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ROMANIA: PM advises Bechtel contract could be annulled

by Adrian HamzescuBucharest Daily News
December 22nd, 2005

Prime Minister Calin Popescu Tariceanu warned the American company Bechtel that the contract for the Brasov - Bors (Transylvania) highway could be annulled if the company does not follow the laws to the letter.

"If the company does not understand that the Romanian legislation comes before its desires, that the contract could be annulled," said Tariceanu in the Parliament while making a speech about the EU accession progress.

The contract was signed by the former government, led by the Social Democrat Party, and it was contested by the Tariceanu office, which required renegotiations of the contract to ensure the contract is compliant with the European legislation.

The Bechtel contract for the Brasov-Bors highway, worth 2.2 billion euros, was granted to the American construction company without a public tender, leading to negative reactions from the European Union. After the 2004 election, the new administration repeatedly expressed its intention to support another infrastructure project; the Pan-European Corridor IV, which crosses Romania from Constanta in the east to Timisoara in the west.

One of the contract's clauses contested by the authorities stipulates that the government should make a down payment of 250 million euros which Bechtel would justify at the end of the project in 2012.

The Minister of Transportation Gheorghe Dobre announced two weeks ago that the American company "understood it has to follow the Romanian legislation" and accepted to justify at the end of each year the expenses for the Bucharest - Brasov highway.

The provision did not comply with Romanian law, the government argued, as the legislation states that a company involved in a public works contract should only receive advances for the year in question, and should present an annual expenses statement, explained the Minister Delegate for Public Works, Laszlo Borbely.

"It is not a matter of utility," stated Prime Minister Calin Popescu Tariceanu, emphasizing that the main problem of the contract was the initial stipulation of the down payment, under which Bechtel would only have been obliged to detail the use of the funds at the end of the project, in 2012. "There are other technical issues, which are also the object of re-negotiations," added Tariceanu, who nevertheless expressed confidence that the financing and the construction work will resume in full strength next year.

The negotiations with Bechtel are nearly ended," said Dobre, adding that a final discussion with the Bechtel representatives will take place this week (one week ago)."

"The results of the re-negotiations are favorable for the government," stated the UDMR (the Democratic Alliance of Hungarians in Romania) Senator Gyorgy Frunda, pointing out that all the illegal provisions have been cancelled and that the contract will be made public next week.

The leader of the Social Democratic Party (PSD), Mircea Geoana, recently stated that the government must take a strategic decision on economic development by concentrating on infrastructure and public investments, to eliminate the discrepancies in development between Romania and the European Union.

The PSD president stated that the sums provisioned by the 2006 budget for highway construction are insufficient and prove the government does not consider economic development as a priority.

The ministry's priorities for next year, as announced by the authorities, are housing construction for young persons, rebuilding roads, constructing water supply facilities for villages, thermal upgrade of the buildings and consolidation of buildings with earthquake risk.

The budget of the Ministry of Transportation should amount to approximately 239 million euros, 55 of which represent international credits. Most of the funds should be directed to residences for the youth through the National Housing Agency.



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