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|  Romania
the awakening giant of Europe |
 Looking for lost prosperity - 1997 : A mixed performance - Rebuilding the Country -
Major Infrastructure Projects March On - The Tough Game - No Pain, No Gain -
The Young Wolves of the Private Sector - What's Next? 
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Interview with
Mr. Basescu,
Minister of Transport
on December 8, 1997 |
Question: Romania’s roads and rail networks are not very good. Could you tell us a brief historical evolution of your sector ?
Answer: Until 1990, Romania was not a country opened for free business, for free commercial activities, for free industrial development. Because of this reason, the infrastructure was not developed according to the needs of a free market economy. Out of 14400 km of roads, not even one kilometer was at European standards. Out of 11500 km of rail, not one km was at this standards until 1990. The Danube, a river which is 50 % over Romania, the development of navigation was not according to European standards. Everything was according to our standards, to east block countries standards, which means low technology, poor quality services comparing with the countries from Western Europe. For this reason, after1990, we were in the position to start very costly projects, in order to upgrade the infrastructure system in Romania. If we are looking at our airports, we have 17 airports, the single one who is in the position to have services at the European standards became Otopeni, starting with this year. If we are looking at the fact that on the Danube we have 26 harbors, on the Black Sea we have three harbors, between these harbors on the Black Sea, one is one of the biggest harbors in Europe. But the services were not at acceptable levels. This is a brief presentation of our infrastructure. In a few words we can say that we have enough infrastructure if we are looking at numbers and capacities, but if we are looking at the performances we can say that we have a lot to work here in order to upgrade the quality of our infrastructure.
Q: And for the modernization of railway and highway networks, what are the main aspects of your strategy?
A: The key projects in infrastructure are to develop the main roads, rails, ports and airports. It is easy to speak generally, but now I will start to be more specific. For example, the Romania is passed by three Pan-European corridors for transport. One is corridor number 4, which connects Berlin with Constanta Harbor passing over Germany, Austria, Hungary and crossing Romania from west to east. On our territory, the extreme west point is Nadlag, close to Arad, and the extreme east point of this corridor is Constanta Harbor. This is a corridor of 850 km which crosses Romania from west to east and it is very important from our point of view that the end of this corridor is Constanta Harbor. Another corridor, which crosses Romania from south to north is the corridor which connects the south of Balkans, crossing Greece, Turkey, Bulgaria, Romania and has the final point in Helsinki, after passing Moldavia, Ukraine and Russia. Here is another priority for us on the railway and road development. The third corridor which crosses Romania is Danube. This corridor, connected with Rhine, via Rhine-Main-Danube channel, is connecting the North Sea with the Black Sea. After this presentation you can easily understand that Romania is placed on an exceptional position. Three main routes for Europe are passing Romania. All these three routes are priorities for us and we don’t wait until 1998 to improve the quality of these roads. Until now we invested on the corridor number four 1 billion $ to rehabilitate the quality of the road and we can say that the technical standard of this road is at European level, even if this road is not a highway, but according with the traffic that we have the standard was low. In 1997 we finalized the first phase of rehabilitation which included the whole corridor on the Romanian territory. In the next year we will start the project to rehabilitate and to modernize the corridor 4 on the railways. The next priority is the rehabilitation of the railway system exactly on this path, Nadlag to Constanta. I presented this project to G24, it is a project which will cost on the end 1.3 billions, and we have very good signals that the European Bank for Investments will start to finance this project from April 1998. Another project is corridor 9, which, as I said, connects the south of Balkans with Scandinavia and, over Romania, this corridor has about 570 km and it’s crossing Romania from south to north. It is also a Pan-European corridor for both systems of transport, rail and roads. If we are looking at the financial possibilities that we have, of course our priority is to rehabilitate the existing roads and rails on this corridor, but according to our evaluations, the rehabilitation and modernization of this corridor will be enough for the traffic we have, with the condition to create in the same time the possibility to extend the capacities of these road and rail in the future, as soon as the traffic will require that. We are now in process to rehabilitate the road system, 60 % of this corridor is already financed and we are looking to find resources for all the project, which means another 250 millions $. Another very important project that we have in Romania is the extension of Constanta Harbor. As you see on the map, the end of the Black Sea-Danube channel is straight on the Constanta Harbor, which means an excellent opportunity to move cargo from the sea going ships to the river ships and vice-versa. In the same time, the Constanta Harbor have a particular facility: all the moorings are connected with the road and rail networks, which is not very common on European harbors. That means that Constanta Harbor can be an excellent transit harbor. The priority that we have now is to extend Constanta South Harbor, which is designated to become a transit point for the grains, a big grain terminal. We have now a very small capacity of moving grains. The capacity was enough until 7-8 years ago, because the destination of this terminal was only to move our grains, but we started to move via Constanta Harbor the grains from Hungary, Austria, Yugoslavia and the needs are bigger. In this respect the World Bank already finalized the first stage for a study and it’s clear that we need to extend the capacity with a silo by minimum 200 000 tones, in order to be able to move about 30 million tones of grains each year.
| Q: The Bucharest-Otopeni airport is under the administration of the Government. So, is it a priority to develop this?
