Rising construction prices and building materials supply problems have caused the Estonian Transport Administration to postpone nearly 50 roadbuilding projects planned for this year to pay existing contractors more.
Because compensating contractors for construction and asphalt price hikes will set the authority back nearly €24 million, almost 50 planned roadbuilding projects will have to be postponed beyond 2022, the agency said.
"This concerns all counties and the objects affected include road surface renovations, new road sections and reconstruction of intersections," Director General Kaido Padar said. Estonia will be building 1,700 kilometers of roads this year compared to the annual average of about 2,000 kilometers. State roads stretch for a total of 16,662 kilometers.
Negotiations with infrastructure builders saw an agreement where the administration will pay for price advance of 4.6 percent. The rate was calculated based on the construction price index.
"In addition to the general price hike, we will be compensating the price advance of asphalt in full. Estimates put the total volume of compensation at around €15-20 million and if we add to this €4 million for state road maintenance compensation, it amounts to compensation for 15 percent of expenses considering our budget," Padar said.
He added that the administration will retain its recent planning volume to have projects ready to go should the economic situation improve.
All major roadworks projects will be taken forward, with the Pärnu-Uulu 2+2 section of highway the only new major procurement estimated to cost €38.4 million before VAT. The project is funded from the European Cohesion Fund.
Editor: Marcus Turovski