Cyprus Mail
Opinion

Our View: Viability studies should be standard practice for all big projects

THE PAPHOS-POLIS highway is back on the agenda, the communications and works minister announcing that new plans for the road that were undertaken on the instructions of the previous government, were nearing completion. A ministerial committee would study the plans and give the go-ahead for the invitation of tenders, while the appropriation of land for the project, which was suspended, would also resume.

Planning for the road had begun under the Papadopoulos government in 2006 and after the obligatory legal appeals against the tenders’ procedure the Christofias government begun negotiations with the successful contractor, despite the public reservations expressed by its finance minister over the cost. Disagreements led to the government opening negotiations with the consortium that had come second in the procedure but these broke down in 2011 because of disagreements over the cost.

A year ago the Council of Ministers ordered the drafting of new plans for the highway that would not be so costly. With grandiose old plans which envisaged the opening of tunnels as well as the building of bridges, many roundabouts and slip-roads the total cost would have been well in excess of €700 million. The government now hopes to get the project done for less than €500 million, which is still a lot of money for a 31km stretch of highway that would be used by a relatively small number of people.

The payment of the project would be completed over 25 years without the full amount being added to public debt; the yearly instalment of about €20 million would be included in the annual budget. But before the go-ahead, there would have to be a cost-benefit analysis and a feasibility study to ensure the investment was justified. A law is currently being drafted, in accordance with the memorandum that obliges the state to establish the viability of any public project before requesting tenders.

Again we must thank the troika for forcing the state to undertake viability studies before embarking on big public projects, in order to establish that the return would justify the investment. This should have been standard practice for all big projects, but it never was because decisions were determined by public demand – if enough voters wanted a project the government obliged, even if the expense was totally unjustified.

While the project would be good for the economy as it would create jobs, we doubt the highway would be deemed viable even in its low budget form, because the road users are not many. We will have to wait for the cost-benefit analysis and to hear how the government would raise the €60 million to pay for the necessary land appropriations that are pending.

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