The Elin Pelin – Kostents railway line has become more expensive by over BGN 122 million

The large-scale modernization of the Elin Pelin – Kostenets railway line, which is part of the Sofia-Burgas route, is becoming dramatically more expensive. Between 2022 and the end of 2024, the project will cost over BGN 122 million excluding VAT. This amount includes indexation, copyright agreements, and decisions for additional tunnel reinforcement. The new type of reinforcement alone costs over BGN 71 million.

The problems with the tunnel were known two years ago, but were only officially announced this year.

However, the project will become even more expensive, as the tunnel near Vakarel needs further reinforcement. An independent geological and structural survey is currently underway. The aim is to determine the most appropriate technology for continuing the construction of the facility.

We would like to remind you that the railway line is divided into three lots. The first is between Elin Pelin and Vakarel, the second between Vakarel and Ihtiman, and the third between Ihtiman and Kostenets. Separate construction contracts were concluded for each of them following a public tender in 2017. The contracts were signed two years later. The project is funded by the Operational Program “Transport and Transport Infrastructure” 2014 – 2020.

The contract for the first lot, which includes the tunnel passages, is the most expensive. This is also the contract with the largest increase in price. The second lot has seen the smallest price increase.

Just two weeks ago, Transport Minister Grozdan Karadzhov announced that the cabinet was allocating BGN 238 million for additional payments on railway projects. According to the minister, the money will be used to pay old indexations requested back in June 2021 under contracts for major railway projects. The Elin Pelin – Kostenets line was also included in these contracts.

However, it remains unclear how much money each project will receive. Although the Council of Ministers' decree has been uploaded to the legal information system, it does not contain a detailed breakdown. Because of this, it is unclear when each requested indexation was paid.

The signed additional agreements for the Elin Pelin – Kostenets railway line state that indexations are to be paid within 30 days of their signing. It is unclear whether there have been any delays in these payments. There were quite a few requests for indexation, as can be seen from the buyer's profile on the website of the National Railway Infrastructure Company.

It became clear back in August last year, during an inspection by former transport minister Georgi Gvozdeikov, that the project would become more expensive. At that time, he announced that the contractors had requested additional funds, but did not specify the exact amounts.

Lot 1: Elin Pelin – Vakarel, over BGN 100 million increase

The Elin Pelin-Vakarel section (lot 1), which includes the construction of tunnels, is the most significantly overpriced – by over BGN 100 million excluding VAT. The reason is the requested indexation of over BGN 28.6 million, as well as additional BGN 71 million for modified tunnel fastenings. At the beginning of the project, an additional agreement was signed for author supervision for just over BGN 1 million excluding VAT.

As a result, the initial contract from November 2019 worth BGN 498.8 million excluding VAT has already reached over BGN 599.5 million excluding VAT. This represents an increase of nearly 20.2% over the initial value. To this end, a total of nine additional agreements were concluded between the end of 2022 and the end of 2023.

The contractor is the Turkish consortium “Cengiz-Dui Railway Elin Pelin,” with the Turkish companies ‘Cengiz’ and “Dui” as participants.

Strengthening the tunnels

This is undoubtedly the most complex section of the line, including the construction of the longest railway tunnel in Bulgaria and the Balkans – the one near Vakare. However, it is precisely here that the builders are encountering problems, which were first hinted at by former minister Georgi Gvozdeikov in August last year, when he mentioned that the construction of the tunnel “poses serious challenges due to the geological characteristics of the site.”

The problem was publicly announced by Transport Minister in March this year. According to him, the method used so far to reinforce the structure is not effective. He further explained that the tunnel is undulating due to the initial design, which provided for only slight reinforcement. However, the soil, which is mainly clay and sand, is causing problems. Thus, two and a half years ago, additional reinforcement was undertaken, but this has not had the desired effect. According to Karadzhov, this now requires a “third design” with a new type of reinforcement.

New anchors and heavier fasteners have been installed in a 50-meter section, which have not yet deformed. This method must be applied along the entire length of the tunnel.

This is a very serious overhaul, which must be carried out without stopping work,” the minister said.

He added that the limits for unforeseen works have been reached in agreement with the European program financing the project. Karadzhov also mentioned a special annex signed a year ago, but did not disclose the cost increase to date.

However, this is clear from the additional agreements signed. On May 30, 2023, the documentation shows that such an agreement was concluded for modified fasteners for the primary lining of the two tunnels in the section (note: the larger one is almost 7 km long and the smaller one is about 1 km long, which has already been dug).

The documentation states that additional studies in April–May found that the rock mass is softer and the groundwater exceeds the requirements of the initial design. The usual anchors do not provide sufficient load-bearing capacity, so the contractor has proposed adding five types of reinforcement anchors and steel mesh.

The financial cost of the reinforcement is over BGN 71 million excluding VAT. The activities should have started after the agreement was signed. However, it is unclear which ones they are, as according to Karadzhov, several different attempts at reinforcement have been made. However, an additional agreement was signed on July 17, 2023, according to which NKZI will pay an advance of 15% of the cost of the reinforcement, or just over BGN 10.6 million excluding VAT.

Lot 3: Ihtiman – Kostenets, nearly BGN 20 million above the initial price

The modernization of the Ihtiman – Kostenets railway section (lot 3) has increased in price by over BGN 19.5 million excluding VAT, reaching over BGN 414.1 million. The initial contract was worth BGN 394.5 million excluding VAT.

The increase is the result of six consecutive additional agreements, all justified by the Methodology for price changes in public procurement as a result of inflation. The first such request was made at the end of 2022, and the last one at the end of 2023.

The contractor for this lot is Strabag GP Rail 2017, comprising Strabag AG – Bulgaria branch, Strabag Sp. z o.o. – Bulgaria branch, Strabag Rail GmbH, and GP Group AD.

Lot 2: Vakare – Ihtiman, additional services and indexation

The increase in price for this lot is the most modest. At the beginning of the implementation, an additional agreement was concluded for author supervision worth BGN 119,500 excluding VAT. Although this does not change the value of the contract, it is a type of price increase. The contractors have requested only one indexation at the end of 2022 in the amount of over BGN 1.6 million. Thus, the initial contract value of over BGN 113.6 million excluding VAT has been increased to over BGN 115.3 million excluding VAT.

The contractor is Euro Put DZZD, with participants VDH AD, Ingstroyengineering EOOD, and Bitumina GmbH-Bulgaria.

Translated with DeepL.