[PR] “Fast” and “cheap” loans for the implementation of expensive and complicated investment projects

Making direct deals on infrastructure projects without public bidding increases the risk of corruption. This could be observed in the agreement concluded by the Macedonian government at the time with the Chinese company “Sinohydro” on the construction of the Miladinovci-Shtip and Kichevo-Ohrid highways, analyzes the Institute for Democracy in the research document “Hostled into an impasse: the delusional belief in corrosive Chinese capital for the construction of North Macedonia’s highways”. Nevertheless, despite this risk, these seemingly cheap and quick loans are attractive to Western Balkan politicians.

Today, the cost amounts to more than 10 million euros per kilometer of motorway, according to existing projections; an amount that could still increase. This is how much the Kichevo-Ohrid highway will cost citizens; a project that, in addition to 3 years of delay, cost almost double the initial projection, while the legal proceedings launched for abuse of power and corruption clouded it.

The tapped conversations published in 2015 by the then opposition revealed the existence of suspicions of corruption and abuse of power, following which an indictment was drawn up. The Special Prosecutor’s Office opened a case called “Trajectory” against four official persons, senior officials and reported that there were grounds to suspect that the damage to the budget amounted to EUR 155,117,172.00. There is still no court ruling in the court case.

Construction of the expressway started on February 22, 2014. For the purpose of this capital investment, a loan was raised from the Exim Bank of China and the country is expected to repay it within 20 years. In October 2013, Parliament approved the loan, and in November of the same year, the agreement was signed between the government of the Republic of North Macedonia and the Chinese company.

The then government promised that the new highway would be operational in 4 years, in 2018, but in 2020, the highway is barely half finished. The Chinese contractor “Sinohydro” now has a new deadline until June 30, 2021 to complete the construction of the highway. The first few kilometers of highway between Vrbjani and Ohrid were announced to be open to traffic this year.

The initial project underwent a modification following alignment errors of the planned and built platform. Construction activities have been stopped, and the price is being paid by the citizens. The authorities indicate that the total project execution rate is now slightly above 50%.

Initially, it was announced that the 57 km long highway would cost 374 million euros. Today, the price with the additional amendments to the initial agreement has already reached almost 600 million euros.

You can read the analysis “Hustled Into a Dead End: The Delusional Belief In Chinese Corrosive Capital for the Construction of North Macedonia’s Highways” here.

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