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Poland: Delays Plague Highway Construction

Warsaw, 20 July 1998 (RFE/RL/-- Development of Poland's super-highways is being delayed by a controversy over whether the state should offer loan guarantees to investors.

Under the existing plans, 2,600 km of limited access, four-lane highways are to be built by 2015 at an estimated cost of $15 billion to approach standards of the European Union. There are currently only 256 km of such roads in Poland.

The EU has recently urged Poland to improve the road system which is now one of the worst in Central Europe. Only Albania and Romania have inferior roads. The EU says Poland must improve its road system if it wants to join the organization. Andrzej Urbaniak, manager of the Agency for the Construction and Use of Highways (ABiEA), said at a transportation seminar earlier this month that it is necessary to change the existing law on highway construction

This law is rooted in a system, so-called BOT, in which a private consortium secures its own financing to build a highway, operates it as a toll road for some 20 or 30 years and then hands it over to the state.

Investors are reluctant to put up money when they are uncertain of the return. Several domestic and western companies won tenders last year for the construction of highways. These tenders were accompanied by state guarantees for about 50 per cent of the projects.

But after further studies showed that the return on the investment could be smaller than expected, some companies started to argue that higher state guarantees are needed to start construction.

"The current project is unrealistic to implement, and the fears of the investors are justified," Urbaniak said.

He said only about 15 per cent of planned highways should be linked to the BOT system and the rest ought to be financed by the state and be left free of charge for motorists.

There has been no immediate response from the government, but the increase in state financing seems more than likely.