And again a fiasco: an unexpectedly applied brake can have an impact on urban development

Said projects are implemented according to the principle of a concession, which gives companies the right to carry out economic and commercial activities, assuming the provision of public services or the performance of other state or municipal functions. Attempts have been made to build a national stadium in this way, but the suspension of construction by the Office of Public Procurement (VPN) has raised several questions: will projects on this principle continue to be implemented? Why can some use this principle and others cannot?

Another attempt to shake up the idea of ​​a national stadium after failure has already become part of Internet folklore: It’s joked that we’ll probably start flying into space on commercial flights before we have our own national stadium.

Mindaugas Sinkevičius, President of the Lithuanian Municipal Associations, and Algimantas Variakojis, Founder of the Business Angels Fund, spoke about the message that the failed project sends to investors interested in the grant in a discussion on the Responsible Approach.

Stock and skepticism will translate into a higher price

Although the principle of the concession is widespread and widely applied in Lithuania, failed projects, such as the construction of the National Stadium, cast a nasty loophole. The National Stadium, which is expected by almost all Lithuanian citizens, will soon not attract sports enthusiasts and professionals. Are you debating whether this will not harm future projects? Will Lithuania finally have a national stadium or will companies avoid contributing to this project?

During the discussion, M. Sinkevičius stated that many mayors had already tried to build this stadium, there was a lot of political noise and speeches, but something tangible or stable was not yet visible.

“Every investor, knowing the context, will easily find the story and conclude that there is a lot of risk, political uncertainty, uncertainty, things that cannot be quantified.” Many will view this project with skepticism. Stock and skepticism will translate into higher margins. When a process fails, investors will incur losses for the first time by participating in a new process. He gives no one credit: we want to believe that during the quarantine, by borrowing billions, we could spend part of a million on the construction of the National Stadium and complete the failed concession, bid and build with public money. However, it would be desirable for concessions to exist at the municipal level. I hope that they do not become impossible and continue to be a transaction between companies and society, “he said.

Mindaugas Sinkevičius was also supported by Algimantas Variakojis: According to the latter, the unpleasantly interrupted construction of the National Stadium will certainly harm investor relations with the municipality, perhaps even with the state.

“It just came to our attention then. The whole setup cost a lot of money and he suffered huge losses. If the state were fair, he could make up for the losses. All these objects, visible, symbols, the fact that Ronaldo is playing in the stadium, underneath from the plinth. Lithuania attracts tourists and investors with a cinema at the airport, cafes in the center of the capital, they are interested here, but when it shows the ruins, it immediately gets a different impression. We need to analyze the policy more broadly shrug even if we lose money. Now Lithuania has borrowed several billion and probably won’t put it anywhere, and the Vilnius budget provided European funds for the construction of the National Stadium. But now, they are not used. ” said the founder of the Business Angels Foundation.

Government uncertainties

The interlocutor affirmed that not only this, but also other projects implemented under the concession principle are surrounded by much uncertainty and mistrust: there are many questions for businesses, which are not always answered.

“The biggest problem is that all uncertainties come from the government: one service does not speak to the other, and I see that the government can move to one side, business to the other.” Then when you get double explanations you really don’t want to start. Businesses also dislike the fact that large areas of good land go to private businesses that have won a tender, and other businesses that, if they have won, but really shouldn’t have, are being squeezed, broken down into various details. , then everything stops. Mistrust is sad, because we immediately lose investors who can contribute, which could reduce the price, “said Algimantas Variakojis.

According to him, in several years the government has spent a lot of money on tenders: the sums were considerable and it cost not only the state, but also the business itself.

“For example, a fund that was preparing to finance has several investors who have donated money and hired lawyers. Private companies take investments very seriously and who will cover their losses? Another thing is that we are ruining our relationship with foreign investors: they can divert their money to other projects, they no longer want to invest. The government is destroying the details of the business, which involves investors who can help control the situation, “said the expert.

The state does not trust self-government

Still, do the municipalities, the state, really need commercial help to implement certain projects? As Mindaugas Sinkevičius, president of the Association of Municipalities of Lithuania, said during the discussion, cities are certainly not financially capable of implementing certain objects. On the other hand, the opportunities to obtain loans for self-government are complicated.

“The virus has slightly improved the situation: it has financially opened its hands to the state and the municipalities, but even those opportunities, the possibility of a deficit of one and a half percent of the municipal budget, can be serious in Vilnius, but in the municipalities smaller ones don’t allow for something more serious. ” Since self-government does not have financial autonomy, we ask the central government to trust it, and the central government knows this better, and unfortunately confidence does not arise. Therefore, the possibility of operating and implementing projects on the basis of a concession, when the municipality does not need to seek its own budget or borrowed money, is the only real way to implement one or the other project, “explained the interlocutor, the need to a concession.

It revealed that many of these projects have been implemented in Lithuania, for example, Palanga Concert Hall, Druskininkai Ski Arena. According to M. Sinkevičius, there will also be some in the future, therefore the situation in Vilnius creates a negative background.

Without a concession you can stop urban development

“The concession is a good example: the whole world is on that path. There is nothing wrong with a company investing its own or borrowed money and receiving part of the employment payment for the municipality building, part of commercial activities, etc. The world is full of examples of hospitals and underground car parks. No project is dead because the company has shown no interest. However, companies do not show interest in cases where the bureaucratic mechanism does not allow quick decisions. We have been working with Vilnius stadium. Time and money have been invested, and we are all sitting next to the gelda crack, the stadium skeleton. The lack of communication between the authorities is clear: it was unexpected that we applied the parking brake at the last minute and everything stopped again. After such situations, I have a question: what is the future of the National Stadium? “He expressed his concern.

Concession-based projects not only ease the financial burden on municipalities, but also ensure that cities can successfully expand. Municipalities in a country that is not rich in oil or other land resources have to seek financing elsewhere, so the willingness of companies to cooperate is really good for both parties.

“If the principle of concessions no longer existed and the municipalities had to implement projects only with their own money, urban development would become more complicated. Let’s say that the budget of the municipality of Jonava is 50 million, we can borrow about 750 thousand. euros What can be done with so much money? The appearance of larger projects in one municipality or another is due to a public investment program or loans. In this respect, the 5 big cities have more flexibility, but the smaller cities do not they would have the opportunity to build anything serious or commercially attractive. Without concessions, fewer projects would be carried out in Lithuania, “Mindaugas Sinkevičius explained.