The construction crisis threatens the execution of European funds

The rise in the price of raw materials has become an unexpected obstacle to the Spanish economy. Not only has it tightened the supply chain in recent months and raised the energy bill, but it has also triggered a real halt in the energy sector. construction. A key industry for the economy … and a fundamental lever for the execution of European funds.

The construction employers sounded the alarm several months ago, but the Administration He did not recognize the braking until just a few days ago. It was the president of Adif, María Luisa Domínguez, which admitted a week ago in an interview with EP that the problems

with raw materials, they had already affected the deadlines for certain works.

Specifically, delays have occurred in projects such as high speed to the Basque Country, the Mediterranean corridor between Murcia and Almeria and in the Extremadura section between Talayuela and Plasencia. The public company assures that it has already unblocked these problems by negotiating with the contractors a revision of the previously agreed prices.

But he is also aware that, if the legislation is not changed, problems will recur in the short term. “In the ministry we have a working group focused on this matter and we have asked the Treasury that the revision of the prices of the work contracts is recovered “, they explain from Adif.

Until 2015, public contracts included this review in case unexpected cost increases occurred in the execution of the works due to the revaluation of certain materials. The deindexation law approved by the previous governmentHowever, it eliminated the mandatory nature of this review because it considered that it fed inflation in a certain sense. A modification that has caused the contracting companies to fully assume the increase in raw materials.

Now the Government is studying how to reverse this measure. The Secretary of State for Transport, Isabel Pardo de Vera, referred to this matter last week in an appearance at the Congress of Deputies, where he acknowledged that budget execution had fallen in 2021 due to the rise in prices of raw materials and energy, as well as the shortage of certain products. That is why the number two of the ministry supported the revision of the contracts to “distribute risks.”

On Transportation they are aware that the moment is crucial. “Spain is going to be under construction for many years,” he said. Pardo de Vera on the Low camera. Indirectly, the ministry’s number two referred to the distribution of European funds, an arduous task in which the Ministry of Transport will play a crucial role. The Budgets for 2022 contemplate an endowment of 5,875 million euros from European funds for the department led by Rachel Sanchez, the ministry that will receive the most budget in 2022 of the Next Generation funds.

Now the most important (and complex) thing remains: the disbursement of these funds. At first the government He hoped that it would start throughout the fall, although now the intention is for the executions to begin before the end of the year. From the Ministry of Economy they have specified to Efe that this first formal disbursement would be about 10,000 million euros.

Concrete projects

The construction sector seems essential for this rain of millions to materialize in specific projects. For this reason, from Transport they send winks to the contractors, who have had to endure in recent months the increase in price of all kinds of materials. The aluminum, for example, has reached all-time highs since 2008, reaching $ 3,000 per tonne.

When the price of raw materials began to take off, back in May, most analysts took it for granted that it was a temporary problem. It was not so. The increases have continued throughout the last six months, and although it seems that the worst is over and prices are deflating, the crisis has left a huge hole in the balance sheet of construction companies. According to the data of the National Construction Confederation (CNC), 40% of the companies in the sector have had to paralyze or suspend projects in recent months due to this increase in cost. «In all areas there is a shortage of raw materials. Many subcontractors are giving up the execution of the works because they are unable to acquire materials that have risen more than 50% in recent weeks, “he explains the president of the employers’ association of large concessionaires and construction companies (Seopan), Julián Núñez.

The small print

In Nuñez’s opinion, this problem “can greatly affect the investment of European funds”, especially since next year Spain should already have a percentage of these projects executed. “In the program Next Generation You can also impute works that are already in execution, and those rise in raw materials has affected them fully, ”says the president of Seopan.

The ball is now in the court of the Treasury. Sources from the Transport portfolio assure that the revision of the contracts will be carried out, but it is still pending to establish “the fine print” of the measure. “Not all contractors are going to be eligible for this review. It is still necessary to determine under what conditions the review can be carried out ”, warn these same sources.


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