NATIONAL MOTORWAY CONSTRUCTION PROGRAM (NMCP) IN SLOVENIA (realisation, financing, impact on national economy) France Krizanic, Ph.D., director Economic institute of the Law School, Ljubljana, Slovenia Zan Oplotnik, Ph.D, researcher Faculty of Economics and Business, University of Maribor Economic institute of the Law School, Ljubljana, Slovenia November 2004

Slovenia as a crossing point for V. and X. Pan-European corridors

ROAD INFRASTRUCTURE

ROAD INFRASTRUCTURE IN SLOVENIA AROUND KM OF PUBLIC ROADS 31% - state owned (6349 km) 69% - owned by municipalities Competent authority for state roads: DRSC – directorate of Republic Slovenia for Roads DARS – Company for Motorways (100% state owned) (from 2003: construction agent and concessionaire for managing and maintenence of existing motorway network)

MOTORWAYS IN SLOVENIA build since 1972 build since 1972 ‘big bang’ in construction – after 1994 ‘big bang’ in construction – after 1994 in 1994 enacted first NMCP (amendments in 1998) in 1994 enacted first NMCP (amendments in 1998) (National motorway construction program) (National motorway construction program) goal – complete ‘Slovenian Motorway Cross’ goal – complete ‘Slovenian Motorway Cross’ in 2004, new NMCP enacted for period in 2004, new NMCP enacted for period

MOTORWAYS IN SLOVENIA km (First NMCP) (New NMCP) Total( ) Motorways Expressways In total:

New NMCP – enacted 2004 (Motorways constructed and anticipated till 2013)

FINANCIAL ASPECTS OF NMCP in 1994, NMCP was set at €2,2 bill for 440 km in 1994, NMCP was set at €2,2 bill for 440 km till 2002 around €2,3 bill spent for 230 km due to till 2002 around €2,3 bill spent for 230 km due to some cost underestimation some cost underestimation financial resources for construction ( ) financial resources for construction ( )  budget funds –gasoline Tolar(56%)  Tolls (7%)  Commercial financial credits (22%)  EIB, EBRD, etc loans (15%)

Sources of finances for NMCP from 1994 and 2002

FINANCING new NMCP ( ) €3,5 bill still needed for new NMCP completion €3,5 bill still needed for new NMCP completion new NMCP is set at around € mill per year new NMCP is set at around € mill per year sources of financing: sources of financing:  budget funds fixed at € mill p.y.  Tolls – completly spend for maintenance  ?????

POSSIBILITY OF CONCESSIONARY CONSTRUCTION? concessions were often mentioned in the past concessions were often mentioned in the past feasibility of implementation failed due to: feasibility of implementation failed due to:  low daily traffic volume ( )  high frequent sections already constructed  long lasting and costly procedure  …. concession YES, but for managing and maintenance of concession YES, but for managing and maintenance of existing motorway network (DARS from 2003) existing motorway network (DARS from 2003)

FINANCING new NMCP ( ) instead of concessions and loans from 2004: instead of concessions and loans from 2004: LONG-TERM INFRASTRUCTURE BONDS Why? Why?  benevolent influence on domestic capital market  domestic private capital included  liquidity for investors through secondary market  disburden state budget

FINANCING NEW NMCP ( ) in mill € Anticipated: Investment Sources of financing In NMCP BondsBudgetDebtOtherTotal: ,927151,4207,92,6388, ,470158,2206,92,4437, , ,144,14,2466, ,121,63,7478, ,413,84,2491, , ,306, , ,304,9499, , ,3474, , ,900344, ,500327, ,90195,400195,4 Total:3.553,72.112,01.959,6494,333,04.598,9

MACROECONOMIC ASPECTS OF NMCP significant part of all construction works (25%) significant part of all construction works (25%) Analyses exhibit strong positive influence on: Analyses exhibit strong positive influence on:  total investment activity in Slovenia (+7% p.y.)  Slovenian economic growth (+0,9% p.y.)  Employment (+0,7% p.y.)  Influence on inflation insignificant set-back in construction in 2001 (around –30%), set-back in construction in 2001 (around –30%), proved to be in correlation with overall economic proved to be in correlation with overall economic stagnation that year stagnation that year

MACROECONOMIC ASPECTS OF NMCP

due to previous experiences and positive expectations, due to previous experiences and positive expectations, new NMCP is set in accordance with following: new NMCP is set in accordance with following:  dynamic and structure of financing adapted to economic conditions (app. 1,6% GDP p.y.)  Avoiding excessive annual oscillations  ‘soft-landing’ in last years of NMCP  Use of long-term and stable, noniflationary, private source of financing (infrastructure bonds)  Disburden state budget