A: This year we concentrated a large amount of money for the modernization of the Otopeni Airport. We extended very much the platforms of the airport and in the same time we built a new terminal in only one year. It is the biggest investment for Romania and on December 22 we will inaugurate it. We concentrated here 283 billions lei in order execute this objective. And we have there a lot of American equipment.
Q: If Romania wants to be at the crossroads of the trade exchange in the world, Romania will need foreign investment for its development. So, is there already big foreign investors in your sector?
A: Next year it will be the bid for the first concession on the highway system. As I said on the beginning we modernized the corridor 4, but for us it’s clear that modernization is not a long time period solution. For this reason we started to try to concess the building of new highways. Next year we will concess the highway between Bucharest and Constanta, 200 km of highway and for these procedure the pre-qualification stage was already passed. They were 18 companies who came on the pre-qualification and we selected 4 of them and from these four, which are four of the most known in Europe, one will be the World Investment News Ltdr on the end of February. The next step it will be to try to concess other sections of the corridor 4, in the road sector. In the same time, from Bucharest to Pitesti, another 120 km of highway is in a program to be rehabilitated, to be modernized at European standards. We already have this project financed by the World Bank and the European Bank for Investment. There are 120 million $, which will be invested in this highway.
Q: Highway seems to be a gold mine for foreign investors.
A: Yes. Considering the future development of Romania, the highways will be gold mines. In the same time the Romanian Government is ready to release all the Governmental guaranties for important infrastructure investments, but not for concessions of highways. A concession in a concession, probably we will guarantee the profit in one way or another. Because in the case that investors will not cover their costs and will not obtain the profit which they expect, probably, at the end of the period, they will ask for a guarantee for obtaining profit, and we are prepared to discuss with them on this matter. But we will not build highways with Governmental money for two reasons: first of all the time for this type of investment has passed and secondary we don’t have this money.
Q: Now maybe a more personal question. You are a very active minister. What has been your most satisfying personal achievement since you have been Minister of Transport?
A: Of course, I have a different opinion from the population. I succeeded to impose this years the tax that was named after me, which was a very hard public issue. I kept very hard my position and I pushed the Parliament to vote this law. For example, after I imposed this taxes for using the roads, we collected to our budget 1700 billion lei, which means about 300 millions $. This money are dedicated for roads maintenance and modernization. Of course, this is the beginning. I intend next year to increase the taxes, because I don’t see other solution to modernize our roads. Nobody will be prepared to give us loans if Romania will not have a contribution for the modernization of its infrastructure. I don’t expect that next year the Romanian budget it will be so big and the priorities which are on the teaching system, on the army and so on, which are costs that every Government have to support, will be changed. For this reason, it was my idea to create a separate resource for infrastructure, in order to have Romanian contribution to the projects we have. We cannot wait to receive money from somewhere else to modernize our infrastructure. In fact, it was a new approach in Romania and the population was very much against on the initial stage, but it’s a very common practice over the world. Of course. The Romanians have to change their habits. The state cannot be the entity which has to do everything for them. They have to contribute if they want to have something. They are ready to blame the Government because their car broke in a hole, but they were not prepared to pay to eliminate these holes. What I felt in the last period is that lot of people started to understand and now this tax is not anymore so unpopular. It was our chance. For example, this year we put on the roads 3 millions tones of asphalt comparing to the period between 1993-1996 in which was put the same quantity but for the whole period. This was the effect of the tax. And the difference is also that in that period everything came from the budget and in 1997 only 3 % came from the budget and the rest from the contribution of the population.
Q: Now, as a final question, keeping in mind that you’re reaching 2.5 million readers, what will be your final message to them?
A: The final message is that the top priority of Romania is the development of infrastructure and we understand very well that if we don’t develop the infrastructure nothing can be well developed, nor the industry, nor the tourism, nor the level of life for Romanian citizens.
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© World INvestment NEws, 1998.
This is the electronic edition of the special country report on Romania
published in FORBES
Magazine's enriched with complementary information,
such as full interviews, detailed company files and more.
June 1 st 1998 issue
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