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Serbian highway costs soar amid delays and financial burden

Serbia’s ambitious highway project from Pojat to Preljina, known as the Moravian Corridor, has faced staggering cost overruns and significant delays, despite only completing a quarter of its planned length. Originally estimated to cost 900 million euros for 112.3 kilometers, the project has already exceeded this budget by 54%, with projections suggesting it could ultimately cost two and a half times more than initially contracted with the American-Turkish consortium Bechtel-Enka.

As of June, the construction of the highway has already depleted the Serbian budget by nearly 1.4 billion euros, with each kilometer potentially costing between 25 and 30 million euros, including interest on loans used for financing. This makes it not only a vastly expensive endeavor but also one that is far from completion. Promised to be finished by the end of 2023, officials now concede that the Moravian Corridor may not be operational before mid-2025.

The financial burden on taxpayers has been immense, totaling 162.2 billion dinars by mid-year, with hundreds of millions more allocated annually: over 200 million euros in the first half of this year, 380 million euros last year, and similar sums in preceding years. Despite these expenditures, each kilometer constructed has already cost 12.3 million euros (1.44 billion dinars), and costs are anticipated to escalate to 20 million euros per kilometer by completion, excluding loan interests which could push costs to between 25 and 30 million euros per kilometer.

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The project has been marred by missed deadlines and escalating costs. Initial promises of completion within four years have proven unrealistic, with delays leading to substantial additional expenses. While praised for efficiency by Serbian President Aleksandar Vučić, the Bechtel-Enka consortium has struggled to adhere to agreed timelines, necessitating multiple contract amendments and revisions that have ballooned the project’s estimated cost to possibly three times its original value.

Critics, including the opposition SSP, have long pointed out irregularities in the project’s procurement process and the unrealistic nature of early cost estimates. Despite assurances and occasional progress reports, including visits by officials to construction sites, substantial delays persist. Financially, Serbia has already borrowed 1.6 billion euros for the highway, with recent loans totaling 700 million euros in October 2023 alone, highlighting ongoing financial strain and the need for additional borrowing to complete the project.

The Moravian Corridor saga underscores persistent challenges in Serbia’s infrastructure development, with public frustration growing over the mismanagement of public funds and unmet promises from government officials. As the project continues, its ultimate cost and completion date remain uncertain, casting a shadow over future infrastructure initiatives and fiscal responsibilities.

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