NAMRB Management and the Ministry of Regional Development and Public Works discussed measures for stimulating the investment activities

A special program for road repairs and water supply network with national funds, agreed at the beginning of the year, the Municipal Investment Fund and the progress achieved for indexation of construction contracts were the main discussion topics at a working meeting between the Minister of Regional Development and Public Works Grozdan Karadjov and NAMRB Leadership.

By the end of May, funding applications for 268 municipal road network sites were submitted to the Ministry of Regional Development and Public Works worth nearly 1 billion BGN. Another 95 road repair projects have been submitted within the additional 15 days deadline. During the negotiations for Budget 2022, an agreement was reached to allocate BGN 500 million from the budget of the Ministry of Regional Development and Public Works for repairs of municipal infrastructure. 419 million BGN have already been set aside, and the remaining 82 million BGN will be provided with the budget update. The funds are extremely insufficient, against the background of the condition of the municipal road network, the Ministry of Regional Development and Public Works reported. Part of the resource is planned to be provided for projects in water supply and sewerage, where the need for investment is even more drastic. Under this component, the regional ministry has so far received documents for 900 water supply and sewerage sites worth approximately 1.5 billion BGN. Thus, the municipal projects awaiting funding from the Ministry of Regional Development and Public Works, for which it is not possible to be implemented with funds from other sources, are worth nearly 3 billion BGN.

The prioritization of proposals will begin in early June. The leading criteria for the roads will be the condition of the respective section and whether it provides the only access of the people to the settlement and to the social infrastructure. Ministry of Regional Development and Public Works will establish an organization for reliable control, and inspections will be carried out before and after the construction activities. An important condition is that the projects proposed by the municipalities do not include a street network, but only roads, including those parts of them that pass through the settlements.

Municipalities that have not completed the process of joining the consolidated territories will not be able to apply for investments in water supply and sewerage infrastructure. If the consolidation of a district is not fully completed and there are municipalities in it that are served by a municipal water supply and sewerage operator, they will not be able to receive funding. However, the other municipalities in the district, where the services are provided by one water supply company, will have access to the funds, according to the Ministry of Regional Development and Public Works. Priority will be given to projects for settlements with introduced water supply regime. The deadline for completion of construction and installation works on the sites financed this year will be December 31, 2023. Therefore, it is recommended, if possible, that the projects be divided into stages. Phasing will allow more sites to be launched within the calendar year.

Ministry of Regional Development and Public Works will publish criteria for project evaluation in June.

The optimistic forecast is that the mechanism for indexation of construction and installation contracts will be operational by the middle of the summer. After the adoption of the already submitted amendments to the Public Procurement Act, the approval of the indexation methodology is forthcoming, which is at an advanced stage of preparation. For now, there is a possibility to increase the agreed prices by 15%, and both the Ministry of Regional Development and Public Works and the municipalities consider this amount of indexation unrealistic and will insist before the Ministry of Finance for a margin of up to 30%.

NAMRB will insist that the announced Municipal Investment Fund starts operating as early as this year, which would partially compensate for the lack of European funds. Municipalities are adamant that the program for road repairs and water supply network, which they agreed with the Ministry of Regional Development and Public Works, should be a separate tool.

According to the data on the implementation of the budget for 2022, presented by the Ministry of Finance within the National Meeting of Financiers from Municipalities, the low implementation of capital programs in the system of municipal expenditures is impressive. The reason for this is both the difficulties in the implementation of investment activities caused by the rise in prices in the industry and the delay in the programs of the new period 2021 - 2027.

NAMRB leadership and Deputy Prime Minister Karadzhov agreed to hold separate thematic meeting dedicated to clearing all issues and details about the measures to be funded by the Recovery and Resilience Plan and especially the Energy Efficiency Program.