The Romanian Ministry of Development drafted an emergency ordinance that would allow it to adjust the value of the contracts already awarded and thus cover the losses incurred by the contractors as a result of the rising materials and energy prices.

"Without the mechanism proposed today, the public investments would be blocked, and the construction companies going insolvent would generate unemployment. The investments envisaged under the Recovery and Resilience Facility would be at risk," minister Cseke Attila argued.

The mechanism proposed by the ministry envisages indexing the portion of the contract not yet delivered by contractors under a formula already in use (HG 1/2018) and based on the construction cost index as reported by the National Institute of Statistics (INS).

The contractors will have 45 days to apply for the indexation mechanism after the emergency ordinance comes into force, News.ro reported. The mechanism is applicable to both the contracts sealed and to those contracts in the process of being awarded, minister Cseke Attila stressed.

The impact of the measure on the public budget is estimated at RON 5.16 bln (just over EUR 1 bln, 0.4% of GDP) for the period until the end of the year, according to the ministry's estimates.

andrei@romania-insider.com

(Photo source: Inquam Photos/Sabin Cirstoveanu)