boletus
3 Jun 2011
News / Tusk drops Chinese COVEC building the A2 motorway in Poland [83]
Since you did not answer my question whether or not you have actually seen the contract between GDDKiA and COVEC I did some finger walking searching for an "evidence (that) GDDKiA was delaying payments". Yes I found some reference regarding "Polish NDI and Macedonian SB Granit" complaints (2011-02-11), but frankly I still have no clue which side was in fault.
wbj.pl/article-53179-update-a4-highway-builders-want-out.html
As to "not being flexible enough" - how much flexibility do you want - considering this: BRE Bank Securities report, about Q1 2011 financial forecast for Budimex.
So, GDDKiA was quite generous with contract advances in Q4 2010, and yes - Budimex was delaying payments for its contractors - not GDDKiA. It seems that this is a standard practise in Poland
The report shows the table of GDDKiA "generosity" towards major industry players. Ratios of their cash flows to the GDDKiA advances in Q4 2010 look like this:
Budimex - 30.2%
Hydrobudowa Polska - 34.7%
Mostostal Warszawa - 19.6%
PGB - 28.8%
Polimex Mostostal - 32.4%
Overall, the report presents plenty of interesting facts - if one only wants to find them, rather than just complain.
With respect to bids, according to Wyborcza:
Yes, here was the bad choice: the offer was too good to be true.
if you insist on having the roads built in time for EURO 2012 then you should be a little bit more flexible
Since you did not answer my question whether or not you have actually seen the contract between GDDKiA and COVEC I did some finger walking searching for an "evidence (that) GDDKiA was delaying payments". Yes I found some reference regarding "Polish NDI and Macedonian SB Granit" complaints (2011-02-11), but frankly I still have no clue which side was in fault.
wbj.pl/article-53179-update-a4-highway-builders-want-out.html
As to "not being flexible enough" - how much flexibility do you want - considering this: BRE Bank Securities report, about Q1 2011 financial forecast for Budimex.
The highlight of Budimex's Q4 2010 report was an impressive operating cash flow totalling PLN 944m (after consortium partner stakes). Historically, the company's cash flows did not correspond with earnings, and they came from differences between accounts payable and accounts receivable (ca. PLN 1.5bn) such as contract advances received from the national road authority (GDDKiA) or overdue payments to contractors.
So, GDDKiA was quite generous with contract advances in Q4 2010, and yes - Budimex was delaying payments for its contractors - not GDDKiA. It seems that this is a standard practise in Poland
Virtually all large road builders reported strong operating cash flows in Q4 2010 which we believe came from contract advances received thanks to the national road authority's (GDDKiA) end-of-year spending rush. This year, government advances toward road contracts will most probably be much less generous given the GDDKiA's high expenses and the tight national budget.
The report shows the table of GDDKiA "generosity" towards major industry players. Ratios of their cash flows to the GDDKiA advances in Q4 2010 look like this:
Budimex - 30.2%
Hydrobudowa Polska - 34.7%
Mostostal Warszawa - 19.6%
PGB - 28.8%
Polimex Mostostal - 32.4%
Overall, the report presents plenty of interesting facts - if one only wants to find them, rather than just complain.
With respect to bids, according to Wyborcza:
The consortium presented and offer half as cheap than the estimates by officials. Two sections with a total length of nearly 50 km were to be built for 1.3 billion zł (on average about 26.5 million zł / km). For comparison Mostostal will take 843 million zloty for 17km section B (about 49.5 million zł / km), and Strabag - 643 million zloty - for the 17.6-km section D (about 36.5 million zł / km .)
Yes, here was the bad choice: the offer was too good to be true.