The Moravian Corridor from Pojat to Preljina will cost 745 million euros plus 20% for “unforeseen costs” which means it will cost 900 euros, or “only” 100 million euros more than originally announced, according to an analysis published by Vreme.
The text also raises the question why now, when Serbia can borrow on the international market very cheaply, several times cheaper than in the time of Boris Tadic, the Government of Serbia did not decide to finance the construction of this corridor in this way, but opted for such a financial arrangement made in a non-competitive procedure.
On December 5, the Serbian government signed a commercial agreement with the US-Turkish consortium Behtel-Enka on the construction of the Moravian Corridor.
That being said, it would be a good idea to have this as a final price as well, since Bechtel’s involvement in the region has so far always been accompanied by subsequent price increases and public scandals, unfortunately without court epilogues.
The text recalls that the same day that the agreement was signed with the Behtel-Enka consortium, President Vucic opened the construction site of the Ruma-Sabac-Loznica highway. On that occasion, the Law on Public Procurement with transparent procedures was played out, since the contract was concluded on the basis of the interstate agreement between Serbia and Azerbaijan. That section is being built by Azvirt.
Azvirt first began construction in Serbia during the reign of Boris Tadic when he was hired to build a 40km section of the Ljig-Preljina highway that was paid 320 million euros.
“It is no big secret that at least 40 million euros was overpaid in those 40 km, Aleksandar Vucic also gave that information during a parliamentary debate when he attacked opposition Democrats for looting as prime minister, citing the contract of 40 million euros as an example”.
If we already know that Azvirt in Serbia, at least according to Vucic himself in parliament, was engaged in corrupt affairs by the previous government, we can only wonder what they deserved for “pardon” and new jobs outside the tender, asks the author of the text Bogdan Petrovic.
Analyzing the cost of highway construction, the author recalls that Azvirt was once paid 8 million euros per kilometer in the mountain section of the Ljig-Preljina highway, with many tunnels and slopes. The 110km long Moravian corridor, which is being built in the valley, with pre-announced “unforeseen works”, will cost 900 million euros, or 8 million euros per kilometer. The two sections are incomparable, since this corridor does not pass over any hill or river; so there is no need to build expensive infrastructure such as bridges and tunnels, unlike the difficult hill terrain on the Ljig-Preljina road.
The authorities found justification for such a difference in the cost of the highway in additional works “on the regulation” of the West and Great Morava flows. This is not a valid rationale, more than 100 million euros.
Moreover, if we assume that the Chinese supply was also 20-25% higher than the value that would be obtained in the open tender, we can conclude that the cost of the Moravian Corridor in the tender would be 400 million euros, that is, with its “regulation” of the flow river 500 million.
The previous government resorted to interstate arrangements, among other things, since, on the other hand, extremely favorable (for that moment) credit arrangements were secured, with a grace period and low interest rates (especially for the Chinese). There was some (little) justification for avoiding transparent procurement and contracting at increased prices. The state could at least finance those works at an interest rate that was twice lower than the interest it would otherwise borrow on the market for Srbijagas nebulisers, the text estimates.
Today, due to favorable circumstances in the international market, but also fiscal consolidation, Serbia is able to borrow funds on an exceptional basis (interest on a 10-year bond is about 1.3% per year and was 7.5% during Tadic). This further calls into question the justification for concluding such arrangements while avoiding competitive practices.
However, instead of taking advantage of these conditions and inviting tenders for key projects, the government has sent a new lex specialist to the procedure, who, like the “Bechtel lex”, has introduced “strategic partners” from all routes, the Belgrade subway and God knows what else. So within a few months we will get a bunch of “friends” and “partners” who will squeeze the state cashier by tens of billions of euros, and probably fill up with billions someone’s pockets.
The text also states that the tender for Bechtel – Enka was rigged, and with its presence at the signing of the agreement, the official support of the US government was given to this deal by US Ambassador Anthony Godfrey.
“It is certainly His Excellency Mr. Goffrey knows that the contract with Behtel-Enk was not concluded in a transparent procedure. Not only was a special law suspended for public procurement, expropriation and construction standards, but the condition for choosing a strategic partner was that he built more than 800km of highways exclusively in Southeastern Europe, which only the aforementioned consortium could fulfill, as no other company has built that mileage in the region. So much for transparency If there were no restrictions with the region of Southeast Europe, someone else could have come forward”, the text states.
Minister Zorana Mihajlovic and Sean Carey, Vice President of Bechtel, signed in October 2018 a Memorandum of Understanding and Cooperation in the Construction of the Moravian Corridor section.
