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PPP projects in Greece surpass 3 billion euro threshold

Νίκος Καραγιάννης

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The 3bn euro threshold for PPP projects in Greece has now been surpassed. The method of Public-Private Partnership was introduced in the country about 12 years ago and the truth is that the first steps were particularly cautious.

In a country where constructions -until then- were largely implemented as classic public works, with distinct roles between the contracting authorities and contractors, PPPs seemed to be alien.

The Special Secretariat for PPPs was set up under Nikos Mantzoufas and the first project (i.e. 7 fire stations) were contracted bac in 2009.

It took some more years for this method to have the first “followers”, but again with limited popularity. However, what slowly tipped the scale was the results as even though as a method had a limited “charm”, the projects produced stood out in terms of appearance and operation efficiency, compared to another completed public project.

The key project

The 24 schools in Attica were a key project for the PPPs to start expanding in new areas. The result was so impressive that this method could promise a different, more sustainable way of implementing projects.

Since then, they have successfully entered into urban transport, waste management units, motorways, university buildings, dams, street lighting, broadband infrastructure, etc.

Our country has been distinguished for its performance in PPP projects, reaching the third place in the world from the World Bank, as in almost all projects there is strong participation and transparent procedures.

The Greek PPP projects continue to receive significant distinctions in terms of transparency and good practices in tender procedures. One of them, Epirus Waste Management Unit, received was awarded as “the infrastructure project of the year”, at the 3rd Infrastructure-Transport Conference in 2019.

“PPP projects are an ‘islet’ that can, under certain conditions, change broader mindsets and the quality of projects”, a market expert with knowledge on the subject told ypodomes.com.

It is no coincidence that all major companies in the country vote confidently in favor of the PPP projects, citing them in every field of discussion as a way out to the shortage of mature projects but also by participating en masse in the relevant tenders, especially in recent years.

Nikos Mantzoufas, being one of the longest-serving executives in a government position, now in the role of the Secretary General of Strategic Investments and PPPs, receives multiple requests for new projects, creating an important core for entrepreneurship and the constructions sector.

However, PPP projects are also a strategic choice for both the Ministry of Infrastructure and the Ministry of Growth and Investments. Ministers Kostas Karamanlis and Adonis Georgiadis have repeatedly referred to them.

26 projects

In total, we can count 26 PPP projects from 2009 until today. Fourteen of them have been signed and either have been completed or their construction is in progress while another 12 are currently running, i.e. they are still in auction or in a tendering process. Altogether,they have a budget of 3.01bn euros, an extremely large amount if we consider that just 3 years ago there was a moderate acceptance of the method.

Fourteen projects concern the maiden projects for the 7 fire stations and two projects the school units in Attica (10 14), the telematics and the electronic ticketing systems for OASA, three projects for broadband infrastructure in rural areas (LOT 1, LOT 2, LOT 3), digital court records, and waste units in Western Macedonia, Epirus, Serres, Peloponnese and Ilia. These projects have a total budget of 822.2m euros.

Twelve projects, with a wide variety, are in pre-contractual procedures, from the approval of the inter-ministerial committee to the second phase of the tenders and they are equally of great interest. In general, the tenders have many important participations both from Greece and abroad. These 12 projects have a total budget of 2.18bn euros.

The largest project of this group concerns the ultrafast broadband infrastructure with 868m euros, followed by VOAK Motorway section, Hersonissos-Neapoli with 295m euros and Kalamata-Pylos-Methoni with 245.5m euros.

In the list we have three major projects for university institutes across the country: student dormitories in the University of Crete with 206.6m euros, in Democritus University of Thrace, with 105.4m euros and in the University ofThessaly with 91.5m euros. There is also have the IIBEAA (Medical-Biological Foundation of the Academy of Athens) with 58.5m euros.

New entries

In these projects, we have also counted those that have received significant approval from the PPP inter-ministerial committee, because it gives them the necessary acceptance to announce their tenders.

These projects concern the Havria Dam in Halkidiki with 110m euros, the street lighting in the Regions of Central Macedonia (12.4m euros), Epirus (6.6m euros), the waste management units in the western sector of Central Macedonia with 130m euros. and the Innovation Center with 58.5m euros.

However, other projects are waiting to be approved in the “queue” in order to start their implementation and these mainly concern waste management units, school buildings and new project areas that are constantly being added to the long list of Public and Private Partnership projects.

