Government continues Bechtel highway project

Works for the construction of Brasov-Cluj-Bors highway, also known as the Bechtel highway, will be able to continue, now that the government has decided to contract a foreign loan.

It took the Romanian authorities six months to realise they were unable to change the contract the Nastase-led government had signed with US” Bechtel Corp., though they had threatened as early as the electoral campaign to even cancel the contract. The only practical effect the hostile statements had was to block works for the construction of the highway and to implicitly delay the project, which is now finally resumed.

The money will be secured by the Finance Ministry, which will borrow 100 million euros from Raiffeisen Zentralbank Osterreich and Calyon Corporate and Investment Bank.

The loan matures in 12 years and comes with a four-year grace period. It will be repaid in equal instalments every six months, with the first payment due in four years from the moment the loan agreement comes into effect.

Without providing any details, the government stated that the loan would have a variable interest rate, which affects the transparency of the deal.

The reimbursement of the 100 million-euro foreign loan, as well as the payment of insurance premiums, interests, fees and other related costs will be made from the state budget, through the budget of the Ministry of Transportation, Constructions and Tourism, in line with the sums that are annually approved to this end.

Bechtel representatives expressed delight at the decision the government had made. “The contracting of this loan is good news for us since we are now certain work on Transilvania highway would continue. It will surely take a while before the money reaches us, but the signals are positive,” Bogdan Zgarcitu, a communication manager with the company, told Ziarul Financiar.

Works for Transilvania highway started last year, under a contract worth 2.2 billion euros, but they were slowed down this spring as the Government did not meet its financial obligations to the US company.

Lacking financing, Bechtel representatives had to lay off over 500 Romanian and 160 foreign workers. Moreover, several subcontractors lost contracts worth tens of million euros amid work ceasing.

“We set a budget for this year in sum of about 213 million euros. As we did not get the money from the government, we decided to cease work on the two sections,” Bogdan Zgarcitu added.