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WHY ARE SLOVAK MOTORWAYS THE MOST EXPENSIVE TO CONSTRUCT IN EUROPE?

Ministry justifies costs

FOR THE LAST few years, Slovakia has been juggling two major priorities: keeping the state deficit as low as possible and state guarantees at a minimum; and tempting private and corporate enterprises to invest in Slovakia's less developed regions. The first is a matter of strategic fiscal policies. The latter depends on physical infrastructure - motorways and highways to provide easy access to remote areas.
Slovakia's motorways, it seems, are the most expensive in Europe.

FOR THE LAST few years, Slovakia has been juggling two major priorities: keeping the state deficit as low as possible and state guarantees at a minimum; and tempting private and corporate enterprises to invest in Slovakia's less developed regions. The first is a matter of strategic fiscal policies. The latter depends on physical infrastructure - motorways and highways to provide easy access to remote areas.

Slovakia's motorways, it seems, are the most expensive in Europe. According to SME, the EU estimates that one kilometre of Slovak highway costs €12.5 million on average compared to €8.4 in the Czech Republic and €2.7 million in Italy. The average price in EU-15 countries is €6.8 million; in EU-10, it is €9.1 million.

Why the cost discrepancy? Tomáš Šarluška, spokesperson for the Transport Ministry, says there isn't one.

"I don't agree with those numbers. It is important to know what is compared with what," he said.

According to Šarluška, the EU has been comparing apples to oranges. For example, the price of one kilometre of motorway built on flat terrain is cheaper than the same length of road constructed in the mountains where extensive grading, tunnels and viaducts are often needed. The price of a stretch of Slovak highway, says Šarluška, can vary from Sk300 million (€7.51 million) to Sk1 billion (€30 million).

Furthermore, Slovakia must build roads with concrete, which is more durable across a wide range of temperatures, from sub-zero in winter to very high heat in summer - and more expensive. Says Šarluška, most EU countries do not have to deal with the problem of extreme temperature variables.

There are certain issues that make Slovak motorways more expensive than necessary, he concedes. According to Šarluška, "enforced investments" make it possible for towns to claim compensation from the government if a motorway or highway cuts across its land. He used an example where a town requested the state pay for a new football field since it lost its old one to a motorway.

Šarluška says that enforced investments, a product of government-sponsored legislation, allow "town halls to blackmail the state". The town hall is responsible for issuing local land and building permits. By law, the government must obtain the proper permission before it can start motorway or highway construction. When town demands are not met, says Šarluška, permits are not issued.

Šarluška describes an incident in Považská Bystrica, in the western part of Slovakia, to demonstrate his point. He says the Považská Bystrica town hall requested 500 new flats in return for granting the state a land easement permit to build a motorway through its town. Šarluška says he does not know why, but the flat deal did not go through. Consequently Považská Bystrica refuses to grant an easement and the motorway cannot be built.

The Považská Bystrica town hall refutes Šarluška's allegations, arguing it would not grant the permit because the government was late in filing the necessary paperwork concerning environmental issues linked to the motorway construction. The SITA news wire confirmed Považská Bystrica's version of the deal.

Despite setbacks, the Transport Ministry continues to find ways to speed up motorway construction - even if it means losing site of escalating costs. One initiative involves bringing in private investments.

Although Šarluška admits this would make motorway and highway construction even more expensive, it would significantly accelerate the process. For example, the government expects to privately finance the final construction of the Žilina to Výsoké Tatry motorway.

To facilitate financing and avoid state guarantees on loans, the government has approved the creation of Diaľničná spoločnosť (Motorway Corporation), which it will own in full. The corporation should be established in January.

"I heard whispers that it most likely will be established in February," said Šarluška. He said the delay has something to do with starting capital.

The purpose of the corporation is to encourage relationships between private investors and the state. When a private party invests in road construction, the Motorway Corporation will pay the investor from income generated by the motorway. If tolls and road taxes do not cover the terms of the loan, the state will subsidise the remainder, using funds from other road taxes or from the state coffers. Historically, the income generated by Slovak motorways is not enough to cover the expense of construction.

According to the Hospodárske noviny daily, the legislation creating the Motorway Corporation does not solve the financial risks that the state would incur in a private investment. Guarantees or the state's ability to pay remain outstanding issues.

Slovakia soldiers on. Many motorway sections are complete. Slovakia has finished its part of the Austria-Slovak agreement to join the two countries with a motorway. And the A6 (Austrian) motorway, from Kittsee to Parndorf, will be completed by 2008.

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