1550 Construction Companies to Disappear from the Market

1,550 construction companies would probably be removed from the constructors’ register by the end of the year, Minister of Regional Development and Public Works Rossen Plevneliev told a news conference. Currently 5,860 companies were listed in the public registry of the Bulgarian Construction Chamber. The purpose of the register is to be clear which companies are entitled to operate on the market and for what projects each company has resources. But due to the crisis and the market satiation the number of construction permits falls by 32% since start-year, and companies’ revenues are down by 15.3%, the minister pointed out. This is not only owing to reduced consumer construction, but also to delays of many infrastructure projects financed with EU funds, on which companies relied to survive.

The number of employed in the construction industry is expected to fall by some 25,800 persons

from 231,000 working in the sector in 2008. According to data of the MRDPW employment in construction companies has declined by 6.4% as of start-year.

Yet by the year-end between 35 and 38 of the 41 suspended municipal projects will get completed. Those have been started with state money by the previous management of the regional development ministry and are mostly water supply and public works activities. The projects were for the total value of BGN 132.5 million, but after having municipalities re-evaluate them MRDPW managed saving some BGN 16.5 million from construction works costs. For the constructions impossible to freeze extra BGN 27 million will be demanded from the Ministry of Finance, Minister Rossen Plevneliev said.

On another 19 contracts concluded under the Regional Development Operational Program prices are reduced so, that additional BGN 32 million is saved.

For the two months of its work the new team of MRDPW has managed to save BGN 65 million.

Yesterday Rossen Plevneliev told the Parliamentary Committee on Local Self-government and Public Works that after the change of the management of the Road Infrastructure Agency its budget deficit as of August 1 amounts to BGN 167 million. Of this sum BGN 132 million are for assigned but still unpaid for construction works, and the rest – for roads maintenance. All tender procedures for winter cleaning and roads maintenance are announced, but so far the Agency has not yet received the BGN 25 million demanded from the finance ministry for covering the expenses on it. In order of avoiding crisis orders in the last minute, from the next year on 4- or 5-year contracts will be concluded with the selected companies, head of the Bulgarian National Chamber Roads Roumen Yovchev told Bulgaria News recently.

In this regard Minister Plevneliev commented that

 the Roads Agency has started negotiations for using Finland’s experience for winter cleaning

and stated an opinion that Finland was the most unsuitable example Bulgaria could take. A pilot project funded by the World Bank envisages from the next year in three regions – Sofia, Pazardzhik, and Haskovo, new agreements for roads maintenance to be concluded as well. They would only feature a total sum, which the company wining the respective tender would receive. For this money it would have to complete activities it is own discretion but in a manner suitable for reaching the criteria by the Agency set for roads’ quality. Under this system savings of some 10-15% of the roads maintenance money were accounted.

Plevneliev informed also that under the agreement for the Lyulin Highway construction an initial delay of 6 months appeared because expropriation procedures over the track were awaiting a government decision. Regarding the Trakia Highway, which is one of the three promised by the regional development minister, the intention there is by the end of this month the tender procedure to be closed and the contractor to be known in February next year.