, because there are problems not only with the land owners but also with the authorities which prolong giving permits for work,” adds Botocan.

Skyrocketing prices

Controversies over high prices charged by construction companies for the works on motorways have enraged public opinion in Romania. The immature market for construction materials and the lack of available workers in this field are among reasons for construction costs that sometimes rise up to 20 million Euro per kilometre of motorway. At the moment, the cost of the road building work force in Romania is much higher than in neighbouring countries.“Prices vary a lot because the state closes many types of contracts with these companies,” says Grecu. “The main reason for the high prices is that the mechanisms of the market don’t work as they should. It is like in the case of the high prices in real estate. Nobody understands why an apartment in Bucharest can be higher than in some western European capitals.”Valentin Stoica, marketing vice-president of Romanian infrastructure design and consultancy company Search Corporation, complains about the short deadlines given by the authorities for the feasibility studies which establish the technical and economic details of the projects. At the same time, the studies take a very long time to gain approval from the state. This imbalance affects the quality of the results. Compared to other EU countries, the terms for the drawing up of projects are much longer than in Romania. “A well drawn project can save time and money during the construction process,” says Stoica.

Beating the high cost

Some construction firms predicted the problem of insufficient materials and started building up their own facilities. Tehnologica Radion, a local construction company specialised in infrastructure, works rarely with subcontractors.“We tried not to depend on anyone for our activity,” says Theodor Berna, owner and general manager of Tehnologica Radion. “That is why we have developed 12 factories for construction materials.” Regarding the much needed work force, Berna explains that during the winter time, when the inclement weather forces construction to stop, the company sends delegates all over the country to recruit new staff. “We often get in touch with local authorities in villages to ask the inhabitants to come to the city hall for a group meeting in which we present our offer,” Berna says. “It is a good strategy.”Another problem is finding temporary accommodation for construction workers near the site location. For its work in Bucharest, Tehnologica Radion has to help people to commute every day from 100 km outside the Capital. Meanwhile Max Boegl, which has a partnership with Italian constructors Astaldi on projects in the capital as well as on ‘Sun’ motorway, had to buy land on the outskirts of Bucharest and build houses for the workers brought from all over the country.

Maintenance problems

At present there is no separate state institution responsible for the service and maintenance of the motorways and national roads. The National Company for Motorways and National Roads, a body mainly responsible for the construction, reconstruction or rehabilitation of these roads, is also accountable for maintenance. The Government intends to split the two main responsibilities and create a distinct institution for management of motorways. “It is not correct to mix the two activities,” Grecu believes. The future state institution will be responsible for applying new layers of asphalt, painting the trunks of the trees along the roads and cleaning up after a heavy rain.

Giving priority

The motorway between Bucharest-Brasov is the country’s main priority for construction. This route is the spine of the country, between south Romania, the capital and the centre and is the only access route for Bucharest’s inhabitants to their mountain resorts in the Prahova Valley. Construction works for this 173 km motorway started in 2007 and are due to be finished in 2014 at a cost of approximately 2.2 billion Euro. The first section that connects Bucharest and Ploiesti is planned to be finished in 2010.Traffic intensity on Romania’s national roads has increased three times in the past 20 years, according to the Ministry of Transport. Meanwhile a report published last year by the European Commission says that in Romania in 2006 more deaths in car accidents have been registered than in 2001.There are four planned highways for Romania, which are detailed below.

Autostrada Transilvania

Autostrada Transilvania (The Transylvanian Motorway) between Brasov and Bors, on Romania’s western border with Hungary, is one of the biggest road infrastructure projects in Europe. The motorway will stretch southeast to northwest over Transylvania, passing by Brasov, Fagaras, Sighisoara, Targu Mures, Cluj-Napoca, Zalau and Oradea. The 415 km, four-lane motorway is being constructed by US company Bechtel. The works started in 2004 and are due to be finished in 2013. Last year, the construction works cost 195 million Euro and, for this year, another 442 million Euro will be spent. Currently Bechtel is working on two sections and, by the end of 2008, will make efforts to finish the first 40 km of the motorway between Campia Turzii and Gilau, according to Bogdan Sgarcitu, external affairs manager at Bechtel Romania.

