The Slovenia Times

˝I believe that both the EIB and EBRD will want to cooperate on a regional project as large as the construction of the Divača-Koper track.˝



Deloitte, the company that developed the Investment Plan, assessed that the investment of EUR 1,194m for the Divača-Koper track is economically and financially feasible. What is the estimated capital injection from Slovenia and does it depend on the extent of financing from other countries? What assurances can Slovenia expect from them?

The Investment Plan clearly defines the extent of financing required and how the EUR 1,194m will be funded. The amount in the Investment Plan was considered when amending the budget for 2019, with a capital injection from Slovenia of EUR 400m fully budgeted. The fact that the financing will come from the budget is important for closing the financial structure of the project, which has to be done by end of May this year if we are to receive the European funds already granted. Let me stress that this project is structured in such a way that the entire investment will be repaid with contributions from the track users, that is from the fees and charges from cargo carriers on the roads, rail and through our port in Koper. The government is yet to decide whether land-locked countries will be allowed to cooperate on our project. If the government approves financing from land-locked countries, then Slovenia will only have to invest half of the currently foreseen amount in the capital of the state-owned 2TDK, established to construct and manage the new railway link.

What is the estimated timeframe for the investment to be returned to the state budget?

2TDK has a 45 year track management concession during which time, according to projections, the project will have been repaid, including the loans for the construction of the new track. It is also projected that the state's capital injection into 2TDK will be reimbursed. This means there will be no burden on the state budget. What is more, dividends from the operations of 2TDK, whose sole shareholder is the state, will account for a budgetary surplus in the long run.

The President or the European Investment Bank, Werner Hoyer, stated that the bank is well aware of the strategic importance of the second Divača-Koper track. Nonetheless, he drew attention to the criteria that are vital to the EIB when deciding on financing a project: regional competition, the technical feasibility and issues pertaining to traffic and transport development in the upcoming decade. What is your response to this?

All three highlighted dilemmas are relevant, but so are our answers to those dilemmas. Our traffic growth assessment is actually conservative: 3.9 percent traffic growth per year is predicted at the Port of Koper until 2030, and 2.9 percent growth from 2030 until 2040, while we have been witnessing a 6 percent yearly traffic growth for the past 10 years. We are also fully aware of the competition in the region. I am quite positive that our project is already causing a fuss among our neighbours. The Port of Koper has an exceptionally favourable strategic position and the new track will only make cargo transport through our port more cost- and time-efficient. As for the technical parameters, this section of the railway will be part of the TEN-T network, governed by certain standards laid out by the European Commission and which the track in question will fully meet. What the EIB sees as problematic is actually the expansion of the foreseen service pipes into actual tunnels. Nevertheless, we will stand our ground - we have decided on a double-track railway and we will not build tunnels so small they would have to be subsequently expanded.

You are also negotiating a loan from the EBRD so as to close the financial structure by the end of May. This is, after all, a prerequisite for obtaining the European funds which have already been granted. What amount of European funds have been allocated to the project? What is the predicted total amount of loans from financial institutions and will it be possible for both the EIB and EBRD to cooperate on the project?

The Investment Plan is a living document, thus, changes to the financing structure are possible. As we speak, we are already doing our best to further cut the estimated costs. Currently, EUR 250m of European funds are planned to trickle into the project, with the same amount coming in the form of loans from financial institutions, possibly including the Slovene Export and Development Bank (SID). Due to the EIB-related challenges, we have also started negotiations with EBRD, but I am highly optimistic and I believe that, in the end, both institutions will want to cooperate on such an important project. It is a project of great significance, not only for Slovenia but for the broader region, which Hoyer himself has admitted.

There has been criticism that the estimated project management costs are too high. Is it possible to draw any parallels with other similar projects?

We have been warned about the management cost and the cost of excess material disposal. Each is estimated to approximately EUR 50m and we are already working on their optimisation. We have studied the cost of tunnel construction per cubic metre and found that, on average, digging out the tunnels on the Divača-Koper track does not deviate from or is even lower than the costs in other comparable projects or tunnels. We plan on analysing the management cost and the cost of excess material disposal in a similar way.

The total value of the project should therefore not increase?

Most definitely not. We are working on cost optimisation and as we speak, while in the Investment Plan EUR 150m is already estimated for any potential unforeseen costs. Of course, the actual and final price of the project will only be known after all the calls for tenders have been completed.

According to the Investment Plan for the construction and management of the Divača-Koper track, the construction will take place from 2019 to 2025, with commencement of operations scheduled for the start of 2026. How rigid are these timings? What could change them?

Regardless of the project, calls for tenders is our weakest point. Various complaints with respect to this could delay the implementation of the project. 2TDK must implement the entire project in a way that will limit the possibility of complaints to the greatest extent possible during the selection of the service providers. It is on us, the government, to think about amendments to the law on public procurement. It is not logical that we have 10 times as many problems in this area than our neighbours in Austria.

One of the priority tasks you have undertaken in your term of office is also designing the Third Development Axis. Where are you with the project and how much is estimated to trickle into the project?

The Third Development Axis runs from the Croatian border to Slovenj Gradec. In agreement with the civil initiative from Slovenian Carinthia, who have been waiting for a suitable road connection for a long time, we have decided that even though we have not yet obtained the required project documentation for the northern part of the route and the fact that this type of construction is financially more risky, we will start the works and begin constructing the road in individual sections. As you know, the feasibility of the Šentrupert-Velenje section will be determined by the Constitutional Court, while the Velenje-Slovenj Gradec section has already been approved. The construction will begin in the southern part of the Third Development Axis. The whole project is entirely funded by the motorway company in the Republic of Slovenia, DARS, and indebting will also be necessary. It would be difficult to predict the investment total, but according to the Ministry's estimates, the Velenje-Slovenj Gradec section will cost approximately EUR 400m. It should be mentioned, however, that this section is one of the largest projects that DARS has ever undertaken - there will be many viaducts and tunnels, as is the case with the Divača-Koper section where most of it runs underground. 

The 2019 European elections in May are predicted to be a turning point for the EU, in part due to Brexit. How is your party preparing for these European elections?

These elections are certainly important. Not only because - as it seems - they will take place without the United Kingdom (author's note: at the time of the interview Brexit had not yet been agreed upon), but, above all, in terms of the future that the EU is heading toward. There is a lot of pessimism and scepticism about whether the union is working well and whether it is right that we are still united. The role of politicians in the upcoming elections, and afterwards, is extremely important. We must remind people that the EU is primarily a project for peace. We are, after all, experiencing the longest period of peace, so far, on European territory. We have the right solutions in our party to increase confidence in the EU and Slovenia as part of a strong union, we know how to implement them and voters will recognise this.


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