Mediterranean Hegemony Road

After listening to Lancelot's words, Beshil Ivanov broke out in a cold sweat. There is no problem with cost accounting errors, but if the error exceeds 20%, the cause must be investigated. If the gap is confirmed, then this is a very serious administrative accident.

If it is an ordinary time, there is a mistake, as long as it is corrected in time, it is not a big deal. But this time is different. Who will fill the huge pit with a difference of more than 60 billion?

Fortunately, this is before winning the bid. If after winning the bid, the winning bidder can take this evaluation report to touch the porcelain, directly pay all the construction costs and management costs, and let the Ministry of Communications help to undertake the construction. It is estimated that the Ministry of Communications will be arrested. It's dead!

Of course, it is impossible for such a thing to happen in Bulgaria. If you touch the government's porcelain, do you still want to have a good life?

What Beshear is worried about now is that these two companies are scared away by this cost, and how will it end? He, the Minister of Transport, will be in big trouble!

After a moment of silence, Smith said, Our Bulgarian road construction company has limited financial strength and cannot afford this investment of more than 120 billion levs!

Followed Howell also said: Unfortunately, the investment of more than 120 billion levs is really too large. Even if it is divided into ten years, it will cost 12 billion levs every year. We in Bulgaria The highway group company does not have the strength to undertake this investment independently!

Neither of them said they would quit. This is undoubtedly good news. Beshear knew that the shareholders behind the two companies were the beneficiaries of this plan. Will support this program!

Beshear opened his mouth and asked: What ideas do you two have to bring up? Regarding the issue of cost accounting, our government can re-investigate with your company's technical staff to determine the new project cost, which will take a certain amount of time.

However, if you want to continue to build this project, you will still bear the final investment cost, but the government will give you certain support according to the actual situation!

Smith said hesitantly, I'm sorry,

Mr. Beshear's investment of more than 120 billion levs has far exceeded our budget, and the Bulgarian highway alone cannot support this expenditure.

At the same time, the issue of profitability is also a problem. According to the government's plan, non-luxury vehicles cannot make huge profits from the use of oil. The real profit point is family cars.

According to the economic development in Bulgaria, the project will be fully completed after ten years, and the national car holdings will be between 2 million and 3 million.

Then the annual revenue may not be enough to pay the bank's interest. If we count the operating cost, maintenance cost, and time cost of capital, our annual loss will be as high as 5 billion to 8 billion lev.

Even after 20 years, our domestic car holdings have doubled, and we are still in a state of loss, and we have to add interest on the interest owed in the previous 20 years. The economic experts of our group told me that the loss The numbers will be even bigger!

This has been accumulating, and I doubt that this project will have the day to pay off the bank interest! Of course, banks probably wouldn't dare to lend such unlimited loans, and they also have to consider the safety of depositors' funds!

Howell immediately retorted: No! Mr. Smith, you are too pessimistic. In theory, as long as the national car holdings reach 20 million, and the average fuel cost per car is guaranteed to exceed 1500 levs, If we calculate by doubling the oil price, then there will be a gross profit of 1.5 billion levs, which can basically break even!

Of course, the premise is to meet this standard within 20 years, otherwise the capital cost accumulated over time will be beyond our imagination!

After listening to Howell's explanation, everyone shook their heads speechlessly, thinking that Smith was pessimistic. Don't you think your statement is even more pessimistic than Smith's?

Bulgaria has a population of just over 40 million, and it has 20 million cars. Doesn't this mean that every adult who can drive is a car?

Is this possible? Every household has a car. Historically, when the American economy reached its peak in 1929, the national car ownership was only 5.33 million!

In the 1990s, North America and Europe only reached the standard of 500 cars per thousand people. In this era, there is no possibility of popularizing cars at all!

Even if the car is given to the people for free, their income cannot afford a car. Now the average annual income in Bulgaria is only more than 1,200 levs, and they are asked to pay 1,500 levs for the fuel cost. Isn't it bullshit?

Beshear knew that today's negotiations could not continue. Unless the cost could be reduced, or some sections with low traffic flow could be cut, the plan would not be able to go forward at all!

Okay, you two! I understand what you mean, then we will postpone the meeting first, and we will continue to negotiate when the final cost is calculated!

But before I do it again I want to ask you a question, what is the highest construction cost you can afford? This is related to our next negotiation, please answer carefully!

Smith replied without hesitation: The bottom line of the company is the maximum total investment, which cannot exceed 6.5 billion levs!

Howell thought about it and said, Our bottom line is similar to theirs, even if it is 6.5 billion levs!

Of course, if the government's final evaluation price comes down and the construction cost is less than 1ooo billion levs, we are willing to invest in the government to build it, and it will be calculated at 1ooo billion levs!

As soon as he finished speaking, the reporters below all applauded. These words were very domineering, almost announcing that the cost of this project could not be less than 1ooo billion levs!

As for whether the Bulgarian government will undertake the construction, everyone knows that this is impossible. Where does the extra funding gap come from?

This is not a small number, but it is tens of billions of leva. Even if the Ministry of Finance has money, it is impossible to spend such a large sum of money in order to fill the hole for the Ministry of Communications!

The first day's meeting was abandoned halfway, and the subsequent meetings were postponed indefinitely. Compared with Beshear's worries, the reporters were happy. This is undoubtedly a big news!

Soon the eyes of the world will turn to Bulgaria again, and if the government fails to properly handle this problem, it will become the biggest joke of the century!

