From thick Transylvanian forests dotted with medieval villages and castles that inspired Bram Stoker's Dracula to memorable wine-tasting experiences in local vineyards, Romania is a land of a thousand adventures. But getting from one place to another is a different sort of adventure. The current state of Romania's transport infrastructure needs investment and modernisation.
Under the Project Advisory Support Service Agreement (PASSA) initiative, the EIB helps Romania to save money and unblock essential transport projects so that implementing new public infrastructure projects does not feel like a roller coaster ride.
Romania’s transport infrastructure ranks among the least developed in the European Union
A 2018 survey carried out in Romania showed that 93% of respondents were unhappy with the country’s road infrastructure and 85% with the rail network. They have good reasons to be dissatisfied.
In the first six months of 2019, the cumulated delays of all the trains operated amounted to more than three years. The average speed of a freight train is currently 15 km per hour, while the average speed of passenger rail is little more than 40 km per hour. The main reason is the poor condition of the railway network, which over the years has suffered from significant underinvestment in maintenance. This has led to speed restrictions on certain sections and trains running at speeds lower than those registered almost 100 years ago.
Romania has one of the shortest motorway networks in the European Union. The network is little more than 900km long and resembles a puzzle with many missing pieces. Motorways and national roads account for just over 20% of the road network. This causes frequent traffic jams and bottlenecks on the busiest sections and speeds as low as 10-20 km/h.
Loops, twists and further rounds
Despite having access to EU cohesion funds, Romania builds only 45 kilometres of highway per year, on average. In recent years, the Romanian authorities have addressed this situation by preparing major construction and rehabilitation projects. Although some progress has been made, this has yet to be felt in terms of new motorways opened to traffic or upgraded railway lines.
Part of the difficulty lies in the fact that Romanian authorities are short of professionals skilled in project management due to the relatively unattractive salaries offered by public institutions. This triggers a lack of accountability and a complex decision-making process, generating further delays. Many road and railway projects, for example, encounter delays because procedural steps such as construction permits, land expropriations, geographical studies, archaeological investigations or environmental impact assessments, are not properly followed. In other words, the need to use EU funding within clearly defined deadlines has generated a situation in which projects are tendered and contracted even though they do not meet the minimum requirements for timely implementation.
As a result, Romania’s public authorities have had to deal with a rising number of contractual disputes or claims in which contractors are requesting financial compensation for years of delays. For instance, between 2007 and 2019, the Road, Railway, and Metro Companies received claims from contractors amounting to €2.2 billion. Some contractors have taken advantage of this situation and even succeeded in obtaining financial compensations exceeding their effective financial losses.
A smoother ride ahead
The Romanian government reached out to the EIB who, under the PASSA agreement, provide professional advice in contract and claims management.
The EIB’s experts and consultants analysed claims covering years of project implementation and piles of supporting documentation including project histories, contractual correspondence, technical and financial reports, detailed time programs, construction logs, and thousands of invoices. The experts found out that although the claims for prolongation were generally well-founded, this was not the case for the financial claims, which in many cases were substantially higher than the costs incurred by the contractors.
Thanks to the PASSA team, the authorities were able to lower the contractors' financial claims by 39%, on average. Over the course of a year, only €50 million out of the €85 million claimed by contractors for railway and metro disputes, were granted.
While providing hands-on support in dealing with claims, the EIB experts and consultants also advise the Romanian authorities on how to prevent additional costs, thereby saving money which can then be used to finance other critical projects.
Romania is planning a massive programme of transport infrastructure improvements, including the construction of 1700 km of motorway. A budget of €17 billion has been set for 2021-2027, including billions from the European Union. €118 million was recently approved under the Connecting Europe Facility, EU's grant scheme for transport infrastructure.
"Developing transport infrastructure is the basis for Romania's economic rebound," said President Klaus Iohannis. "We have a huge chance in the coming years to develop this infrastructure by using the EU funds at our disposal."