Bechtel Walks Off Romania's $2.5-Billion Motorway Project.

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HIGHWAYS

Construction of one of Europe's largest highway projects, Romania's $2.5-billion Transylvanian motorway, is on hold through lack of payments. Turnkey contractor Bechtel International Inc. recently fired 530 workers while the government reviews its contract and seeks international loans.

Contract awards for the estimated $1.3-billion eastern extension of the same highway have also been suspended. The awards, made by Romania's previous administration, are also being investigated by the new government for compliance with European Union procurement laws.

"We believe that all outstanding issues are going to be resolved shortly," says Bechtel's project spokesman Bogdan Sgarcitu. "We are encouraged by the Ministry of Public Finance's steps to arrange external financing."

San Francisco-based Bechtel suspended work initially for 90 days in June "due to insufficient payments from the Romanian National Company of Motorways and National Roads." Over a third of its 685 local workers were suspended on reduced pay and 21 suppliers and subcontractors stood down. With no improvement after 90 days, Bechtel dismissed most of its worker.

Bechtel signed the design-construct contract for the 415-kilometer, four-lane motorway from Brasov, in central Romania, to Oradea on the Hungarian border, in late 2003. The company joint ventured with Turkey's Enka Insaat ve Sanayi A.S. Istanbul, to handle work.

With the project due for completion in eight phases by 2012, Bechtel in June 2004 started four years' work on the first 118 km, from Campia Turzii to Cluj Vest and from Suplacu de Barcau to Bors. Last October, the U.S. Export-Import Bank announced its guarantee for $180 million commercial loans to the Romanian government to fund the work.

However, the new government, elected last year, objected. According to a source at the Ministry of Transport, Construction and Tourism, the Transylvanian motorway had not been adequately budgeted by the previous government. The new regime also launched investigations into the contract awards.