Money Buried in Sand
The Crimean economy shoulders a heavy burden of unfinished projects
The other day the Supreme Council of the Crimea again addressed the persistent problem of unfinished construction projects. In Soviet times, such unfinished projects were the result of the practice of year-by-year distribution of capital investments without due account of funding sources. Today’s situation is supposed to be different. Although the Crimea has been implementing a regional program to cut the number of unfinished projects since 1999, this number is still staggering. According to Anatoly Kotseruba, chair of a special parliamentary commission, there are about 1,200 unfinished projects on the peninsula, including 700 in the public sector. The deputy claims it will take about 1.5 billion hryvnias to complete them. However, agencies provide different figures. For example, the Main Department of Public Works and Construction and the Ministry of Architecture say there are 674 and 464 unfinished projects, respectively. There is no unanimity even within the same agency — the Ministry of Economy. In one of its documents 428 projects are included in a blacklist, while another lists 875. In any case, these unfinished projects have swallowed billions of hryvnias with no apparent effect. Moreover, to quote Mr. Kotseruba, “today these construction sites are not being guarded and are being cannibalized; they were not properly mothballed, their documentation is obsolete, and some of them have stood idle for ten years.”
The parliamentary commission chairman suggests taking stock of these sites in order to choose the ones that will be finished at budgetary expense and commissioned next year. The Speaker of the Crimean Parliament Borys Deich claims, however, that neither the Crimean nor the national budget have the UAH 1.5 billion needed to complete them. Besides, Mr. Deich maintains, the Crimean leadership does not know which projects should be taken out of mothballs first and whether this will have any effect. On the other hand, there is no doubt about which of the projects should be written off. The trouble is that this list often targets the wrong projects — either by mistake or lack of awareness. For instance, the list of projects being written off includes a 640-seat additional classroom area at the Saky school, although UAH 1,400,000 have already been invested in this.
How is the above-mentioned program being implemented?
“Everything should be transparent. Everything — project accounting, write — offs, sales, and commissioning — must be recorded,” Mr. Deich told a parliamentary session, analyzing the implementation of the program. In his view, “it is high time we set up an informational software program to keep a computerized account of unfinished construction projects.”
Meanwhile, another factor contributing to the mess in the construction sector is the fact that the Crimea has failed to establish a regional executive body to formulate policies on unfinished construction projects that belong to this autonomous republic. In theory, this is dealt with by the Main Department of Public Works and Construction, the Ministry of Economy, the Ministry of Architecture, the Property Fund, and even the Works and Construction Department of the Crimean Committee for Nationalities. But in fact this “collective responsibility” has created a situation in which no one cares about these neglected construction sites. Several government officials have been in charge of this; this time it’s a first vice-premier. On the face of it, they’ve increased the level of responsibility for the unfinished facilities. Yet this bureaucrat is also incapable of taking a forthright approach to the problem because all the above-mentioned departments are subordinated not to him but to altogether different vice-premiers.
This may be the reason why the Crimea still has no bylaws that would regulate an approach to the abandoned construction sites. It is not clear who actually owns the unfinished property. As a result of the “property mess,” 83 entities remain unclaimed. For example, in 2003 the village of Krymska Roza, near Simferopol, built but failed to commission a school boiler room.
The downside of this unfinished construction is not only millions of wasted hryvnias but also the fact that new funds are being appropriated with enviable regularity every year to finish the construction. As a result, capital investments, instead of being concentrated, are being squandered time and again on a host of dead projects. Experience has shown that almost half of all construction projects remain unfinished. According to Mr. Deich, 63 new entities were included in the 2003 plan of capital investment distribution, 32 of which were stripped of funds this year and are going to be unfinished. Nevertheless, 53 new projects have received funds. Should the current trend continue, soon the peninsula is likely to see about 25 new unfinished sites — the self-reproducing mechanism is working at full blast.
The Speaker of the Crimean Parliament puts the blame on imprudent use of funds. In 2002 they began to lay a gas pipeline from the village of Tokarevo to the village of Shubino (Kirov district) at an estimated cost of UAH 3.4 million. Immediately 1.1 million hryvnias were allocated, but since last year not a single kopeck has been earmarked. While the pipe is rusting away, a million- plus hryvnias have gone down the drain. In 2000 they began building a gas pipeline worth UAH 0.6 million to the village of Komarivka (Krasnohvardiysk district). Everything ground to a halt after 0.2 million had been spent. There is still no water supply in the village of Kyrpychne, near Simferopol, where work on a 1.35-km aqueduct began in 2002.
“For some reason, the problem of unfinished construction seems to have taken on a life of its own. The impression is that all interested parties have adopted a complacent wait-and-see attitude, hoping the problem will disappear by itself. But life shows that it will not just vanish,” the parliament speaker concluded. Meanwhile, parliamentarians have instructed the government to assess each unfinished construction project by December 1. The government is going to divide all the unfinished sites into three categories before January 1, 2005. Some of them are to be privatized next year, so the new owners will be finishing them. Others will acquire public utility status. The third category will comprise low-priority and socially hazardous projects that will have to be decommissioned.
