Financing road networks in the CEEC

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

An extensive construction and modernisation of the road network in Central and Eastern Europe is necessary in order to catch up with western European standards.

The road network in the CEEC is characterised by variations in density (1.62 km/km² in the Czech Republic, 0.39 in Bulgaria). The 0.6 km/km² average is appreciably lower than that in the Member States (1.59). It is also of poor quality, with a greater proportion of unsurfaced roads, in Estonia and Latvia for example. An extensive construction and modernisation programme is therefore necessary in order to catch up with western European standards.

The road and motorway development programmes are almost always publicly financed, either with national or European funds (EIB, ISPA programme, cohesion funds starting in 2004). In addition to the State budget, the candidate countries sometimes use special national funding via taxes on petrol or a motorway tax disc. But in Poland, a project designed to finance the construction of highways and motorways by means of a tax disc was rejected by the Polish Parliament in February 2003. Hungary abandoned its road fund in 2000 but is considering the creation of a new one financed by a tax on petrol. Slovenia is the only country in the region, together with Romania (on a 17 km section), to have installed a toll system on its 296 km network of public motorways. The tolls are collected by DARS, a body founded in 1993 as a public company to take charge of the motorway programme.

Recourse to private finance remains limited throughout the region.

It was experimented upon in Hungary, which today has one 97 km long private motorway (M5). It is not popular with users because of the high price of the toll. In 1993 a 35-year concession contract had been signed for the M1 motorway. But the State finally withdrew the concession in 1999 and took back control of the motorway. Hungary is considering the creation of a Public-Private Partnership (PPP) for its M6 motorway project (220 km), whose form remains to be defined; the first section is due to open in 2006.

A 30-year concession project was signed in Poland in 2000 for the restoration of a section of the A4. Another project, based on a Build Own and Transfer contract (BOT, over 40 years) is financed by a toll over a 50 km portion of the A2, in service since 1st January 2003.

In March 2001, the Czech government asked (without going to public tender) a private company to build on a BOT basis the D47 motorway (80 km in Northern Moravia) with a shadow toll. But the renegotiation of the terms of the contract (signed in June 2002) failed and it was suspended. In spite of this failure, the Prime Minister recently revived the idea of using PPP to finance infrastructure projects. Indeed, the Government Fund for Transport Infrastructures is to a great extent supplied by the revenues from privatisation, which are expected to fall significantly over the coming years. Under these conditions, it is becoming impossible to avoid having recourse to private finance in order to carry out the ambitious transport infrastructure development programme embarked upon by the Czech Republic.

A motorway project between Bratislava and Kosice in southern Slovakia is being studied. The government would like to call upon private finance, but traffic expectations are low. Finally, Slovenia and Romania are also investigating the possibility of calling upon private partners.

The implementation of clear PPP legislation could help to develop private infrastructure finance in the region. Several countries have launched a debate, as in Lithuania, where a new law on concessions is going through Parliament. However, concession bills have not always passed into law (as was the case in Slovenia), or in some cases the texts are ill adapted, as in Hungary for example where the law on public procurement is not in conformity with the 1991 law on concessions.

For more analyses, see the

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