The Transport Ministry has certain reservations toward the Finance Ministry's stance on the influence of the construction of select D1 highway and R1 dual-carriageway sections through PPP projects on government debt and state budgetary policy. Transport Minister Lubomir Vazny announced on Wednesday that it is necessary to discuss this problem, to judge the accuracy of the numbers and then to make a decision. He considers the analyses, which are part of the released Finance Ministry's stance, to be "bad."
"There is no connection between PPP projects and euro adoption, since they are not included in the evaluation criteria for euro adoption. They indirectly define sustainability in subsequent years. PPP projects may be related to this," said Mr. Vazny. He was reacting to the question of whether it is right to launch these projects prior to Slovakia's entry into the Eurozone. The Finance Ministry recommends that the Transport Ministry not sign a contract with a concessionaire until the final stance of the European Central Bank and the European Commission on the ability of Slovakia to fulfill the Maastricht criteria for euro adoption has been released.
The Transport Minister still perceives PPP projects as the most suitable model for the planned construction of a large-scale highway network. He believes that Slovakia needs to construct 151 kilometers of select highway stretches of the D1 highway and R1 dual-carriageway.
In its analysis, the Finance Ministry recommends that the government reduce the extent of the public-private partnership (PPP) projects and drop the third package concerning those stretches around Zilina that are very complicated from a technical viewpoint. However, the Transport Ministry keeps insisting on implementation of its original draft, which was approved by the Cabinet on September 5. "I find this model economically effective. I realize that it will have a certain impact on the state budget, but if we compare the model of financing highway construction from public resources with the model of PPP projects, the latter is more advantageous," Mr. Vazny defended his own proposal.
As he continued, the installment of the state against concessionaire would be fixed, while the gross domestic product (GDP) grows. For a conservative estimate of GDP growth at 5 percent, the construction of highways according to the model presented by the minister would be advantageous for Slovakia. While the installment is 0.7 percent of construction costs in 2011, it will be only 0.01 percent of construction costs in a 30 year's time. Preliminary construction costs for implementation of the minister's plan represent SKK 105.7 billion.
He stated that the government's intention to complete the highway between Bratislava and Kosice by 2010 is not at all related to the next parliamentary elections. This was in reaction to the Finance Ministry's assertion that the implementation of PPP highway projects projected for 2010 will be more expensive than if the projects were implemented several years later.
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