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EU governments tackle Poland over unpaid road-builders
June 17, 2013 / 2:56 PM / in 4 years

EU governments tackle Poland over unpaid road-builders

* Six states send letter to Polish deputy prime minister

* EU contractors owed billions of euros on road contracts

* Poland says the construction firms are at fault

By Christian Lowe

WARSAW, June 17 (Reuters) - Six European Union states have asked Poland to explain why it is not paying billions of euros that foreign construction firms say they are owed for work carried out under an EU-backed road-building programme.

Poland’s state roads agency says it is the contractors that are at fault, but the dispute risks harming Warsaw’s reputation in Brussels, which is pumping huge sums of development cash into Polish roads and railways.

Reuters has obtained a copy of a letter about the row signed by the ambassadors of Austria, France, Germany, Ireland, the Netherlands and Portugal. It was addressed to Polish Deputy Prime Minister and Economy Minister Janusz Piechocinski.

It was the first time the EU governments had formally joined forces in the dispute, so the joint letter will raise the diplomatic pressure on Warsaw.

The letter said the unpaid money pointed to fundamental and systemic problems in the way Poland manages big civil engineering projects.

“This phenomenon seems to have reached a level which indicates that support from the Polish government might be helpful in order to avoid negative implications to the image of Poland’s business environment,” it said.

The value of claims against the roads agency lodged with Polish courts stands at about 10 billion zlotys ($3.15 billion), according to the letter, which called the sum “unusual and unprecedented”. It asked Piechocinski to look into the matter.

The Economy Ministry declined to comment.

Firms that have been in dispute with the Polish road agency over payments include Austria’s Strabag and Alpine Bau, a unit of Germany’s Bilfinger, Ireland’s SIAC, SISK and Roadbridge, and a unit of Spain’s Ferrovial.

Poland is undertaking a massive programme, part-funded by the EU, to build a modern motorway network to replace the narrow and dangerous roads left after decades of Communist rule.

Contractors allege that the state roads agency, GDDKiA, has not paid them for stretches of motorway, even though the work has been completed.

They say the agency cashed in bonds without any justification that had been lodged by contractors as a guarantee they would complete their work.

GDDKiA managers dispute that account. They say the most common reason for payment delays is that contractors’ work has fallen below agreed standards. GDDKiA said it had been forced to terminate some contracts because of failures by contractors.

Late last year, the EU executive, the European Commission, asked the Polish government to explain what had happened with the disputed contracts. The Commission has not yet revealed the outcome of that request. ($1 = 3.1707 Polish zlotys) (Additional reporting by Pawel Sobczak and Chris Borowski; Editing by Kevin Liffey)

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