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Cancelled TGV project - state to pay just 20% of huge compensation claim

tgvPortugal’s General Inspectorate of Finances has looked at the €187 million claim for compensation for the cancellation of the €11.6 billion high speed rail network and decided just 20% of the total applied for is justifiable.

The TGV pipe dream had been drifting around since 1988, finally was authorised by the José Sócrates  government and promptly was cancelled by Passos Coelho in 2012 on cost/benefit grounds i.e. there was plenty of cost and no discernible benfit.

The audit reports followed which tore apart the slap-dash project with scorn heaped on the actions and inactions of both government and management.

A company established in 2000, RAVE, was in charge of the development of the necessary studies and the launch of the procurement procedures. The company’s management clearly did not want to rush things and finally failed in its objectives, having cost the taxpayer a large fortune in the meantime.

In the TGV project report, the conclusions were damning - no pilot studies, no previous experience and an large degree of ‘excess optimism’ which led the inspectors to conclude that the whole project was poorly thought out, financially reckless, badly planned and would be a burden on the taxpayer for decades to come with no positive benefit to the nation.

The PPP financing was singled out for criticism and luckily was rejected by the Court of Auditors which marked the beginning of the end of the whole expensive affair. There also was justifiable suspicion from the public that part of the €11.6 billlion financing would end up sticking to politician's pockets. 

The Auditors’ report noted that the 12 year TGV viability study alone had cost the taxpayer an incredible €153 million. In addition to the 'studies undertaken,' the TGV project cost the taxpayer €32.9 million in 'structural costs' - whatever they were.

After the scheme was cancelled by the current administration, the Ellos consortium led by Soares da Costa SA and Brisa put in astonishing claims for €187 million in compensation for the railroad that was never built.

These companies wanted €187 million but have been awarded just €28.5 million of which the state already has paid €16.7 million on account.

This has been an expensive shambles, poorly conceived, unplanned, unprofessionally managed.

Thankfully, the final insult, payment in full of a well padded compensation claim, has been stopped dead in its tracks by the General Inspectorate of Finances who earns that thanks of a grateful nation.

See also: http://www.algarvedailynews.com/news/4405-portugal-s-high-speed-rail-network-not-financially-viable-according-to-final-report

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Comments  

+1 #6 Joao Martins 2015-08-20 17:49
Quoting Mr Peter Booker,,
'' We must keep reminding ourselves that Portugal as with Greece -would not be changing one iota without the Troika supervision!" says M Harris.''
I come to this country, my birthplace every year for 6 months of the year, i come from a first world country and when i arrive here i acknowledge the new roads hardly anyone uses, the out of date rail system that we must use, so what has changed after all these years,, for me,, NOTHING, i still drive the old crappy roads, still use the crappy train to go to Lisbon, the town i was born in / live in (Quarteira) is a toilet, more apartments are still being built but no parking / road infrastructure, so all this talk of Troika, money, better this or that, all glossy rubbish talk, this country should have been left untouched and all the money should have gone to build more and better hospitals or to help the struggling poorer students but NO, better build new roads that no one uses. Should have let it alone.
+1 #5 Peter Booker 2015-08-19 12:19
"We must keep reminding ourselves that Portugal as with Greece -would not be changing one iota without the Troika supervision!" says M Harris.

And scarcely at all even with Troika supervision.

I have this idea that bad boys though the Portuguese and Greeks are, the real culprits responsible for the mess in the eurozone are the bankers and other lenders who have lent money to these countries without the benefit of any sort of guarantee that they could pay it back. With the result that Greek debt will soon be over 200% and totally unsustainable. And of course, improvident and unregulated (I mean you, Carlos Costa) Portugal is heading in the same direction.

Who is betting that the euro will survive another five years?
+1 #4 M.Harris 2015-08-19 08:33
dw (nationality Portuguese ?) needs to read up on banking regulation in advanced countries. Certainly there is a time lag between laws catching up with new products and activities in banking - but outright fraud, incompetence and dishonesty is punished when proved.

Selling sub prime mortgages, which apparently triggered the original crash, were not in themselves illegal. What was, was the financiers not being open about their risks and bundling them into good investments. And many have been subsequently fined and imprisoned.

All Portuguese banking scandals were triggered externally. Bank employees not even trying to behave within 'global standards and regulations'! And what punishment? Token ankle bracelets - even when convicted.

But as always we foreigners get the incessant intentionally misleading 'equivalence' postings from Portuguese- driven by their self-perceived inferiority.

These countries are not sufficiently developed to have even a definition of 'illicit gain' and the mechanism to detect and punish it. And so the perpetrators of these hopelessly skewed against the public interest PPP's will therefore continue making their millions !

We must keep reminding ourselves that Portugal as with Greece -would not be changing one iota without the Troika supervision! Just not European Union material.
+2 #3 Rob.Thompson 2015-08-18 21:28
Steve could have also mentioned a typical PPP investigation. Perhaps the best known one being the Metro that involved the current Finance Minister. Who had signed the contracts off to launch them several years before. But who now denied any knowledge of them.

So the banks were claiming the money owed them. But the Portuguese Government had looked high and low for their copies of the contracts.

Months went past and the banks, realising they were not dealing with honourable people, then had the brilliant idea of looking up their versions of the contracts. What was odd was that we, the people, were then told that the Bank copies were not the correct final ones. More months then went past.

Then finally, at the end of a corridor in some lonely unused ex-Government offices we learnt of a dusty, storage room. Within which was a single office desk with a locked drawer. Caramba ! The missing PPP Metro contracts ! With the Fin. Mins signature on them.

During the MP's committee hearing held to bury this latest finding we heard the explanation. The offices had fallen into disuse as it was rumoured to be seriously haunted. Being a primitive people, not taken lightly in Portugal.

Apparently live PPP contracts were loath to venture down that corridor - even in daylight. Nightwatchmen told of long dead PPP contracts (remember some PPP's are at least 20 years old) moaning in their filing cabinets. And tapping them on the shoulder if investigating. The Nightwatchmen spinning round - nothing there! Not even a Post-It.
0 #2 dw 2015-08-18 21:10
Quoting Steve.O:
Yet you realise that you are in a bandit country as absolutely no-one is held responsible. Financially responsible. As in seriously fined. Sacked. Punished. Imprisoned. As is highly likely in an advanced EU country.


How many northern European bankers are in prison, have been punished or have even lost out financially as a result of their crimes? And what of the negligent so-called regulators?
+1 #1 Steve.O 2015-08-18 18:43
led the inspectors to conclude that the whole project was poorly thought out, financially reckless, badly planned and would be a burden on the taxpayer for decades to come with no positive benefit to the nation...

There has been many reports over the last few years and they are clearly for Troika type 'outsiders' to attempt to show that "We, Portuguese, are not (exactly) like the Greeks. At least we Portuguese go public about public administration incompetence"

Although, of course, we Portuguese never name any individual for doing anything wrong as they are some heavyweights relative whose family will start a Balkan style feud with ours for generations. Anything PPP or involving pump priming from the public purse (also known as Brussels) seems to fit this category. Can anyone point to one that hasn't? Billions will have been squandered over the years this way.

Yet you realise that you are in a bandit country as absolutely no-one is held responsible. Financially responsible. As in seriously fined. Sacked. Punished. Imprisoned. As is highly likely in an advanced EU country.

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