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BRATISLAVA SUBWAY PROJECT GIVEN NEW LIFE WITH COAL-FOR-CASH OFFER

Siemens touted as Russian debt mediator

Bratislava Mayor Jozef Moravčík has a new plan how to get a subway system built in the Slovak capital - have the Russians pay for it, with the help of Siemens.
Two years after burying the metro project for lack of funds, Moravčík on August 13 presented cabinet with a proposal by which payments on the $1.2 billion that Slovakia is still owed by Russia in Soviet-era debts would be earmarked for the Bratislava subway.
According to the mayor, were 15 billion crowns ($319 million) siphoned off the total debt figure, the entire costs of the subway - extending from the Petržalka suburb to the main train station - could be painlessly met.

Bratislava Mayor Jozef Moravčík has a new plan how to get a subway system built in the Slovak capital - have the Russians pay for it, with the help of Siemens.

Two years after burying the metro project for lack of funds, Moravčík on August 13 presented cabinet with a proposal by which payments on the $1.2 billion that Slovakia is still owed by Russia in Soviet-era debts would be earmarked for the Bratislava subway.

According to the mayor, were 15 billion crowns ($319 million) siphoned off the total debt figure, the entire costs of the subway - extending from the Petržalka suburb to the main train station - could be painlessly met.

What is more, the mayor said, the German firm Siemens has already begun negotiations on becoming debt intermediaries with representatives of the Russian government.

The debt has since 1994 been paid down through shipments of commodities - mostly energy supplies such as nuclear fuel rods and coal - from Russia to Slovakia. Siemens has proposed it would negotiate the supply of extra commodities from the Russians, sell these extra goods on Western markets, and use revenues from such sales to finance construction of the Bratislava subway.

"Siemens should be taken into consideration as the company which would carry this [debt settlement operation] out," Moravčík said. "It would be a relief for me because we would be able to offer people public transport compatible with other capitals of the European Union. It would also boost the city's economy because commercial and economic development depends on a flexible transport system.

"It would be good if we at last started with the construction through finances received from the Russian debt. It seems to be the only realistic way."

Moravčík added that if the government supported the proposal, construction could begin next year with the first 4 billion crowns ($85 million) approved for 2002.

Do it yourself

Despite Moravčík's enthusiasm for the new funding plan, state officials asked to comment on the city hall proposal were pessimistic about the mayor's chances of winning government approval.

"I don't know anything about Siemens' involvement in the project," said Deputy Finance Minister Vladimil Podstránsky for The Slovak Spectator on August 16. "I think there's no problem with the philosophy behind city hall's proposal to use Russian debt finances for construction of the subway, but at this point, it's not realistic that it will be put into practise."

Podstránsky explained that the Russian and Slovak Finance Ministries had already started talks on what portion of the Russian debt would be paid off in 2002. Priority, he said, had been given to goods such as cyclotron particle accelerators for medical research, nuclear fuel and coal, while no more than $95 million in debt would be settled, the same figure as this year.

"If city hall is able to negotiate more than $95 million with the Russians or to find someone to do so, I don't see any reason the money shouldn't go towards construction of the subway if the government approves it. But there would have to be a tender launched to find a company to settle the debt, and the project would not be allowed to take place at the expense of the strategically-important goods which have already been discussed," Podstránsky said.

"Moreover, we haven't yet managed to force the Russians to agree to larger quantities of goods in debt settlement than the figure which has been proposed and discussed. They aren't willing to finance everything either," Podstránsky added.

But according to Vladimír Kovalčík, general director of the Metro company established by city hall and the central government to build the subway system, Siemens had a good chance of success in negotiations with the Russians.

"I have information, confirmed from the Russian side, that they started negotiations last year. The fact that Siemens has come up with this proposal means it has discussed everything thoroughly with the Russian side. This represents a real chance to get this [subway project] going at last," Kovalčík said.

Negotiations between Siemens and Russian officials were also confirmed by Ľubomír Kanis, the general director of Devín Banka, who said in an interview with the Slovak daily Národná Obroda published August 17 that the talks had been going on for several months. Devín has for several years had an exclusive contract to recover Russia's debt to Slovakia.

Siemens once again

Plans to build a subway in Bratislava were first announced 28 years ago. Ground was actually broken in 1988, but little progress was made beyond a 150-metre tunnel and several excavations for future subway stations in the Petržalka suburb.

The project was stopped in its tracks after the Velvet Revolution in 1989, but two years later the French firm Matra Transport International was chosen as the supplier of all future trains and tracks. Since Matra was bought by Siemens in 1998, the project has run into constant delays due to lack of finances.

Siemens' role, through Matra, as supplier on the subway project was questioned recently after the Slovak Attorney General's Office announced Siemens Business Services Austria was under investigation in a case of alleged bribery in a state tender. In the wake of the scandal, former Metro director Pavel Vlček called for a new tender on the subway supply contract to be called.

Moravčík, however, said that it would be best to stick to the results of the original 1998 tender. "Of course, we would still get our lawyers to check the tender and say whether the results were acceptable before construction started," the mayor said.

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