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Romania’s Renegotiation Of Infrastructure Contracts Doubles, Triples Initial Costs – World Bank

Romania’s transport infrastructure costs are among the highest in Europe, largely because authorities repeatedly renegotiate contracts awarded to private companies and final costs are double or even triple the initial level, the World Bank said in a report.
Romania’s Renegotiation Of Infrastructure Contracts Doubles, Triples Initial Costs - World Bank
05 mart. 2009, 14:37, English

Public spending for transport infrastructure is not only below planned levels, but is also affected by defective cost assignment, wasteful use of funds and cost increases, the World Bank said in its report to Romanian authorities, obtained by MEDIAFAX.

In 2008, Romania assigned just $8 million for railway infrastructure maintenance but made little effort to lower its railway network to the level of demand and to cut unprofitable passenger services and therefore lower the railway sector’s labor force costs, the report stated.

World Bank experts noted that urban transportation is largely neglected, which has major consequences on the economy and affects people’s wellbeing.

The international financial institution grouped the main issues affecting transport into categories such as: legal, institutional, capacity-related, financial, efficiency and responsibility constraints.

Among legal difficulties, the World Bank mentioned the statute of the Romanian national roads and highways company CNADNR and laws regulating expropriation procedures for projects of public utility.

Responsibility-related issues refer to the lack of transparency in transactions, the lack of very strict implementation of public procurement rules and failure to remedy deficiencies found during check-ups.

As short term measures, the World Bank recommends the lowering of subsidies for passenger railway transport, the creation of jobs by increasing funds for maintenance and traffic safety activities, the creation of Transport Authority for Bucharest and the revision of highly expensive infrastructure contracts, where the Bank gives the example of Romania’s Transylvania Highway.

Medium-term measures suggested by the World Bank regard increased productivity and competition, reduced public spending and more efficient environmental protection costs.

World Bank experts added Romania could save up to 40% of the money it assigns to road construction and maintenance.