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Victoria Mindova

The PASOK government sped up and announced five concessions for repairs and construction of roads. The total project value is 8.7 billion euros and will be implemented on the base of public-private partnerships. "It is about constructing 720 km new highway sections and the improving another 530 km of existing highways," said the Minister of Transport and Infrastructure Dimitris Repas at the formal press conference on the project. The press conference was attended by the Minister of Finance Georgios Papakonstantinou as the green light for the project depends on his Ministry.

The concessions involve the state, six Greek and six foreign investors, and 43 banks. The financial institutions are 11 local and 32 foreign. The project involves six Greek construction companies and four foreign firms. The state will participate with 26.5% of the projects value or 2.3 billion euros, other 26.5% will come from revenues from tolls to be collected only to fund the projects at a later stage.

Private investors will enter the project with about 3.1 billion euros, which will be borrowed from banks. This amount equals 38% of the total capital needed to complete the project for the five highways, 50% of which will be provided by the Greek banks. So far, the project has taken around 3 billion euros, of which 984 million euros came from the public sector. The state money for the project comes from both the public investment program that has been seriously cut and from the European funds under the National Framework for Economic Development. So far, 550 million euros from tolls have been allocated to the project and the first bank loans amount to 270 million euros. 500 million euros came from the investor circles, and 800 million euros are bridge loans needed for the start of the project.

Without being officially announced, this is the first major step of the present government to closer public-private cooperation. The concessions for the five highways were considered back in 2003 but the contract was signed in 2007. Due to inaccuracies and failure of the state to meet its duties, the concessions were frozen and the renewal of the national road network has been significantly delayed. Upon the recommendation of the Troika, and because the European experience shows that the development of infrastructure projects could be crucial for the positive economic growth of the country, the present government was prompted to take the old concessions out of the closet, to slightly improve them and put them into operation.

"The projects must be completed in 2014, but, unfortunately, there are some delays," said Dimitris Repas. To ensure the smooth funding of the project the state will create a guarantee fund of 500 million euros at the Bank of Greece. It will provide the necessary guarantees for the infrastructure loans under this program, but it will not burden the budget, because the guarantees are not expected to be paid. At the same time, while the construction and reconstruction works on roads and highways are running, the government promised to reduce the tolls by 25% -30% for the next three years. Thus, the citizens will not pay the full price for roads that are not finished yet, which was the main demand of the "I do not pay!" movement at the end of last year. Dimitris Repas said that the projects are crucial not only because of the amount of the investment, but because of the impetus they will give to the economy and the opening of new jobs in times of crisis.