AmCham Macedonia Winter 2014 (Issue 40) - Page 7

ANALYSIS In November 2013, Macedonia signed a construction deal for two other major highway stretches with the Chinese company Sinohydro Corporation Limited. The first 50-kilometre stretch of this motorway will link Skopje (and therefore Corridor 10) to Stip, a significant national economic hub. Construction on this project should start by mid-2014. The second highway segment will eventually form part of Corridor 8. This 57-kilometre highway will link the important lake resort town of Ohrid to Kicevo (now separated by impassable mountains), greatly improving the trip from Skopje to Ohrid. After initially failing to find a company that would build the two stretches in exchange for toll concession rights, the Macedonian government decided to raise a loan worth €574 million from the Chinese Export-Import Bank. However, the loan terms include the obligation that at least half of the construction services and materials be Chinese. This loan marked the first serious attempt by the Macedonian government to tap into the €10 billion in Chinese funds earmarked for transport projects in this region. But the government is not entirely abandoning the idea of finding companies that would build and operate parts of its highways. The International Finance Corporation is currently advising the government on preparing a tender for two additional highway stretches: 1) the 35 kilometer long highway stretch from the western town of Gostivar to Kicevo, part of Corridor 8 and 2) the 13 kilometer long highway leading from Skopje to the border with Kosovo. The only missing piece of this puzzle at this stage is a plan to build the stretch of Corridor 8 that would link Kumanovo with the Bulgarian border. A new highway will draw Macedonia & Kosovo closer Just last month, Kosovo created a short-list of companies (including U.S.-Turkish venture, Bechtel-Enka, which recently completed Kosovo’s first highway, from Pristina to the Albanian border) to eventually build the 65-kilometre stretch of highway running from Pristina to the Macedonian border. As Kosovo moves closer to awarding a tender, the Macedonian government signaled has echoed its intention to complete a much shorter, 13 kilometer, stretch from the border to Skopje. While the Kosovo part of the Emerging Macedonia Winter 2014 Issue 40 highway will cost some €600 million, the Macedonian stretch will cost an estimated €70 million. The Macedonian Transport Ministry recently signed a consultancy contract with the IFC, to prepare a tender to begin the selection process of a company that would eventually build and operate this road. The Transportation Ministry signaled it is likely to release the tender after the presidential and early parliamentary elections now scheduled for mid April 2014 and should be built by 2018 at the latest. The new road is expected to significantly boost trade relations between the two countries, Kosovo being one of the few countries with which Macedonia maintains a significant trade surplus, especially in agricultural and oil products. The volume of trade between the two countries reached some €300 million in 2012. The motorway will also ease the sale of services to Kosovo residents who already regularly travel to Macedonia for medical, retail, educational, tourism and other services. Reviving rail After more than 30 years of virtually zero investment in its railways, Macedonia launched a major project in 2012 to reconstruct the most battered lines as part of Corridor 10. EBRD is financing the €17.6 million project, which is aimed at boosti