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GRITS: The new electronic tolling system with one transceiver for all motorways

Νίκος Καραγιάννης

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Σταθμός διοδίων

End titles for the tender regarding the installation of satellite tolls were put by the Ministry of Infrastructure and Transport after a decision of the Minister, Mr. Kostas Karamanlis, cancelling the relevant tender.

It was the last act of the case, as essentially the tender was already neutralized by the Council of State, where after an appeal of the participants, serious deficiencies were found.

It is reminded that it was an ambitious plan to install transceivers for the traffic control of all trucks and cameras for passenger vehicles, combined with free flow lanes on the motorways and a proportional charge according to the kilometers travelled.

Market sources describe this plan as maximalistic, as such a wide implementation, as they comment, does not exist in any country of the western world.

“GRITS”: A transceiver for all motorway axes

One cycle is coming to an end, but a new cycle is opening at the same time in the case of the modernization of greek motorways’ tolls. According to information of ypodomes.com, the agreement between the Ministry of Infrastructure and Transport and the concessionaires as well as the state-owned Egnatia Odos, has been secured. This agreement was one of the first goals set by Mr. Kostas Karamanlis, as a Minister.

The new system where all axes will be entering is the so-called “GRITS” (Greek Interoperable Tolling System). Aegean Motorway, Attiki Odos, Olympia Odos, Moreas Motorway and Gefyra SA are already included in the network. As of next October, Egnatia Odos and its vertical axes, Ionia Odos, Nea Odos and Kentriki Odos-E65 will also join.

For the drivers, this means that with one transceiver they will be able to drive on all covered motorways without having to change a device. The charge remains the same (0.06 euros per kilometer) as do the discount packages on each motorway. In short, drivers will charge the transceiver of their choice with money and with it they will be able to pay everywhere across the country.

According to sources close to the subject, the existing motorways are currently upgrading their systems and from June the testing of the systems will start for a period of 3-4 months. GRITS is reportedly scheduled to operate next October, possibly even a little earlier, if trials are completed soon.

For the future, a new tender for electronic tolling system is being explored where interoperability will go to a higher level with the operation of a free-flow system.

Operation of the hybrid tolling system on Olympia Odos on its way

IBI Group’s hybrid tolling system will also be put into operation soon by Olympia Odos. But what is the “hybrid tolling system” that is being implemented? It is basically a fairer charging policy that is addressed exclusively to the owners of o-pass devices (i.e. Olympia Motorway’s electronic transceivers).

Its “smart” operation is extremely simple. O-pass users are charged at the tolls according to the price of each station but upon drivers’ exit at the interchange of their choice, a calculation will be made subtracting the kilometers that haven’t been used till the next toll station. Based on these kilometers, the difference will be deducted from the paid price and the money will be refunded to the drivers’ accounts.

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Attiki Motorway: Procedures for extension projects and new concession period, begin

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Σήραγγες Αττικής Οδού

The process for the new tender regarding the operation of Attiki Motorway begins With the hiring of a technical and financial consultant. The three companies that have been selected by the Ministry of Infrastructure and Transport are: RACE Consulting Engineers LP, LDK Consulting Engineers SA and Hill International.

What is interesting in the decision of the Minister of Infrastructure and Transport, Mr. Kostas Karamanlis, is that it gives the possibility for more than one concession contracts, that is, the exploitation and operation of Attiki Motorway in sections.

As described in the decision: “The Ministry of Infrastructure and Transport intends to auction in the near future one or more concession agreements for the operation and maintenance of Elefsina-Stavrou-A/D Spata and the Western Regional Avenue of Ymittos, in combination with additional construction projects (extensions of Attiki Motorway and/or projects on other roads)”.

This scenario has gone public since last autumn and was even linked to funding VOAK Motorway project in Crete. The previous model received by the Ministry of Infrastructure for VOAK was considered financially unsustainable, however, this is just one among many scenarios for the next day on Attiki Motorway, that are on the table.

The search will be carried out with two elements: one related to the financial aspect as this affects the expiration date of the contract and the second to the parameters related to the provision for obligations such as heavy maintenance, upgrade of the tolling system, etc.

