CZ/SK verze

"New Railway Corridors Crucial for Europe's North-South Connection," Emphasizes BUDIMEX Management

&quote;New Railway Corridors Crucial for Europe's North-South Connection,&quote; Emphasizes BUDIMEX Management
photo: RAILTARGET/"New Railway Corridors Crucial for Europe's North-South Connection," Emphasizes BUDIMEX Management
09 / 11 / 2023

At TRAKO 2023, we spoke with BUDIMEX's management about the entry of the Polish construction giant into the market. Our guests were Maciej Olek, board member and director for industrial, energy, and transport construction, and Dariusz Bac, director of railway construction.

In the Czech Republic, BUDIMEX may not be widely recognized yet, but it holds a strong position in Poland and internationally. Could you tell us more about the company?

Maciej Olek: BUDIMEX is a Polish company with over fifty years of history. It initially made a name for itself through foreign contracts before refocusing on the Polish market, including several years of operations in Germany. We have a longstanding branch in Cologne, Germany. Recently, we altered our development strategy to re-enter international markets, focusing on the Czech Republic, Slovakia, and the Baltic states. We are also exploring the Swedish market. We have established entities in all these regions and are opening a branch in Riga for a Rail Baltica bid. In Germany, we operate three entities, including Rail BX in Cologne, which received Deutsche Bahn certification for electric traction construction. Our Czech and Slovak operations were previously discussed by Rafal Zahuta.

Regarding Rail Baltica,  the Visegrad Group countries have recently persuaded the EU that simply modernizing existing corridor lines is insufficient. Instead, a high-speed railway network is necessary to connect our region with Western Europe using advanced railway technology. This includes linking the north, through Rail Baltica, with the south of Europe. Our countries have now incorporated this network into the TEN-T system. Specifically, Poland has embarked on the CPK project. What contributions can BUDIMEX make to these projects? What opportunities does it have, what are its plans, and is it feasible to complete the projects within the timeline stipulated by the TEN-T regulation?

Dariusz Bac: Constructing entirely new railway corridors is an essential task, particularly in connecting Europe's north with its south. BUDIMEX can particularly offer the necessary potential to comprehensively manage such projects. This includes active participation in the preparation, design, and securing of the required permits and decisions. We possess the necessary engineering and technical staff, as well as a construction and machinery park.

In general terms, we are fully prepared to undertake large-scale projects like High-Speed Rail (HSR). We are the pioneering Polish company in modernizing the CMK (Central Railway Main Line from Warsaw to the South), which now operates at a maximum speed of 200 km/h. However, two stations – Olszamowice and Idzikowice – have been upgraded to support speeds of up to 250 km/h. This line already features switches that meet high-speed rail parameters.

Therefore, we bring real experience and investment in enhancing railway infrastructure quality. Coupled with our capabilities, this forms a solid foundation for implementing all types of railway projects, not just high-speed ones, abroad. We are gearing up for Rail Baltica projects in all three Baltic states, aiming for a smooth initiation and execution of these projects.

You are, therefore, a natural partner for CPK (High-Speed Rail and Airport) in Poland. Central Europe is undertaking what is set to be one of the largest rail projects in Europe in terms of financing. What are the costs of your work, and what is BUDIMEX's perspective on financing this project, especially in the wake of the energy crisis, the shortage of some materials in the market, and the wave of inflation that's sweeping through economies, similar to the pre-Covid era?

Maciej Olek: Funding has become a significant challenge, particularly due to recent events. The pandemic, followed by Russia's aggression against Ukraine, disrupted supply chains, and the surge in energy prices have resulted in higher costs than those seen 2-3 years ago. It appears unlikely that we will revert to pre-crisis pricing. Consequently, investors should anticipate higher expenditures than initially projected. Naturally, the cost of executing a project is contingent upon its model, technical solutions, and client specifications.

We possess a substantial project and technical background, which prompts us to actively encourage investors to collaborate on technical solutions. The insights we've gained can greatly contribute to optimizing new projects. The CPK project, comprising 1800 km of new railway infrastructure, is historically unprecedented. Therefore, it's vital to foster dialogue between the market and investors regarding solutions, experiences, technical designs, and materials, to achieve the best possible outcome. While it's theoretically feasible to construct with high-end materials like gold and platinum, the current focus is on optimization through cost-benefit-use-value analysis.

We've dedicated many years to creating opportunities for external investment. In our discussions with CPK, we've proposed that beyond our role as a general contractor, we could also participate as a financial co-investor. This could take the form of a Public-Private Partnership (PPP) or involve financing specific segments of a project. We're open to engaging in similar discussions internationally. Our parent company, Ferrovial, has a successful track record of implementing concession-based models for projects globally.

We have the necessary expertise and thus view the prospect of implementing PPP projects in the Czech Republic positively. Systemic financing challenges are expected, even at the European level. Often, if one project receives funding, another may not. Therefore, we encourage clients to be open to public-private partnerships, as they can be beneficial for everyone, including the end users. If funding from existing sources like the CEF falls through, there's an opportunity for dialogue with companies like ours on alternative ways to complete the network. The future holds many possibilities, and we are very interested in and eager to engage in projects within the Czech Republic.

Rafal Zahuta: BUDIMEX's entry into the Czech market will increase competition and could positively impact prices.