In 2012, the constructions sector will benefit from the advantages of starting an election year, this being the main factor invoked by sector company representatives, regarding a possible market growth. Thus, among the aspects already proposed by authorities in this sense, count the recent budget corrections with which funds earmarked for investments in 2012 were increased. Also, important measures for the construction sector include the possibility of concluding public-private partnerships for social housing constructions, by means of the National Housing Agency (ANL), amending the legislation and increasing the funds earmarked to the "First home" program or the opportunity to access European funds for implementing several heat rehabilitation projects for blocks of flats. At the same time, in order to eliminate certain problems faced as part of the open tender processes, sector associations negotiate the certification of construction companies at ministry level, while preparing specialized programs for competent personnel training. However, it remains to be seen to what extent the new government will manage the country’s economic situation in the near future, as resuming the investment activity and implicitly the construction market evolution will depend on this background. It is obvious that the Government’s resignation, announced at the beginning of February 2012, will generate a period of uncertainty on the Romanian investment market, all we can currently hope for being that the period of transition and transfer of authority be as short as possible and not affect the program undertaken as part of the agreement with the International Monetary Fund (IMF). Romania is now undergoing a risky period, whose main consequence can be represented by its not reaching the economic objectives undertaken, and this could be translated by investors into a blockage of transactions and funds available at a local level. According to the construction companies’ representatives, the new Executive authority should set the priorities of continuing investment projects, reducing the budget deficit as close as possible to zero level, but at the same time maintaining economic growth and reducing taxation, which creates additional pressures on the private environment.
Investment funds increase, following budget amendment
According to the most recent budget amendment, the main changes target investment support. Thus, the Ministry of Transports and Infrastructure (MTI) will receive additional funds amounting to RON 722 million, out of which RON 500 million will be used for the payment of arrears to the National Company CFR SA, RON 155.7 million are intended for continuing investments for the projects carried out by the National Company of Highways and National Roads in Romania (CNADNR) SA and Metrorex, RON 24.5 million will be earmarked to the co-funding of European programs and the difference of RON 82.5 million will be distributed to the companies managing railway and underground transport, for granting social subsidies. Moreover, the budget of the Ministry of Regional Development and Tourism (MDRT) will receive an additional RON 430 million, mainly for the payment of arrears to the companies having performed local interest roads rehabilitation and modernization works (as per the Government Decision 577/1994), but also for the construction of housing units intended for rental to the youth and payment of the savings premiums, according to the Emergency Government Ordinance 99/2006. Last but not least, the Ministry of Culture and National Patrimony (MCPN) will receive RON 53 million, out of which RON 47 million are intended for delivering works for the National Library. Also, the registered capital of the National Credit Guarantee Fund for Small and Medium Enterprises (FNGCIMM) was increased by RON 250 million – a measure which is going to allow the granting of loans to companies, in view of generating new jobs. Former Executive authority representatives showed that the budget amendment was implemented against the background of our country’s recording between October – December 2011, an economic growth for the fourth consecutive quarter and a 4.5% Gross Domestic Product (GDP) growth, in the last six months of last year, as against the same timeframe of the previous year.
Public-private partnerships for social housing construction
One of the projects announced for facilitating the construction of social housing intended for the youth, provided by means of the National Housing Agency, targets the application of public-private partnerships for the construction of housing units for rental, investors who become involved in these projects being to receive 30% of the amounts obtained from the related rents, until write-off. According to an emergency ordinance recently approved by the Government, Law 152/1999 on the organization and operation of ANL is amended, the new provisions indicating the fact that the amounts collected from the rental of housing units built in public-private partnership will be distributed to a share of 50% to the state budget, 20% to ANL and 30% to the investor. The new proposals will also be applied in the case of projects underway, in order to include them as soon as possible in the public domain. ANL will be responsible for the assignment of lease contracts, to be concluded for an average 20-year duration. Thus, the private investor ensures unit funding, in order to subsequently recover funds through the 30% share obtained from rent collections and other regular unit payments, which are to be reimbursed by ANL according to the law, from the MDRT budget.
Over EUR 1 billion funds for crediting through the "First home" project
Good news for construction companies also consists in the possibility to continue the "First Home" program, at least until September 2012, as the necessary financial resources are available, according to the FNGCIMM officials. Thus, there are funds to continue program implementation, totalling over EUR 1 billion, considering that the program records approximately 85 applications per day, and the medium credit value is EUR 38,500. "By the end of last year, 52,000 contracts were signed with beneficiaries, out of which only 35 required payments from the fund", as declared by Aurel Saramet, FNGCIMM president. The "First Home" program was launched in 2009, being currently in the fourth implementation stage.
Thermal rehabilitation program, stimulated with EUR 360 million worth of European funds
The European Commission (EC) has recently approved the re-allotment of the EUR 360 million from other operational programs for the implementation of blocks of flats thermal rehabilitation projects, countrywide. According to an announcement made by MDRT officials, the amount would suffice for the rehabilitation of approximately 250,000 apartments, for which works could be launched in May 2012. The respective funds will be re-allotted from the Operational Programs for Human Resource Development (POSDRU), Technical Support and Administrative Capacity Building, managed by the Ministry of Labour, Family and Social Protection, Ministry of European Affairs, respectively the Ministry of Administration and Internal Affairs. "The thermal rehabilitation of blocks of flats represents a Government priority, followed by the delivery of large infrastructure works. Following re-allotment of these funds, we expect the possibility to rehabilitate approximately 5,000 blocks in 2012", as mentioned by the Former Government officials, following negotiations with the European executive authorities.
Article published in the January/February 2012 issue of the AGENDA CONSTRUCTIILOR Magazine. For detailed information click here!