In more detail, the search will include issues related to:

Carrying out technical control of the Concession Agreement during the period of operation and maintenance and specifically for the production of a technical report focusing on the following issues:

A. Identification of time points for heavy maintenance of the project

B. Cost of heavy maintenance

C. Estimation of foreseen costs for the fulfillment of the obligations deriving from the concession agreement

D. Identification of the systems that refer to the regulation/control of the circulation as well as the collection of toll fares

E. Additional or emergency works performed which are not compensated by the State and that have been accounted for and have also been included in the financial model

F. Operating-maintenance costs in addition to the fixed remuneration of the operator and matching with the provisions of the contract between the operator and the concessionaire

Detailed examinations

In addition, issues such as: the validity of the applicable parameters for the correctness of application by the concessionaire, scrutiny on financial statements, extraction of information regarding contractual clauses on tax-free reserve, accumulated losses, etc. as well as the investigation of existing loan obligations, etc.

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The revival and the challenges of Greece’s major infrastructure projects

Νίκος Καραγιάννης

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Σιδηροδρομικός Σταθμός Αιγίου

The country’s major projects are coming back to life after a period of stagnation that brought grumbling and pessimism throughout the construction industry. Yesterday’s visit of the Minister of Infrastructure and Transport, Mr. Kostas Karamanlis to the under-construction Thessaloniki Metro, was a message that the project is on track and is progressing while the commitment for its operation in 2023, was maintained.

Additionally, this message for the projects’ comeback is becoming more and more powerful considering the announcement for the implementation of projects of 13bn euros. A series of projects that are stagnating, either at their tendering or their construction stage, are taking steps forward and this summer it seems that there will be a special interest for the promotion and implementation of major projects.

The big double tender for VOAK Motorway has been unblocked after almost a year and now the environmental study is being prepared. This big step forward “gives wings” to the tendering process that until a few months ago was in doubt. The status is the same in the tender for the procurement of new urban buses. In the previous days, there has been a series of statements from the leadership of the Minitry regarding the launch of the big tender next September. It is reminded that the previous tender has been cancelled after the decision of AEPP.

In terms of projects, the extension of the Tram to Piraeus, the new double-track railway line betweeen Kiatoa and Aegio and the first half of Athens Metro Line 3 section, Aghia Marina-Nikaia- with 3 stations will be all delivered in the summer. The other half of the extension, reaching the “heart” of Piraeus, up to the city’s Municipal Theater, is probably expected in 2022.

At the same time, mobility is observed on Egnatia Motorway. The company, which in recent years has faced questions even for its very existence, in the last 5 months has auctioned a number of major road projects that stimulate the construction market.

More particularly, the connection of Thessaloniki Port (OLTH) to the country’s motorway network, the completion of Thessaloniki-Polygyros and Thessaloniki-Kassandra axes, as well as the two maintenance tenders for the main motorway, proved that the company has a future ahead of it.

EYDAP has also auctioned two large projects in Eastern Attica amounting to 140m euros with the relevant tenders being in progress. ERGOSE also estimates that two tenders concerning electrification projects will proceed in the near future.

At the same time, the Ministry of Infrastructure is preparing two major PPP tenders for the summer. The first is for the Thessaloniki Ring Road and the second for Havria Dam in Halkidiki. The road PPP project Kalamata-Pylos-Methoni in Peloponnese is also proceeding again with all participants while the tender for Salamina subsea road tunnel is progressing as the environmental study is being prepared for submission.

Of course there are plenty other PPP projects; 3 large building projects with a total budget of 450m euros for the Universities of Thrace, Crete, Thessaly, another one by the Academy of Athens, while more projects are about to come in the near future.

As far as major strategic projects by privatized bodies are concerned, the project for the expansion of the cruise pier in the port of Piraeus has started, while in the second phase of its tender is the project for the completion of OLTH’s 6th pier. Finally, Fraport’s large-scale investment in the 14 Regional Airports that are under its management, is also at an advanced stage.

“Thorny” projects

However, there are three major projects in the queue: Patras-Pyrgos Motorway, Athens Metro Line 4 and Aktio-Amvrakia sweep-contract, all of which are on hold for different reasons.

For Patras-Pyrgos Motorway, the contracts have been dissolved and the approval of the Commission is expected in order to “re-attach” the new section to Olympia Motorway.  For Athens Metro Line 4, the appeal of the two final contenders (i.e. AKTOR and AVAX) to the Council of State means a waiting time of about a year.

Regarding, Aktio-Amvrakia Motorway a decision is expected on whether the tender will continue or not (meaning that a new one will follow). Delays are observed in the biginvestments of Athens International Airport due to coronavirus pandemic.

Here, as developments are dynamic, we need to see how much they will positively or negatively affect the implentation of the investments. However, the market also anticipates the huge building project for the casino in Elliniko. Despite repeated rejections, Hard Rock seems to be determined to pursue the project through legal means.

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