State shoulders Bechtel's highway

The $2.5bn contract signed with the US company Bechtel to design, build and finance the Brasov – Targu Mures – Cluj – Oradea – Bors highway is not a public-private partnership, market sources close to the project say.

Hailed as the largest investment in Romania’s history, the contract was presented as a public-private partnership, which would exempt the State from paying part of the financing.

In the case of such major investments in infrastructure, the purpose is to get the private company involved so the State should not bear the huge costs alone. The BOT (build-operate-transfer) contract ranks among the public-private partnership types. The constructor, in this case Bechtel, builds the objective (the State may be involved, as well) and operates it for a period of time (10-20 years) in order to recover the expenses, but afterwards the company transfers it back to the State.

Consequently, the financing burden is not entirely shouldered by the State, whereas the constructor is interested in doing quality work. In the absence of such an involvement, the entrepreneur builds it chiefly for the money, just like in any other contract, but for a much greater amount of money than usual.

The Transport, Construction and Tourism Ministry officials had not offered any explanations concerning the Bechtel contract by press time.

Transport minister Miron Mitrea claimed last year that the US group had allotted $800 million to finance the project for the speedway, which will connect Romania to the West by 2012.

The tender for financing part of the project was launched several days after signing the contract with Bechtel, with 461 million euros at stake for the time being.