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Firms battle for new road tenders

Projects worth 30 billion Kč to be shopped by year's end

August 15th, 2007 issue

By Viktor Velek

Staff Writer

After a 10-month hiatus, construction firms are again waging battles for road project tenders. The Road and Motorway Directorate (ŘSD), the state agency responsible for the development and maintenance of motorways and key roads, is poised to offer projects worth 30 billion Kč ($1.5 billion) by the end of the year.
The long drought was most of all a matter of European Union paperwork, the ŘSD says.
“The main cause of the gap was the nebulous mechanisms concerning the processing and approval of applications to an EU operational program,” said ŘSD spokesman Jan Hoření. “A great deal of money for current projects is drawn from this program.”
Applications for the ŘSD’s most attractive tender — the completion of the D8 motorway, worth 12 billion Kč — are currently being evaluated. The D8 leads from Prague through Ústí nad Labem, north Bohemia, to the German border.
“The construction of the 17 kilometer [10.5 miles] section should commence this fall,” said Hoření. “Other tenders will be announced in mid-August.”
Giant road construction companies Skanska CZ and SSŽ (Stavby silnic a železnic) are among the companies flexing their muscles for the tenders. Both firms are now awaiting the result of the D8 competition and other project announcements.
“We’ll definitely take part in some other prepared tenders,” said SSŽ’s sales director Zdeněk Synáček. Skanska CZ has its eye on the new tenders as well, according to company spokesman Ondřej Šuch.
Although reluctant to comment on their chances in the ongoing selection and in upcoming tenders, the companies are expected to do well in the process, if their current contracts are any indication.
SSŽ, a subsidiary of the French company Eurovia, is the country’s largest road constructor. It is building sections of the D47 and D3 motorways, connecting north Moravia with the D1 motorway and Prague with Austria, respectively. It is also involved in railway projects, including the reconstruction of Prague’s railway hub.
In 2006, SSŽ revenues totaled more than 15 billion Kč, with approximately 90 percent of its construction contracts awarded by the state, municipalities or regions.
Like SSŽ, Skanska CZ is working on the D11 and D47 projects as well as the Prague railway hub reconstruction. Skanska CZ is a part of the Sweden-based construction giant Skanska Group. Its annual revenues from road construction total approximately 14 billion Kč.
The directorate has faced criticism that while the country’s economy continues to grow at a strong clip, motorway construction often seems to have stalled.
The fall of communism in 1989 led to a huge upswing in traffic nationwide, causing serious problems on rickety domestic roads. The number of passenger cars skyrocketed from 1.6 million in 1989 to 4.2 million as of mid-2007, accompanied by a similar rise in international goods transport.
A road network designed to serve the moderate traffic of a state-run economy proved insufficient in these new conditions. For example, the motorway linking Prague with Brno, the country’s second-biggest city, was completed only in 1980.
A large part of the country’s transformation into a developed country has been the task of improving its poor road network. But progress has been slower than expected. From 326 kilometers long at the end of 1989, national motorways stretched only 627 kilometers by the end of 2006.
Progress is slowed mostly by lack of resources, protests by environmentalists and other civic groups and complications with land buyouts.
According to Hoření, the ŘSD spends an estimated 50 billion Kč annually on road projects, an amount that does not match the road network’s needs. Each year, the transport infrastructure budget is short an amount approaching 31 billion Kč, according to the Transportation Ministry.
Apart from the EU funds, a bill passing through the government should help alleviate the situation. The new law will direct money from the toll system and other resources to the State Fund of Transport Infrastructure, a body responsible for allocating money for rails, roads and water routes.
For much of its recent history, the road tender system has repeatedly aroused corruption suspicions, as it has been prone to overcharging. For example, bridges and tunnels on the motorway connecting Prague with Dresden are more costly on the Czech side than on the German one, the Czech Supreme Audit Office (NKÚ) found in 2006.
NKÚ has repeatedly revealed flaws at the ŘSD, including bad tender management and poor debt recovery. ŘSD’s long-standing head, Petr Laušman, was sacked at the beginning of the year and new director Alfréd Brunclík has set about making the agency slimmer and more effective.
The construction of the backbone motorway and the other major road networks under the ŘSD’s mandate, totaling about 2,000 kilometers in length, should be completed by 2015, according to the Transportation Ministry.
Currently, drivers can use a network of about half that length.
Viktor Velek can be reached at vvelek@praguepost.com


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