Infrastructure: EU funding pushes expansion of road, rail and port upgrades

Bulgaria struggled after joining the EU to win funding to upgrade poorly maintained highways and a crumbling rail network, even though it stood to receive some €2bn of aid for infrastructure projects in 2007-13 as the union’s poorest member-state.

Its ambition of becoming a transit hub, with international truck traffic moving smoothly between central Europe and the Middle East, a high-speed rail link with Turkey and cargoes returning to refurbished Danube river ports, seemed a distant dream.

EU cash is now flowing in, with 90 per cent of contracts signed and 30 per cent of infrastructure aid disbursed, according to Lilyana Pavlova, minister of regional development and public works.

“We’re doing quite well …We worked hard to prove we had transparent public procurement procedures – none of our projects has been suspended [by the European Commission],” says Ms Pavlova, a 34-year-old technocrat who started managing EU aid projects while taking a degree in public administration at Varna Free University.

Bulgaria’s new efficient image contrasts sharply with past practice. The country faced censure by the commission over corruption and mismanagement of pre-accession EU programmes, with one €7.5m fraud case still unresolved after the Sofia appeal court last month overturned the convictions of seven defendants.

Lazar Lazarov, chairman of the road infrastructure agency, which manages €1bn of EU funds, says tighter control of tender procedures, close supervision of construction work and withholding of payment to contractors until defects are corrected, has brought results.

“Our inspectors take a keen interest in the thickness of tarmac being laid,” says Mr Lazarov.

The 380km Trakia motorway linking Sofia, the capital, with the Turkish border, which serves 6,000 trucks daily, will be the first upgrade to be completed. The final 50km section is due to be completed late next year.

Bulgaria is seeking €1.6bn from the 2014-20 cohesion programme to advance three more motorway projects, though it may have to settle for around €1bn-1.2bn because of UK and other northern member states’ objections to increasing the EU budget.

That would fall well short of the €4.2bn needed to complete the motorway network, “but we have to be realistic,” says Ms Pavlova.

Bulgaria’s motorways will remain a patchwork until ring roads, tunnels and viaducts are completed. It would cost almost €1bn at current prices to build a 13km tunnel on the Struma motorway linking Sofia with the Greek border and the port of Thessaloniki, required under EU environmental rules to protect wildlife in the spectacular Kresna gorge.

North-south truck traffic is projected to increase with the opening in 2013 of the second Danube bridge linking Vidin in Bulgaria with Calafat in Romania. The 200km road link with Sofia is being upgraded to a four-lane highway with bypasses around the cities of Montana and Vratsa. ”Northwest Bulgaria is Europe’s poorest region at present but we believe Vidin can become a cross-border logistics hub,” says Richard Roe, a UK investor managing two land banks with 2.5m square metres of property around Vidin.

Dimitar Savov, head of policy at the transport ministry, says there are no plans to accelerate motorway construction through public private partnerships: “It’s more cost-effective to use EU grants and European Investment Bank loans for roads and railways, and sell operating concessions for existing airports and ports.”

Bids will be invited next year for a concession to operate Sofia airport, used by 3m passengers annually. The Black Sea ports of Varna and Burgas, would follow, together with half a dozen ports along the Danube, Mr Savov says.

Some €640m of EU aid is being used to upgrade the rail network to carry trains at speeds of 100-120km per hour on lines to Greece and Turkey, though it will be almost two decades before the system can match western European counterparts.

Metropolitan, a Sofia municipality company building a €650m extension of the capital’s subway system, has proved the fastest Bulgarian provider of infrastructure. With 61km of subway completed or under construction, “Sofia is rapidly catching up with the European city average,” says Stoyan Bratoev, Metropolitan’s executive director.

EU funding covers 55 per cent of the subway expansion compared with 80 per cent for rail and road projects. The EIB is providing a €105m loan, with the rest coming from the state and municipal budgets.

Subway excavation work in the city centre has exposed sections of ancient Serdica, a wealthy Roman trading city, with mosaics, an early church and fortification walls all on view after a redesign of the central station. Construction costs at about €38m a kilometre are the lowest in Europe except for Spain, Mr Bratoev says: “The faster you build a metro, the more you can hold down costs.”

The second subway line, opened three years ago, is being extended 5km to Sofia airport. A third line is planned to serve new business and residential districts south of the capital.