Alpine Porr Motorway Concession Deal with Serbia To Collapse Unless Construction Starts by End-2008 - Media

If the concessionaire fails to provide bank guarantees and start work on the Horgos-Pozega motorway by December 31, the concession deal will be cancelled, Politica wrote without quoting sources.

The two sides started negotiations on the cancellation of the deal earlier this year after Serbia had already extended on several occasions the deadline for the bank guarantees and the financial closure of the deal.

The 322-kilometre motorway will connect the southern Serbian town of Pozega with Horgos, on the border with Hungary in the north. It will be part of an EU-defined transport corridor linking landlocked Serbia with the Adriatic port of Bar in neighbouring Montenegro.

Last year, a consortium of Spanish company FCC and Austria's Alpine Mayreder Bau signed a concession deal to build the Horgos-Pozega motorway at an estimated cost of 800 million euro ($1.03 billion). FFC was later that year replaced in the consortium by Austria’s Alpine Porr with Serbia’s approval.

During the negotiations, the Serbian government will not insist that the contract is cancelled before the latest deadline extension expires, Politika said. The government is proposing to the concessionaire to bow out amicably if it is unable to honor the agreed terms and deadlines.

As part of the proposal, Serbia is offering to cover some of the costs the concessionaire incurred from the drafting of the project’s paperwork, Politica added.

In August, Alpine Porr said it would abandon the motorway concession after the Serbian government refused to guarantee the consortium more than 200 million euro a year in road tolls and extend the construction period by four years and the concession term from 25 to 30 years.

In September, Serbia's National Council for Infrastructure said the country will open multiple international tenders for the construction of a 150 million euro motorway section previously earmarked for Alpine Porr. The key 108-km motorway section will connect Horgos, on the border with Hungary, with the administrative centre of the northern Serbian province of Vojvodina, Novi Sad.

($=0.7792 euro)