national motorway construction program (nmcp) in slovenia (realisation, financing, impact on...
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NATIONAL MOTORWAY CONSTRUCTION NATIONAL MOTORWAY CONSTRUCTION
PROGRAM (NMCP) IN SLOVENIAPROGRAM (NMCP) IN SLOVENIA(realisation, financing, impact on national economy)(realisation, financing, impact on national economy)
France KrizanicFrance Krizanic, Ph.D., director, Ph.D., director
Economic institute of the Law School, Ljubljana, SloveniaEconomic institute of the Law School, Ljubljana, Slovenia
Zan OplotnikZan Oplotnik, Ph.D, researcher, Ph.D, researcher
Faculty of Economics and Business, University of MariborFaculty of Economics and Business, University of Maribor
Economic institute of the Law School, Ljubljana, SloveniaEconomic institute of the Law School, Ljubljana, Slovenia
November 2004
SloveniaSlovenia as a crossing point for V. and X. Pan-European corridors as a crossing point for V. and X. Pan-European corridors
ROAD INFRASTRUCTUREROAD INFRASTRUCTURE
ROAD INFRASTRUCTURE IN SLOVENIAROAD INFRASTRUCTURE IN SLOVENIA
•AROUND 20.000 KM OF PUBLIC ROADS•31% - state owned (6349 km)•69% - owned by municipalities
Competent authority for state roads:
•DRSC – directorate of Republic Slovenia for Roads
•DARS – Company for Motorways (100% state owned)(from 2003: construction agent
and concessionaire for managing and maintenenceof existing motorway network)
MOTORWAYS IN SLOVENIAMOTORWAYS IN SLOVENIA
• build since 1972build since 1972
• ‘ ‘big bang’ in construction – after 1994big bang’ in construction – after 1994
• in 1994 enacted first NMCP (amendments in 1998)in 1994 enacted first NMCP (amendments in 1998)
(National motorway construction program)(National motorway construction program)
• goal – complete ‘Slovenian Motorway Cross’goal – complete ‘Slovenian Motorway Cross’
• in 2004, new NMCP enacted for period 2004-2013in 2004, new NMCP enacted for period 2004-2013
MOTORWAYS IN SLOVENIAMOTORWAYS IN SLOVENIA
kmkm 1972-19941972-1994 1994-20031994-2003(First (First
NMCP)NMCP)
2004-20132004-2013(New (New
NMCP)NMCP)
TotalTotal(1994-2013)(1994-2013)
MotorwaysMotorways 182182 230230 311311 541541
ExpresswaysExpressways 1616 2929 2323 5252
In total:In total: 198198 259259 334334 600600
New NMCP – enacted 2004New NMCP – enacted 2004((Motorways constructed Motorways constructed and anticipated till 201and anticipated till 20133))
FINANCIAL ASPECTS OF NMCPFINANCIAL ASPECTS OF NMCP
• in 1994, NMCP was set at €2,2 bill for 440 kmin 1994, NMCP was set at €2,2 bill for 440 km
• till 2002 around €2,3 bill spent for 230 km due totill 2002 around €2,3 bill spent for 230 km due to
some cost underestimationsome cost underestimation
• financial resources for construction (1994-2002)financial resources for construction (1994-2002)
budget funds –gasoline Tolar(56%)budget funds –gasoline Tolar(56%)
Tolls (7%)Tolls (7%)
Commercial financial credits (22%)Commercial financial credits (22%)
EIB, EBRD, etc loans (15%)EIB, EBRD, etc loans (15%)
Sources of finances for NMCP from 1994 and 2002Sources of finances for NMCP from 1994 and 2002
Petrol Tolar (budged funds)
56%
Other foreign loans7%
Domestic loans15%
International loans (EBRD, EIB)
15%
Toll envisaged for motorway
construction7%
FINANCING new NMCP (2004-2013)FINANCING new NMCP (2004-2013)
• € €3,5 bill still needed for new NMCP completion3,5 bill still needed for new NMCP completion
• new NMCP is set at around €320-420 mill per yearnew NMCP is set at around €320-420 mill per year
• sources of financing:sources of financing:
budget funds fixed at €160-200 mill p.y.budget funds fixed at €160-200 mill p.y.
Tolls – completly spend for maintenanceTolls – completly spend for maintenance
??????????
POSSIBILITY OF CONCESSIONARY CONSTRUCTION?POSSIBILITY OF CONCESSIONARY CONSTRUCTION?
