The 22 billion Kč ($980 million) deal, which was awarded to the Austrian firm Kapsch in November 2005, is under the scrutiny of both the European Commission (EC) and new Transportation Minister Aleš Řebíček.

The EC called on the government in August to clarify the conditions of the tender to find out whether the company got unlawful state aid when the government excluded all bidders except for Kapsch. Should the EC find shady dealings, it could kill the tender.

Meanwhile, Řebíček called for an independent audit and expressed doubts that the project would be completed even as Kapsch moves forward.

Kapsch plans to build 171 gates by the end of the year, turning some 950 kilometers (590 miles) of highway into a tollway beginning Jan. 1. As much as 2,100 kilometers of road is scheduled to be covered by tolls by July 2007. At 4.05 Kč per kilometer, the government expects to make nearly 2.8 billion Kč annually.

Karel Feix, general director of Kapsch Telematic Services, remains upbeat despite pressure from the EC, the new government and competitors who continue to claim that the tender went awry.

Feix said he was not aware of Řebíček's statement to the contrary, adding that the minister's comments must have been "misinterpreted by the media."

Kapsch has recently acquired nearly 15 construction sites per day in order to build the e-toll gates.

Another challenge

Czech courts are also questioning the tender's legality.

The Regional Court in Brno is examining the tender following an appeal by the Italian firm Autostrade, a company that lost the tender despite its bid coming in 4.5 billion Kč lower than Kapsch's proposal.

If the court sides with Autostrade, it could also strike down the tender, said Ivo Janda, an attorney with White & Case, the law firm handling the case for Autostrade.

Janda added that the Transportation Ministry need not wait for an EC verdict and could revise the tender beforehand.

Autostrade Product Manager Antonio Tschopp said the company filed an appeal with the EC because the Transportation Ministry acted unlawfully when it excluded all bids but Kapsch's.

Christian Koenig, director of the Center of European Studies and a member of the law faculty at the University of Bonn, said that the EC's letter to the government showed that it is taking the issue seriously.

"The fact that the commission reacted to the complaint by issuing this request shows that it entertains doubts as to the compatibility of the measure with the EC state-aid law," Koenig said.

He said the EC may only limit itself to this preliminary examination, or it could initiate a formal investigation if the government is unable to clear the commission's doubts.

An ongoing concern

The e-toll tender has sparked controversy since the summer of 2005, when satellite-toll-system providers complained that the rules of the tender clearly preferred microwave-system manufacturers.

Although as many as 102 contenders showed interest in applying for the tender, only four conglomerates — Kapsch, Mytia, Autostrade and A-Way — submitted bids last September.

But Kapsch remained the only bidder after the ministry excluded the other three for failing to submit all the required documents. The failed bidders cried foul, insisting that the omissions were easy to correct and that the assessment committee did not analyze economic aspects of Kapsch's bid.

The ministry had said price would be the main criterion in the tender, but Kapsch's bid was the second-highest of the four firms.

"The procedure was prepared to suit a preselected bidder — the Austrian Kapsch consortium," Autostrade wrote in its appeal to the EC. "The actual tender process and award demonstrate that the Kapsch bid, though obviously overpriced, was given preferential treatment."