POLAND’S third largest construction company and one of the Euro 2012 contractors, PBG, and two of its subsidiaries declared bankruptcy this Monday (June 4th) because of liquidity problems stemming from infrastructure contracts and road work done in preparation for the Euro 2012. The tournament opens today in Warsaw.
When Poland won the right to host the Euro 2012 tournament along with Ukraine five years ago, the local ambitions were great. Poland planned to build more than 2,600 km of highways and several companies, including PBG, rushed to get a hold of an infrastructure contract associated with the event.
But in the race to get contracts, both the construction companies and the government seem to have left their calculators and their common sense at home, writes the Financial Times. The Polish government chose the cheapest bids, and the bidding companies sold themselves too cheap in the race to get a contract.
The Chinese construction company Covec, which won the bid to construct two sections of Poland’s main east-west highway, lost its contract last year after failing to pay its subcontractors, and the company that took over Covec’s contract, DSS, declared bankruptcy earlier this year.
It is estimated that Poland has spent more than $25 billion on projects associated with Euro 2012, such as road and rail construction and the building of four new stadiums.