Romania’s government says no bankable PPPs available

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Romania’s government says no bankable PPPs available

The state secretary of the Public Finance Ministry of Romania, Gabriel Biris, has stated that the low number of public-private partnerships (PPP) projects in the country is not due to the lack of legal framework, but to the lack of banks support.

According to sources he added that the existing laws already allow private investment in infrastructure projects. However, PPP projects in Rumania haven't gained the trust of banks, and consequently they have failed in the financial test.

Biris said:

“We didn’t have until now PPPs, but this was due to the fact that we don’t have legislation. At some point there was signed this kind of PPP, that was to be implemented, but in the end it was not, because it failed the banking test."

In April 2015 we informed that the City of Buzau (Rumania), supported by the EBRD, published an invitation for tenders for the rehabilitation and maintenance of streets and roads in the city of a total length of 53.4 kilometers.

The project involves the design, build, finance and operation (DBFO) of the roads during the 12-year concession contract. Specifically, the project comprise:

  • Design and execute works for the rehabilitation of the roads, over a construction period of three years;
  • Maintain and operate the roads as follows: during the construction period, to maintain and repair roads prior to and after their rehabilitation; and, during the remaining term, provide full operation, maintenance and repair, of all roads under the contract, including regular,  periodic and winter maintenance; and
  • Obtain and provide all funding necessary for the works and services during the construction period, with not more than 80% represented by senior loans, and not less than 20% provided in the form of operator's own equity investment.

The total value of the contract over its 12-year term is estimated at approximately €49 million (US$52), of which total estimated funded cost during the construction period is €22.4 million (US$23.8), with equity contributed by the operator of 20% of funded cost, or €4.5 million. Senior loans for the project are to be provided by international financing institutions, which may include the EBRD, and by commercial banks. Equity is to be provided by the operator.

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