Friday, January 24, 2014

Madrid's M-30 Ring Road is Twice the Price of the Panama Canal

The image of Brand Spain has deteriorated over the last years. Corruption issues with an impact on the political class first, and then others linked directly to the Spanish Royal Family hasn't been very good publicity. But there is a question that is impossible to ignore regarding Spain: everything related to infrastructure in Spain —construction, costs— is always set in an almost insane context, to say the least. Let's see some examples:
1. Sacyr and the Panama Canal: the Spanish construction company presented an extremely low bid —some sources talk of a recklessly low bid— of €2.3bn to win the tender. They won it and they did what they normally do in Spain: once they are awarded the project, midway through the construction of the infrastructure they claim an alleged unexpected cost increase to be covered by the administration. In this case, the claim by Sacyr from the Panamanian Government is to the tune of €1.2bn, and the Panamanian Government seems reluctant to accept. The threat to stop work on the new Panama Canal, an infrastructure of global significance, is obviously not something to be proud of for the Spanish company, and by extension harms Spain's imatge.
2. The Madrid M-30 Ring Road or Beltway: very similar to the Sacyr issue in Panama, but at a considerably magnified scale. In this case, the companies involved are Ferrovial and ACS —also Madrid-based construction companies, and very familiar with the influence peddling in the VIP lounge of Madrid Soccer Club's Santiago Bernabeu Stadium. If for the Panama Canal (77 km) the contract was for €2.3bn, and now Sacyr claims an extra cost of €1.2bn —totalling €3.5bn— the M-30 is unparalleled: the deal was closed for €2.5bn, but the total cost reached €7bn. Surprised? There's more to come. The Panama Canal is 77 km long. The Madrid ring is less than a half that, 32 km. Thus the cost is three times that of the canal. Awesome.
3. The Pajares Rail Tunnel: the High Speed Train frenzy for all Spanish governments (both left or right wing) is notorious. The €50bn spent are good proof. One of the branches with most problems is that which will reach Oviedo in Northern Spain. To do so, it is necessary to cross the Cantabrian Mountains, and this means tunnelling. But the Spanish modus operandi is not going to be deterred by anyone or anything. If for the Gotthard tunnel in the Alps 10 year of geological studies were required before doing the tunnelling, a few months should be enough for the Pajares tunnel. The result, a botch that caused a hydrological imbalance of 10 to 12 hm3 per year between two adjacent river basins, the Cantabrian and that of the Duero river, resulting in a tunnel that is more like a river, and works that have drained €3.2bn —so far. An endless nightmare.
4. The Bridge On the River Cau-Cau. Azvi, a Spanish construction company based in Seville, has committed a huge gaffe in the construction of a bascule bridge over the river Cau-Cau near the city of Valdivia in Chile. The gaffe was no more and no less than to place one of the leaves of the bascule the wrong way round, so the lanes shift and don't meet at the middle of the bridge.
5. S-80 Submarines: The poor image goes beyond infrastructure construction, and extends to other activities, like weapons building. The most relevant example we can find is the new program of Series 80 submarines for the Spanish Navy. Because of a design error, the submarines have an excess weight of around 70 to 100 tonnes, so it's impossible for them to surface once submerged. In other words, they sink and won't float again. It sounds like a joke, but it's a very expensive one, since the budget for the 4 S-80 units is over €2.2bn, which will now have to grow to repair the malfunction. Yet another botch up.
All in all, in Spain efficient economic resource allocation doesn't seem to be a priority for the country's ruling elite, regardless whether the right-wing Partido Popular or the left-wing PSOE is in power. These huge budget overruns at the taxpayers' expense doesn't seem to concern the political class. A real symptom of the Spanish disease. This is one of the reasons —not the only one— for Catalans to want to build a better country, away from the practices that assault the citizens unchastened.
Àlex Furest

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