Czech transport minister builds on construction company savings

Stalled Czech road and rail projects have been given the green light to continue by the transport minister after construction companies offered savings and other concessions. But with the country still not out of the tunnel as regards spending cuts, the minister has other plans to build on.

Vít Bárta (Photo: ČTK)

Transport Minister Vít Bárta created a shockwave in the cosy world of major road and rail construction work when soon after coming into office he demanded a halt to ongoing and planned projects. The minister said there was no enough money in the coffers to continue with all of them and he demanded a review, warning that some would have to be dropped.

On Tuesday the minister, who has undoubtedly made the biggest impact in the new centre-right government, announced with a touch of triumphalism the fruits of what he had described as a poker game with the road and rail construction companies.

“We can note here that after two months and a day in office as Minister of Transport we can inform citizens of the Czech Republic that we can proceed with construction at costs which are 5.0 percent cheaper”

The concessions from construction companies involve not only cuts in costs but also rescheduling of the payment calendar so that some work will not have to be paid for this year. The overall result is that all but a handful of the stalled road and rail projects will now proceed as originally planned.

But this is far from an end to the minister’s crusade to put the way the state contracts major transport infrastructure projects on new tracks, he is if anything moving into a higher gear.

“For me this is far from ended. This was just the first crisis stage in my new function as minister of transport. We will continue to work on making construction cheaper. Nonetheless, we will now be acting in a more conceptual way and mainly seek savings which will involve more fundamental changes in projects.”

In the longer term, cash is still lacking for a series of longer term earmarked road construction projects. Here Mr. Bárta says that around 130 billion crowns of such projects could be financed through partnerships between private companies and the state, so-called Public Private Partnerships, or PPP, projects. Private companies could, for example, build roads and later recoup their costs from toll charges. One problem here is that government guarantees usually have to be offered if the toll income is less than expected.

If companies do not rush to take up this idea, the minister has another card up his sleeve: he might just invite Chinese construction companies to make offers to build Czech roads. That idea is not as outlandish as it might first seem. Neighbouring Poland has awarded a Chinese company contracts to build around 90 kilometres of motorway at prices which were said to be around a quarter below what local companies were demanding.