Cost of Kičevo-Ohrid Motorway Nears €800 Million

The government is securing loans from other state-owned enterprises to financially assist the Public Enterprise for State Roads in repaying part of a loan installment to the Chinese creditor. Until the budget is revised, the executive is using borrowed funds to cover its obligations. Two weeks ago, at a government session, it was decided to take out an interest-free loan of €7 million from M-NAV.

At its session held on July 14, the government approved the borrowing of funds by State Roads from Macedonian Navigation, the State Lottery and electricity transmission system operator MEPSO to finance the Kičevo-Ohrid motorway. Prime Minister Hristijan Mickoski said the money would be used to settle overdue bank loan obligations.

“The funds will be used to repay a loan to the Chinese bank for the motorways, and the same funds will be returned to the companies in August. So, it is simply a routine procedure that has been carried out many times in the past, with the funds to be returned to M-NAV, the Macedonian Lottery and MEPSO in August,” Prime Minister Hristijan Mickoski said.

In early April, it was announced that the €175 million needed to continue financing the Kičevo-Ohrid motorway had been secured from Komercijalna Banka, Stopanska Banka-Skopje, NLB Banka, Sparkasse Banka and Halk Banka. This development came after China’s Exim Bank halted financing for the project.

China’s Exim Bank had previously refused to approve an additional €175 million because assurances had earlier been given that no new funds would be requested. For this reason, financing is now being secured by the Public Enterprise for State Roads.

In the spring, as part of efforts to accelerate the project’s implementation, the eighth annex to the agreement with Sinohydro, worth €186 million, was signed. This annex has further increased the motorway’s overall financial cost.

The new annex to the agreement on the construction of the Kičevo-Ohrid motorway is intended to create the conditions needed to complete work on the section that remains under construction. Under the revised deadline, work must be completed by May 31, 2027, with an additional 151 days allocated to securing the motorway’s operating permit.

The additional funds will be used for the announced measures to stabilize landslides. The work includes the construction of 14 galleries, the installation of elastic buffers, the construction of parallel access roads that were not originally planned to connect populated areas, and the establishment of a tunnel control center.

The project was initially estimated at €374 million, but annexes added over the years have significantly increased the motorway’s cost. Nearly €560 million has been spent to date, accounting for more than 93 percent of the amount planned for the construction of the Kičevo-Ohrid route.

If payments made so far exceed 93 percent of the projected value, then the final cost, based on previous calculations, should have reached approximately €600 million. With the addition of the €186 million from the eighth annex, the construction cost is nearing the €800 million mark.

Meanwhile, the State Audit Office has found that a systematic and analytical approach was lacking in the planning, design, construction and reconstruction of road sections across the country, while preparations were insufficient. According to the institution, these weaknesses contributed to increases in contract values and delays in deadlines for the construction or reconstruction of the sections.

The relevant reports list several factors that slowed construction of the section, in addition to shortcomings in the project. These include delays in expropriation due to unresolved property-related legal issues, as well as the need for additional land expropriation to reduce the steepness of slope cuttings.

Other obstacles cited include the relocation of above-ground and underground infrastructure, including electricity lines, energy transmission and communication lines, water supply and sewerage installations, as well as individual residential and commercial buildings located along the section’s route.

The slowdown is also linked to the on-site approval of new landfills needed because of the increased excavation planned as part of work to reduce unstable slopes. The report also highlights the insufficient number of technical personnel, machinery and equipment provided by the contractor. (koha.mk)