Ministry of Transport, Information Technology and Communications

Infrastructure Projects Under Implementation co-financed by ISPA Programme

1. BRIEF PROJECT UPDATE

A. Main Bridge Project Physical Implementation and Financial Status 

In the period 1^st June – 30^th November 2011, under the contract have been completed 81% of the piers for the 180 m spans bridge, including erection of pylons to the full height of three piers; 30% of the 40 m spans bridge deck and 79% of deck cantilevers for the 80 m spans bridge; 65% of the deck precast and 54% of deck cantilevers for the 180 m spans bridge, with 20% deck erection; and 49% of the vessel impact protection erected, to form an average of 71% of the contract scope physical works. Design submission and approval process is close to completion and is going on at a much reduced rate. The check of the working drawings (piers, pylons and segments) is regularly ongoing, following their submission sequence. Site works during the recent months are progressing at 24-hours continuous regime and have been focused on

• 40 m spans bridge deck cast;
• 80 m spans bridge deck cantilever erection;
• 180 m spans bridge PB12 pier cast;
• precasting works for 180 m spans segments;
• 180 m spans bridge PB9 and PB10 estradoss cables installation;
• 180 m spans bridge PB10 and PB11 longitudinal struts cast;
• Romanian bank slope stabilization and assembly of scaffolding for the in situ casting of PB12-A3 deck;

 Against the physical works executed about 86,1% of the contract amount has been paid.

Following Engineer’s comments the Contractor submitted Revision 8.2 of the Works Programme in November 2011 and it was assessed by the Engineer as realistic and achievable. Whilst the cash-flow forecast and schedule of payments under the submitted programme is still under detailed review by the Engineer, currently the Engineer is reporting progress and certifying payments against the agreed Baseline Programme reflecting Contractor’s As-Built Works Programme Revision 3a. The indicated completion date in the Works Programme Rev. 8.2 is 29 November 2012 which is 29 months after the original Time of Completion, and almost 18 months after the extended Time of Completion determined by the Engineer as 9^th June 2011, and fixed in Addendum № 1 to the Design Build Contract.

B. Adjoining Bulgarian Infrastructure Project Physical Implementation and Financial Status 

In the period 1^st June – 30^th November 2011 under the contract have been completed 97% of the earthworks, 96% of the structures, 99% of the services, 96% of the railway buildings, 83% of the railway installations and 70% of the road works, to form an average of about 87% of the contract scope. Site works during the recent months have been focused on

• finishing works at Vidin Passenger Station and New Border Freight Station buildings;
• vertical realignment of E79 Road Vidin Entrance Junction;
• railway signaling and telecommunication systems installation facilities;
• completion of road embankments for the road and rail overpasses;
• Vidin Traction Power Substation rehabilitation works;
• installation and alignment of the bridge parapet units.

Against the physical works executed about 76,8% of the contract amount has been paid. Eleven formal Variation Orders have already been issued with payments for them partially made on-account, while valuation by the Engineer is continuing.

Currently the delay is more than 23 months beyond the original Date of Completion and even more than 7 months beyond the extended Date which was fixed as 3 June 2011 in Addendum № 2 to the Works Contract. The Contractor’s most recent update to the Accepted Base Line Programme shows completion at the end of May 2012, and further delay is not expected. Submission by the Contractor of a realistic and achievable works programme to completion is still expected.   

2.  BRIEF ANALYSIS OF THE CONTRACTUAL SITUATION

A. Financial Status

Funds from all sources involved in the Project financing have been contractually provided. As 100% of the grant from AFD, and of the grant and loan funds from KfW have already been utilized, currently payments are made from the grant funds provided by EC & National co-financing, as well as from the Bulgarian national budget resources. Following the EC decision of 1 August 2011, to extend the FM validity till end of year 2012, €86,312 thousand have been utilized from the CF and NF resources, which is roughly 66% of the commitment under the Financing Memorandum, while from the national budget payment for €4 826 800 have been made. From the EIB loans provided for the Project €25,5 mill. have been disbursed from the first tranche, and €15 mill. from the second one. At this moment €38,98 mill. of the loan funds have been utilized which represents 55,7%. The deadline for request of disbursement under the first contract with EIB expired on 15 March 2011, while the deadline for request of disbursement under the second contract expired in August 2009, and the procedure for extension of both disbursement periods is close to completion pending on ratification by the Bulgarian Parliamen only.

Summary of the Project financial status is given in the table below:

B.  Contractual Matters

Main Bridge Project:

The Contractor has submitted in total twenty claims for additional cost and/or extension of time to-date. While seven of the claims have been rejected, eight are likely to be rejected, as no detailed particulars have been submitted, and five are under review before issuing of determination by the Engineer. Three claims have been submitted by the Employer: one for delays in design process, another on re-appraisal of design based on design change notification, and one on slow rate of progress; particulars have been presented on the amounts claimed for delay in design process and Engineer’s determination is awaited.

Modification of the contract agreement has been initiated to reflect the updated Works Programme, and to mitigate the Project delay, as well as to resolve the pending issue of Change of Foundation Variation costs determined by the Engineer in August 2011. Addendum nº 2 which is agreed by the parties shall be signed by the Managing Authority in the shortest possible time.

Adjoining Bulgarian Infrastructure Project:

The assessment of Contractor’s entitlement to additional cost under the Claim for overhead power lines diversions is still pending. The Contractor has notified twenty claims with the intention of seeking additional time and costs but they have not yet been properly substantiated. The Engineer is responding to the claims as appropriate and seven claims have been rejected, while detailed submissions are required from the Contractor for the others, before they can be dealt with fully and formally.

The parties under the both contracts (Engineer, Contractor and Employer) convened a meeting in Sofia on 13^th December 2011, in order to arrive at a mechanism (Modus Operandi) to improve in the shortest possible time the Project cash flow, focusing on faster resolution of Claims and Variations under the Contracts.

3.  OTHER ISSUES

A. Management Structure

Activities have continued in the period June – December 2011 and Draft of the bilateral agreement has been discussed and approved as a basis for negotiations by the Bulgarian Government with a decision of December 2011. The Negotiation Team is currently in a process of establishment, and a proposal to the Romanian Party is to be extended to start negotiations in February 2012 aiming at acceleration of the negotiations process in line with both countries national legislations.

B. Borrow Pits

Difficulties under the contractual obligation of FCC in the supply of additional embankment quality materials, have been resolved in principle, however minimum risk of additional delay in project implementation still exists. Employer’s efforts continued to assist the Contractor and on 12^th December 2011 Minister of TITC officially notified Minister of EET on the urgency of the matter and requested intervention for finalization of the concession procedure. Relevant registration of the “Antimovo 1” Borrow Pit area was made on 21^st December, and the concession is expected to be given to the Contractor before opening the new construction season in March 2012.