The government can’t find funds for roads, it is not only about borrowing money from international financial institutions (IFIs). In Ukraine less than a month to earn the Road Fund, which will increase income on the Ukrainian roads. However, when growth medium quality control of road works remains old.
In November 2016 the Verkhovna Rada of Ukraine has significantly changed the system of management and financing of repair of roads. The change shall come into force at the beginning of 2018, and include the creation of special Road Fund. The Fund will be transferred to trust funds for construction, reconstruction, repair and maintenance of roads of the state (65%) and local (35%) values. Another 5% of the funds provided for activities to ensure road safety.
In addition to government loans, starting from 1 January 2018, directly to the Road Fund shall receive funds derived from the payment of: excise tax from produced in Ukraine in fuel and vehicles; the excise tax imported into the territory of Ukraine fuel and vehicles; import duties on petroleum products, vehicles and tires.
With the start of operation in Ukraine of toll roads and the introduction of appropriate gabaritno-weight control means of the Road Fund will also be financed through two sources: tolls toll roads; charges for violation of gabaritno-weight control.
Logically, with the growth of the budget and the amount of road work becomes more urgent question of controlling the use of funds. In December 2016, the government adopted resolution No. 1065, which was to ensure that in 2018, appropriate control of the quality of repair of roads in accordance with the approved “Requirements for inspection of new construction, reconstruction and repair of public roads” (“Requirements”). In less than two months before the expected “road revolution” in 2018, namely, 8 November, by resolution No. 846, the government introduced changes to the Requirements. How will the control of the Road Fund?
According to the draft Budget for 2018, next year the cost of the repair and construction of roads will be 44 billion against UAH 32.2 billion in 2017, and 19.2 billion in 2016. 35% of these funds will be spent by the regional administrations for repair of local roads.
Does the law of adequate controls on the use of the Road Fund Ukravtodor and local authorities?
To answer these questions, we will look at how will be the quality control of road maintenance, funded by loans from an MFI, and not to say that the Road Fund. As MFIs are in control of the loan funds allocated for repair of roads?
The European Bank for reconstruction and development, European investment Bank and other MFIs, providing funds for repair of roads in the country, stipulates that construction work was performed under clear conditions and with internationally recognized procedures. Ukraine is not an exception.
In our legislation on public procurement there is a special norm, which envisages the priority of application of rules and procedures on the procurement of the IFIs in the implementation of their project funds in Ukraine. Such rules and procedures often include the use of standard FIDIC contracts (FIDIC, the international Federation of engineers-consultants) or other internationally recognized standard contracts. A distinctive feature of these contracts is participation in the construction project, in addition to the customer and the contractor and the engineer. The selection of the engineer, who is usually an international company with a staff of experts, also occurs according to the rules of the MFI. Contracts FIDIC details reglamentary rights and obligations of the engineer, ensuring that he is an influential participant in the construction process. His opinion counts, without approval by the engineer does not occur, no payment under the contract. The engineer, at least formally, and is a representative of the customer, acts independently. How will the control use not to say that the Road Fund?
It is stated that the Requirements approved by Cabinet decision No. 1065 from 28.12.2016, taken with the aim of disseminating the practice of MFIs and participation of an engineer (called a “consulting engineer”) in the process of quality control of road maintenance, which is funded by Nonlending revenues to the Road Fund. But analysis of recent changes to the Requirements, approved by the resolution of Cabinet of Ministers No. 846 from 08.11.2017, it becomes clear that we should not expect a revolution in quality control of construction works in 2018 as: Part of the engineering consultant is not mandatory, but optional. Requirements include the ability to attract the engineering consultant as a form of technical supervision. The result is little that prevents “Ukravtodor”, as before, use your same enterprise, in particular, GP “highway quality control” (previously SE “Dorcentr”) for virtually themselves. Requirements do not ensure the independence of the consulting engineer. The unclear definition of the term “engineer”, the vagueness of its rights and obligations without a more detailed and qualitative legal regulation does not let a specialist to become a real and independent participant in the construction process. Insufficiency of legislative regulation could compensate a competent drawing up of contracts on repair of roads, as do MFIs, using model contracts FIDIC. Unfortunately, it is unclear what will look like the contracts that will be concluded “Ukravtodor” and local authorities. It is unlikely this will be the FIDIC contracts or other international recognized standard contracts. Moreover, it is unclear how will be regulated the role of the consulting engineer in such contracts. Only a small part of road works subject to the Requirements. Requirements apply only to new construction, reconstruction and repair of roads, design of which starts from 1 January 2018. The majority of road works are not covered in this list. Much of the road work is done without design, which provides excellent conditions for the lack of control of quality of work.
Thus, the Requirements lead to more questions than answers regarding the participation of the consulting engineer in the quality control process of repair of roads. The question remains, what tools will be procured the services of an engineering consultant. Will the money of the Road Fund to be used to ensure proper quality control of road works?
It is hoped that the first steps of the government in an attempt to ensure the quality control of road works will be followed by real reform. Unfortunately, it is not necessary to wait from the beginning of 2018.
To ensure quality control of road works can only be the formation of the market of professional services in this sphere with the participation of non-governmental and independent companies with a good reputation and the necessary technical capabilities. The government on its part should ensure the adequate funding of services of such engineers and consultants to ensure their independence.