Fourth corridor

Constanta-Nadlac motorway is part of the Fourth Pan-European Corridor that connects northwest to southeast Europe. The motorway will begin at Nadlac, a town on the western border of Romania, pass by Arad, Timisoara, Lugoj, Deva, Orastie, Sebes, Sibiu, Ramnicu-Valcea, Pitesti, Bucuresti, Fetesti and will end in the South, in Constanta on the Black Sea. From 720 kilometres, 250 kilometres between Pitesti and Cernavoda are finished. “No construction works are taking place momentarily between Pitesti and Nadlac because there is no money for this,” says Mihai Grecu, general director of the National Company for Motorways and National Roads. The Government intended to finance part of the works for this motorway with non-reimbursable European funds. But the EU refused to pay for the section between Pitesti and Sibiu. Instead Minister of Transport, Ludovic Orban, has announced that, by late 2008, he will sign a concession contract for the Pitesti-Sibiu portion. Works on this portion will not start before the first half of 2009.
Ninth Corridor
Giurgiu-Albita motorway is part of the Ninth Pan-European Corridor, which crosses Europe from north to south and connects the EU with Belarus, Ukraine, Russia and the Republic of Moldova. This motorway will be 380 km in length and is planned to be constructed through concessions. This route will not be completed by 2013. Officials from the Ministry of Transport announced that Focsani-Albita section is not a priority because the traffic is not as heavy as on other roads.

Autostrada Moldova

Autostrada Moldova (the Moldavian Motorway) is 315 km in length and will connect the Autostrada Transilvania to Moldavia region. This motorway cannot be financed with European money because it is not part of the EU priorities in terms of transport. This will also be a concession. The road will start near Targu Mures, will pass near Sovata, Praid, Gheorghieni, Bicaz, Piatra Neamt, Sabaoani, Iasi and will end at Sculeni at Romania‘s border with the Republic of Moldova. The motorway aims to be the engine of development for Moldavia, the poorest region in the EU.

Express service

A good network of motorways is not enough for Romania because it does not solve the traffic jams around big cities and in regions of heavy use. The central authorities have a plan for constructing express roads, to supplement the motorways or link up cities. Such roads aim to be constructed between Oradea and Arad, Campia Turzii and Sebes and between Fagaras and Sibiu to create connections between the Transylvanian Motorway and the Nadlac-Constanta motorway. The Ministry of Transport also plans to create an alternative route for the Fourth Pan-European Corridor connecting Craiova and Pitesti with Galati. Express roads gain finance from the state or external loans and are due to start this year. Now Romania has no express roads but plans to build around 500 km by the end of 2013. The express roads will have two lanes per direction but, unlike motorways, they will cross through cities. Express roads will only cost one third of the expenses for motorways, say officials. But the state hasn’t decided the top speed for such roads, which will probably be between 90 and 120 km per hour.By 2013 the Government must rehabilitate the 5,900 km of national roads which coincide with European routes of interests. Another priority is ring roads. Some local authorities have assumed the responsibility for constructing ring roads. But, in the last 19 years, only Brasov and Oradea have done anything. Brasov has finished a four-lane section of four km, while Oradea designed a ring road which, after three years of use, is no longer easing the traffic problem in the city. The Company for Motorways and National Roads is only constructing one ring road in Cluj-Napoca and a section of Bucharest’s ring road, while last year the Pitesti ring road was finished. The master plan of Ministry of Transport aims to build 50 by-pass roads and ring roads on a length of 715 kilometres by 2013.

Future plans for motorways

Ideal development timetable
■ Fourth Pan-European CorridorNadlac to Constanta: due for 2012
■ Ninth Pan-European Corridor Giurgiu to Bucharest: under constructionPloiesti to Focsani: due for 2012Focsani to Albita: without financing
■ Transylvanian MotorwayBrasov to Bors: due for 2013
■ Mountain motorwayBucharest to Brasov: due for 2014
■ Moldavia motorwayTargu Mures to Scuceni: due for 2013
■ Bulgaria link motorwayLugoj to Calafat:Preparations to be made by 2013

Report by Ana-Maria NitoiAdditional reporting Corina Ilie

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