At a recent general meeting of Ellaktor’s shareholder, Dimitris Koutras, head of the group, said that the Greek government scored an own goal, referring to the suspension of major road construction projects.
This statement was probably not too exaggerated, given that Greece’s Gross Domestic Product shrank by half a point and more people lost their jobs due to the temporary suspension of construction sites in Elefsina-Corinth-Patra-Tsakona, Ionian Road, E65 and Malliakos-Klidi. The Corinth-Tripoli-Kalamata road is the only exception, as the construction continues almost smoothly.
Lack of funds
An amount of €5.5b is needed for the completion of the new national roads. So far, approximately €3b was spent, while the total funding of around €8.5b was ensured through concession agreements. They provided the funding through bank loans, public grants and toll revenue, along with self-financing.
However, a year ago, Greek banks discontinued cash flow, based on violation of state’s contractual obligation, while the amount of €5.5 could not be raised through the frontloading of EU funds in Greece.
Negotiations
The Infrastructure Ministry began negotiations with the concessionaires and banks to solve the problems of the major projects.
The negotiations have come little to fruition: the context of understanding signed by companies and the Greek state means that the two parties have a common understanding of the situation in the major projects. However, there is no agreement with the banks.
The problem is that banks now borrow at high interest rates, and they should lend at low rates based on concessions, head of infrastructure of main opposition party Stavros Kalogiannis told Capital.gr. The agreement signed by the ministry and the companies set a deadline in November, which is rather ambitious, he commented. However, a final agreement should be achieved immediately, he added.
Toll prices reduction
It is common knowledge that the reduction of toll prices on motorways is rather highly unlikely.
It would be difficult to compound the reduction of tolls with the fall of traffic volume on motorways to the banks’ projects, said a market source.
Moreover, Infrastructure Minister Yannis Ragkousis said that the debate should restart from zero point and a cross party committee was established to undertake negotiations with the consortiums and banks.
As a result, the issue of toll prices is now considered of minor importance, as the minister set the sustainability of the projects as a top priority.
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