After the meeting was over, Beshear hurried to the palace with experts and materials. If such a big thing happened, how could he not explain it?

Although Ferdinand already knew that this problem would occur, he still did not come out to stop it. It is also very necessary to take the opportunity to beat the cabinet, otherwise, after a long time, people will become ambitious, and it will be difficult to lead the team!

So Ferdinand pretended that he didn't know anything, and waited for the incident to directly hold a cabinet meeting in the palace, waiting for them to come and be criticized!

...

Ferdinand's face was ashen as he looked at the restless people. In fact, he was already happy. As a cabinet that has been in charge of the Bulgarian government for more than 20 years, his prestige has long been high in the sky, and now it is time to cool them down.

Why don't you say anything? If no one wants to say something, then I'll start asking?

Everyone bowed their heads honestly. Apart from such a big mistake, what else could they say? Even if the quotations of these two companies were watery, no matter how much water they had, it was impossible to make more than 60 billion yuan?

Especially the promise given by Howell later, we know that their cost budget must be well-founded, otherwise they would not dare to make a promise!

Ferdinand glanced at everyone and asked coldly: Since you don't say anything, then I'll start asking? You've all seen the cost budget of the bidding company, so who can tell me why there is a difference between the two? Will the difference be that big?

Although not named, Beshear also knew that this was the main responsibility of the Ministry of Communications, so he could only bite the bullet and answer: There are four main reasons:

First, we did not consider the time cost of capital. The first few years of the project investment belonged to the pure investment stage, and we did not calculate the interest of the invested capital, which is the main error;

Second, we have not fully counted the increased cost of construction in harsh geological conditions and special climatic areas, but this still needs to be verified;

Third, the increase in raw material prices and labor costs, this expenditure is unknown, and we did not calculate it;

Fourth, we did not count the cost of building a gas station!

Ferdinand sneered and said, You guys have done a really good job, don't think about it, don't think about that, don't tell me that all the projects in the ten-year plan are planned like this!

So what should we do now? Even if it only requires an investment of 60 billion levs, the average investment, the interest on bank funds is calculated at 5% annual interest, and on average, it is at least 1.5 billion leva per year, (formula: 6oo÷2x5%=15 ) In ten years, that’s more than 20 billion levs! (The interest is rolled over, it needs to be accumulated, and the compound interest is calculated.)

Actually the number is only going to be bigger, I think you all passed your math? So who will tell me, who will pay for the increased cost?

Everyone fell into silence. The increased funds are not a single star. The Bulgarian government cannot afford this expense, and it is also impossible for companies to bear this expense for no reason!

Constantine said hesitantly: Can we ask the National Bank to provide a low-interest loan for this project to offset part of the time cost of the funds?

The Chancellor of the Exchequer Kennedy denied: Impossible! This is equivalent to transferring the risk of this project to the bank. In fact, the risk of this project is no longer controllable, and there is a great possibility that the loan will not be paid in the future!

Once the bank is too deep in this project, if the project fails in the future, the bank may go bankrupt, and we cannot afford this consequence!

Constantine stopped talking. This is no longer a question of interest rates, but the project itself has huge risks. Once the project fails, the supply will be cut off. With tens of billions of funds, no bank can afford this. risk!

Chekov thought for a while and said, Can our government provide them with better conditions, increase their profit margins, and reduce the risk factor?

Ferdinand nodded and continued to ask: Specifically? Where can the government give policy support to keep this project going?

Chekov thought for a while and said: For example: allowing investors to delay the construction of roads in some areas, reducing their early financial pressure;

Another example: some unopened sand and gravel quarries are directly allocated by the government to this project to reduce the cost of raw materials;

It is even exempted from the tax of participating construction companies in this project, thereby reducing the construction cost of this project!

The government can also authorize road construction companies to build a series of facilities such as shops, restaurants, hotels, etc. while building gas stations on the road, and also give free treatment!

Ferdinand shook his head and said: The methods are all good methods, but in fact, none of these methods can be implemented!

Unlike gas stations, we can't permanently tax these shops, restaurants, and hotels, and we can't let them monopolize these industries on both sides of the road!

So in fact, the most we can do is to reduce the cost of some raw materials for this project, but this will save billions of funds at most, and it is not realistic to increase the income of this project!

It is impossible for us to break the industrial chain of our entire society for the sake of this project, and we cannot even allocate material yard or tax the participating enterprises, which will cause very bad social impact!

Everyone's expressions dimmed again. Just like Ferdinand said, the industrial chain of the society cannot be destroyed. The preferential policies provided by the government must be carried out within the framework permitted by Bulgarian law.

Beshear thought about it and said, Can the government find a way to provide a group of free labor for this project?

Ferdinand didn't answer, but turned his attention to Constantine, who was obviously signaling to answer.

After being silent for a while, Constantine said hesitantly: The free labor in the hands of the government is composed of criminals. They all work in mines or on railways. If they are put into this project , then what about our mines and railways?

We cannot affect other projects just for the highway project! Unless we find a way to add a group of free laborers, this issue still needs the cooperation of the military!

Although I didn't say it directly, everyone knew what Constantine's method was, but no one objected. Now it seems that this is undoubtedly the best method.

After all, in the construction of highways in this era, labor costs almost account for more than half of the construction costs. If most of this fund can be saved, then the problem of excessive investment will basically be solved!

Ferdinand didn't make a statement, but his reaction was undoubtedly tacit approval of the government's decision. As for the consequences of this decision, it was not within his scope of consideration, and he couldn't see it anyway!

...

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