Foreigners to build highways?

26th February 2010

© Acubens, www.wikipedia.pl Poland faces competition from foreign investors Share:

Companies from around the world are eager to build Poland's highways. But Polish firms complain they will go broke if competitors from outside the EU are allowed to make artificially lows bids based on unfair employment practices.

To date the only non-European company to win a road-building contract has been the China Overseas Engineering Group, which is part of the consortium building a 50 km segment of the A-2 highway. The job was initially estimated to cost PLN 2.9 bln, but the winning bid was less than half of that – PLN 1.3 bln. 

This year, nine firms from outside the EU have applied to submit bids for contracts to build roads in Poland. In additions to the Chinese, companies from Belarus, Croatia, Macedonia, India, and Turkey are among those bidding on contracts to be signed in 2010.  

Up for grabs are tender offers for 300 km of express roads, 200 km of the A-1 highway and 16 contracts for work on other major roads. So far this year, the Indian company Punja Lloyd has submitted the low bid for construction of the Rzeszow ring road, with an offer of PLN 411 mln.   

Government officials expressed their satisfaction at the prospect of getting more kilometres built with the PLN 7 bln budgeted for road construction. The lower prices being offered by the foreign firms – their bids are often 40-50 percent lower than those of Polish companies – will allow more roads to be built.  

"I won't hide the fact that we are pleased by their interest in our tenders. We are spending taxpayer money. If the offers are low, we save money that can be spent on other investments," Marcin Hadaj of the General Road and Highway Directorate told Rzeczpospolita. 

The Polish companies competing for these contracts are not happy about these new players entering the market. They complain that firms from outside the EU do not have to comply with regulations on minimum wages and other issues that bind domestic businesses. 

"We aren't afraid to compete with them, but we want the rivalry to be on a fair basis. It's well known that Chinese companies are subsidised and can therefore offer prices at below cost," explained Janusz Zaleski, Vice-president of the Polish Union of Construction Employers. 

Industry representatives say they plan to submit a proposal to the Sejm aimed at limiting the access of Chinese companies to government tenders. In December, they appealed to Brussels for protection from non-EU companies, but have not yet received a reply.  

They argue that the stakes are high. Some 100 jobs are created for every kilometre of road construction. In order to avoid being put out of business, many Polish companies, especially smaller ones, will be forced to shift their focus towards road maintenance work or shut their doors.