Simeon Peshov, President of Glavbolgarstroy: The State needs strong legal teams for the major projects

Monika Stoyanova

Mr. Peshov, the construction sector was seriously affected by the economic crisis. However, NSI (National Statistical Institute) reported that the first signs of emergence from the recession could now be observed. What is your opinion and what do you expect?
 - I shared my opinion on this issue at a large meeting with Deputy PM and Minister of Finance Simeon Djankov. Then, I forecast that in the period September-November this year the construction industry would register a slight upward trend. I also explained that in the summer some large tenders for infrastructure projects would be held, while in the autumn the sector would begin to revive slowly.
These were my predictions. I think the sector is really on the upswing now. However, I believe that the launching of tenders for the major road projects was a bit delayed. The important thing is that contracts for the three lots of Trakia highway have been signed and work has already begun. A very substantial financial resource of around €250 mln was allocated for the highway's construction. 
More than a year ago, I told Mr. Carsten Rasmussen, Deputy Head of the Unit responsible for Bulgaria at DG Regional Policy of the EC, that the inspections at the National Road Infrastructure Agency (NRIA) had to be ceased because there was no longer corruption. At that time, I predicted that the construction sector would start to collapse, if tenders for EU funded roads were not opened. My forecast came true again. EU financing is very important at this particular moment. In fact, now there are no problems that could make the EU structures uncomfortable about the absorption of these funds. For example, the tender contests for the construction of Trakia highway were successful and everything is running as it should be.

What, in particular, are the effects of the inspections made in Bulgaria by the European Commission?
  - I will give the construction of Lyulin highway as an example of the positive effects of the inspections. After they were carried out, the contractor of the facility, the Turkish consortium Mapa Cengiz, was the first to improve the quality of its work and increase its operational pace. Actually, all this resulted from the joint actions of our Government and the experts from the European Commission, as well as from the pressure of both sides for high-quality implementation of the project and effective utilisation of the funds. I hope that by the end of the year part of Lyulin highway will be completed and put into operation as promised. In this way, the major part of the EU funding intended for the highway will be absorbed and the state budget will not be further encumbered.
Under no circumstances should we make the mistake taxpayers to be robbed and burdened because of tenders won with dumping prices.

Then what should be done to prevent winning of tenders with dumping prices?
   - A company that won a contest with very low offer prices and that does not execute the signed contract should be immediately excluded from the given project. Furthermore, this company should be deprived of the guarantees it presented. If the contract of such a company is terminated, the bidders should not be allowed to offer the same or lower price at the following tenders. These are the effective measures against dumping prices. Someone who lies, makes low financial bids. Afterwards, he/she strives to make the impossible to increase the price of the project to its real values because the contract allows him/her to do so.
 Incidentally, the contracts, signed for the construction of Trakia highway, are extremely stringent. I am confident that the State will not recede from the set terms and conditions. And so it must be hereafter. If a company fails to meet the scheduled deadlines, it should carry out the project implementation at its own expense or the State should terminate its contract.

Do you think that a company could really be eliminated from a project implementation if it does not respect the contract terms?
 - I believe in the Bulgarian companies that won the tenders for Lot 2 and Lot 4 - the Bulgarian Unification Highway Trace and Consortium Trakia IV with a leading partner Holding Roads PLC. However, I have doubts about the Greek company Aktor S.A. that will implement the construction of Lot 3 from the towns of Nova Zagora to Yambol. First of all, their price is unrealistic. Foreign companies, carrying out similar large projects in Bulgaria, have serious legal departments that explore the opportunities for benefit from certain contract terms in order to acquire more funds. Therefore, the lawyers employed in NRIA should be very well-paid. The employees in the legal departments of foreign companies enumerate some 10 people receiving around €5,000 salary each, while there are only two Bulgarian lawyers with BGN 1,200 remuneration each. The legal teams of both sides should be equally motivated and should work in the same manner, since we are talking about millions of euros.