Bulgaria Minister Prepared to Swallow Lyulin Highway Budget Increase

Business » FINANCE | March 17, 2010, Wednesday // 18:04
Bulgaria: Bulgaria Minister Prepared to Swallow Lyulin Highway Budget Increase Bulgaria's regional Development Minister, Rosen Plevneliev, is willing to contribute state funding to the delayed Lyulin Highway construction project. photo by BGNES

Bulgaria's Minister for Regional Development, Rosen Plevneliev, has announced that he is prepared to reluctantly "accept" a EUR 41 M increase in construction costs of the Lyulin Highway.

Plevneliev said on Monday that the expert assessments recently made all pointed to an under-assessment of costs on the part of the Turkish consortium in charge of the construction project.

The current value of the contract with Mapa Cengiz amounts to EUR 137,4 M. Minister Plevneliev has now agreed to accept an increase of not more than 30%, to EUR 41 M.

Mapa Cengiz had originally won the competitive tender with a bid of EUR 138 M. Later cost estimates jumped to EUR 210 M, with the consortium asking for an additional EUR 73 M in funding.

The Regional Minister is now willing to provide half the shortfall, and has stated that: "Now we are looking for ways to reduce the price, and have already got below EUR 200 M".

According to Plevneliev, the ongoing discussions should come to a successful conclusion "within days". He added that experts from the European Commission arrived in Sofia on Wednesday, to comment on what proportions of the costs could be covered while adhering to the rules, norms and procedures of the EC.

European funding for the long-delayed construction project amounts to over EUR 111 M; this money will be lost if construction is not complete by the deadline - December 31, 2010. Several weeks ago, Mapa Cengiz stated that, despite various delays, they would be able to complete within the stipulated time.

The Minister noted that, if the Eurpoean deadline was not met, the Bulgarian government would have one year in which to complete the project at its own cost, otherwise the EC share would have to be returned to Brussels.

He added that, in an effort to regain lost construction time, the Turkish consortium would hire additional Bulgarian sub-contractors. They have also agreed in recent weeks to employ more Bulgarians in their workforce, and to pay them at the same levels as their Turkish co-workers.

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Tags: Lyulin highway, Mapa Cengiz, Regional Development Minister, Rosen Plevneliev, EU funding
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