• concessions were often mentioned in the pastconcessions were often mentioned in the past
• feasibility of implementation failed due to:feasibility of implementation failed due to:
low daily traffic volume (10-15.000)low daily traffic volume (10-15.000)
high frequent sections already constructed high frequent sections already constructed
long lasting and costly procedurelong lasting and costly procedure
……..
• concession YES, but for managing and maintenance concession YES, but for managing and maintenance ofof
existing motorway network existing motorway network (DARS from 2003)(DARS from 2003)
FINANCING new NMCP (2004-2013)FINANCING new NMCP (2004-2013)
• instead of concessions and loans from 2004:instead of concessions and loans from 2004:
LONG-TERM INFRASTRUCTURE BONDSLONG-TERM INFRASTRUCTURE BONDS
• Why?Why?
benevolent influence on domestic capital marketbenevolent influence on domestic capital market
domestic private capital includeddomestic private capital included
liquidity for investors through secondary marketliquidity for investors through secondary market
disburden state budgetdisburden state budget
FINANCING NEW NMCP (2004-2013) in mill €FINANCING NEW NMCP (2004-2013) in mill €
Anticipated:Anticipated:
InvestmentInvestment
Sources of financingSources of financing
In NMCPIn NMCP BondsBonds BudgetBudget DebtDebt OtherOther Total:Total:
20032003 388,9388,9 2727 151,4151,4 207,9207,9 2,62,6 388,9388,9
20042004 424,4424,4 7070 158,2158,2 206,9206,9 2,42,4 437,5437,5
20052005 421,9421,9 255255 163,1163,1 44,144,1 4,24,2 466,4466,4
20062006 405405 285285 168,1168,1 21,621,6 3,73,7 478,4478,4
20072007 403403 300300 173,4173,4 13,813,8 4,24,2 491,4491,4
20082008 366,7366,7 310310 178,3178,3 00 6,76,7 495495
20092009 354,7354,7 310310 184,3184,3 00 4,94,9 499,2499,2
20102010 320,6320,6 280280 190190 00 4,34,3 474,3474,3
20112011 200,6200,6 150150 194,9194,9 00 00 344,9344,9
20122012 198198 125125 202,5202,5 00 00 327,5327,5
20132013 69,969,9 00 195,4195,4 00 00 195,4195,4
Total:Total: 3.553,73.553,7 2.112,02.112,0 1.959,61.959,6 494,3494,3 33,033,0 4.598,94.598,9
MACROECONOMIC ASPECTS OF NMCPMACROECONOMIC ASPECTS OF NMCP
• significant part of all construction works (25%) significant part of all construction works (25%)
•Analyses exhibit strong positive influence on:Analyses exhibit strong positive influence on:
total investment activity in Slovenia (+7% p.y.)total investment activity in Slovenia (+7% p.y.)
Slovenian economic growth (+0,9% p.y.)Slovenian economic growth (+0,9% p.y.)
Employment (+0,7% p.y.)Employment (+0,7% p.y.)
Influence on inflation insignificantInfluence on inflation insignificant
• set-back in construction in 2001 (around –30%),set-back in construction in 2001 (around –30%),
proved to be in correlation with overall economicproved to be in correlation with overall economic
stagnation that yearstagnation that year
MACROECONOMIC ASPECTS OF NMCPMACROECONOMIC ASPECTS OF NMCP
2.5
3.0
3.5
4.0
4.5
5.0
5.5
-5
0
5
10
15
20
25
94 95 96 97 98 99 00 01 02
GDP growth INVESTMENT growth
change in %
change in %
MACROECONOMIC ASPECTS OF NMCPMACROECONOMIC ASPECTS OF NMCP
• due to previous experiences and positive due to previous experiences and positive expectations,expectations,
new NMCP is set in accordance with following:new NMCP is set in accordance with following:
dynamic and structure of financing adapted to dynamic and structure of financing adapted to economic conditions (app. 1,6% GDP p.y.)economic conditions (app. 1,6% GDP p.y.)
Avoiding excessive annual oscillationsAvoiding excessive annual oscillations
‘‘soft-landing’ in last years of NMCPsoft-landing’ in last years of NMCP
Use of long-term and stable, noniflationary, private Use of long-term and stable, noniflationary, private source of financing (infrastructure bonds)source of financing (infrastructure bonds)
Disburden state budgetDisburden state budget