End of the story for a D3 highway PPP in the Czech Republic
Article written by Adam Zdeněk, PPP and Economic advisor, Prague, Czech Republic
The fascinating story of D3 highway project is probably coming to its end. Although the project's marketing conference at Czech Ministry of transport left it attendants with optimism, the reality is unfortunately a bit different.
D3 highway project was one of the pilot PPP projects, which were started by the socialist government in 2005. There was a lot of money spent on feasibility studies, risk analysis, concession agreement, other feasibility studies and financial models. Main issues were connected with permits and land acquisition, e.g., whether the land acquisition risk should be left with concessionaire or with public sector. These are generally the main problems with Czech transport projects and it results in an extreme length of project preparation which takes approximately 10 years from political decision until the tender starts. Unfortunately 10 years are at least two political cycles.
D3 project was put on hold by the conservative government, because until 2009 there was plenty of public money and good availability of Structural funds financing. The politicians off dusted the project in 2012 and appointed PwC as its financial advisor with the task of resetting the project structure to fit the recent economic climate. They started the work but the state fund of transport infrastructure (public sector body which finances transport projects) went for Plan B too. And based on information from SFTI, the D3 project is in the pipeline for Structural fund's financing.
We have a say in Czech - never say never, but it is not going to change. Let's hope that the PPP concept of procurement for transport infrastructure, which works in many countries, will be once successfully implemented in CZ too. The main competitor for PPPs in Czech republic are "free" Structural funds.
Read more about the Czech Republic PPP market.
About the author
Adam ZdeněkPPP and economic advisorgsm: +420 739 062 703; email: adam.zdenek.ep@gmail.comPraha / Prague, Czech Republic
