PPP on hold for national stadium
The mayor said that, following the increased central budget subsidy for the construction of the metro, the municipality had extra cash available that could be used for the zł.150 million project. This year, he added, the city was in a position to spend just zł.10 million on the stadium, though the sum would increase to zł.50 million in 2005.
The decision came as a surprise to those businesses that have been eyeing the potentially lucrative contract and some have suggested that municipal funds could, in the end, prove insufficient to complete the project. It is, for example, unclear how much the municipality would be able to commit to the project in 2006 and after.
"If the money has been found [in the city's coffers], then it is difficult to criticize the decision," said Tadeusz Kuczborski, head of business development at West LB, the local branch of the German bank known for its involvement in such projects as the new Wembley stadium in London. West LB has also expressed an interest in financing the Warsaw stadium. "We can only urge the municipality to consider whether there are sufficient funds to complete the project and, if not, to consider all the possible scenarios for its future financing," he pointed out, adding that unless all the options are considered now, the city could run into trouble, "when the money starts to run short and urgent action is required."
Kaczyński appeared to allow for such a scenario, saying that a private investor might be brought in at a later date. The declaration seemed to puzzle some potential investors who privately said it gave the impression of a lack of planning and hotchpotch thinking about the project.
Leo Turno, the president of the Football Stadium Construction and Management special-purpose company, denied any such allegations, saying that the mayor's decision should not be interpreted as sudden backtracking on an earlier plan.
"It is rather a very clear commitment on the part of the municipality that, after careful analysis, this model of financing was judged the most beneficial," he said of the mayor's remarks. He added that the mayor's decision eliminates the risk of a private investor finding potential returns on the investment unsatisfactory.
As the city hall's own lawyers point out, the city council had previously decided that the project would be financed through a public-private partnership. As the mayor is not empowered to overrule that decision, a new city council vote will be required for Kaczyński's plans to go ahead.
Some in the business community have remarked on the recent development as a sign of city hall's mistrust of the private sector. Leo Turno declined to comment on these allegations, although he offered an insight into the authorities' thinking.
"If I were the mayor, I'd be very open to co-operation with business," he said. "But this can lead to temptations and requires a certain level of maturity on both sides. Money can sometimes be difficult to find to employ experts, who might negotiate with businesses on an equal footing."
Yet again, it seems, the challenge of co-operating with business has proven a difficult one for city hall.
The decision came as a surprise to those businesses that have been eyeing the potentially lucrative contract and some have suggested that municipal funds could, in the end, prove insufficient to complete the project. It is, for example, unclear how much the municipality would be able to commit to the project in 2006 and after.
"If the money has been found [in the city's coffers], then it is difficult to criticize the decision," said Tadeusz Kuczborski, head of business development at West LB, the local branch of the German bank known for its involvement in such projects as the new Wembley stadium in London. West LB has also expressed an interest in financing the Warsaw stadium. "We can only urge the municipality to consider whether there are sufficient funds to complete the project and, if not, to consider all the possible scenarios for its future financing," he pointed out, adding that unless all the options are considered now, the city could run into trouble, "when the money starts to run short and urgent action is required."
Kaczyński appeared to allow for such a scenario, saying that a private investor might be brought in at a later date. The declaration seemed to puzzle some potential investors who privately said it gave the impression of a lack of planning and hotchpotch thinking about the project.
Leo Turno, the president of the Football Stadium Construction and Management special-purpose company, denied any such allegations, saying that the mayor's decision should not be interpreted as sudden backtracking on an earlier plan.
"It is rather a very clear commitment on the part of the municipality that, after careful analysis, this model of financing was judged the most beneficial," he said of the mayor's remarks. He added that the mayor's decision eliminates the risk of a private investor finding potential returns on the investment unsatisfactory.
As the city hall's own lawyers point out, the city council had previously decided that the project would be financed through a public-private partnership. As the mayor is not empowered to overrule that decision, a new city council vote will be required for Kaczyński's plans to go ahead.
Some in the business community have remarked on the recent development as a sign of city hall's mistrust of the private sector. Leo Turno declined to comment on these allegations, although he offered an insight into the authorities' thinking.
"If I were the mayor, I'd be very open to co-operation with business," he said. "But this can lead to temptations and requires a certain level of maturity on both sides. Money can sometimes be difficult to find to employ experts, who might negotiate with businesses on an equal footing."
Yet again, it seems, the challenge of co-operating with business has proven a difficult one for city hall.
