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The state is seemingly looking for the reason to terminate the contract of concession of the International airport Chisinau (ICA), concluded with the company Avia Invest in August 2013. Moreover, not to pay any compensation to the concessionaire provided in case of early termination of the contract… This conclusion comes to mind when you see the government at the beginning of the working week in the morning appoints a working group to assess the legal grounds and the possible consequences of termination of the contract on concession of ICA.

It can be reminded that in May 2013 the Cabinet of Ministers headed by Iurie Leanca adopted the resolution “On concessions of international Chisinau airport” and the conditions of its concession. We will not go into the details of an ongoing discussion about how that decision was taken, the fact remains: in August 2013, the contract for the period of 49 years was signed and approved by the Cabinet.

The contract itself is not an open document, but there are many provisions in the decree of the government, as well as repeatedly voiced by officials. So, not later than one year after signing the contract, the concessionaire shall commence the reconstruction work, and within two years to invest at least 40 million euros in the stipulated objects: terminal expansion and modernization of the runway, apron, lighting systems, drainage and parking construction.

When ridership MAC will increase to 2.6 million people/year, the concessionaire must invest another € 110 million; and increasing flow over 3.2 million passengers a year – a further 80 million euros. The total amount of investment must be 244,2 million euros, in addition, the concessionaire must pay the state rent in the amount of 1% of turnover.

Naturally, it is agreed that if the concessionaire fails to fulfil obligations, the contract may be terminated. But the state may not cancel the contract if the concessionaire complies with all the terms of the contract. Otherwise, you will have to first recover all the invested by the concessionaire money and losses of profit for the entire period of the concession – 49 years, and this is (without exaggeration) – hundreds of millions of euros…

Again, whatever was said, and it would be desirable to depart from the laudatory speeches in the address of Avia Invest, but the international Chisinau really airport became upgraded…

InfoMarket agency remembers time when in 1998 the EBRD has provided a loan of $9 million for the reconstruction of the airport and another $3 million were contributed by the government. The loan was provided for the period for 12 years at 7% p.a., plus Libor (1999 Libor was from 5.11% to 6.51%). It was almost immediately introduced an airport tax of $14 from each sold ticket money to repay the loan and interest thereon. The Director General of state administration of civil aviation Victor Topa was told that the money will be enough even for the two telescopic ladder.

In 2013, then Vice-Premier, economy Minister Valeriu Lazar called the airport a “suitcase without a handle”, the enterprise is in dire need of development, in order not to disappear as the element of air services in the region in which there is very tough competition…

So, from the moment of signing of the concession contract have passed two years. What has been done by the concessionaire? If anticipating these issues, the management of Avia Invest regularly invites the media to see the reconstruction progress.

Today in the country was built the largest modern multi-level parking for 800 cars. At the end of September – beginning of October, as promised by the CEO of Avia Invest, will be open extended terminal: the number of stands for registration will be increased from 12 to 18; will be increased the number of Windows border control; from 4 to 9,  will be increased the number of exits (gates). The fact that the expanded terminal will be opened in the next month showed the progress of the work done.  At the same time the press was given the opportunity to verify that things are working to create a drainage system at the airport which still did not exist, and rain water pose a threat to aircraft. It shows how you replaced the electrical part of the airfield and electrical equipment.

Inviting on Monday, 24 August 2015 journalists at a briefing on the results of 7 months the airport’s CEO Petr Jardan was forced to change the text of the message to respond to the government’s decision on the establishment of the Commission on the termination of the concession agreement. Holding a briefing for one hour, he provided the press with the additional information, according to the questions of the Prime Minister Valeriu Strelet.

Taking into account the first stage of investments, the concessionaire starts work on the reconstruction and for the next two years is obliged to complete and invest not less than € 40 million in this project. This term expires in fall 2016; we tried to systematize statements of Avia Invest on the status of reconstruction and construction works and their cost. And here’s the result:

Object	Cost	State of works
Construction of parking	6,5 million euros	Completed
Expansion of the terminal at 3860 sq m and reconstruction of the existing terminal area of 11,000 sq m € 9 million, completion by autumn of 2015.	9 million euros	To be completed till autumn 2015.
Construction of water collectors	2 million euro	To be completed till the end of 2015.
Reconstruction and modernization of the lightning system.	3 million euro	To be completed till 2015.
Reconstruction of the runway	15 million euro	Till autumn 2016.
Reconstruction and modernization of the apron	10,5 million euro	Till autumn 2016.
Reconstruction an modernization of the tail tracks	10 млн. евро	Till autumn 2016.
TOTAL	56 million euro

According to Petr Jardan, in 2014 the volume of investments of Avia Invest amounted to 17 million euros. By the end of 2015 it is expected to invest 30 million euros. The remaining investment will be made in 2016. The most difficult from the point of view and finance are works at the airport – runways, tracks, and platforms – as all works are made in such a way as not to violate the schedules and airport operations. Therefore, what could be done for the season in the closed zone, it is necessary to stretch in time in the area where there are regular flights while maintaining all necessary safety requirements. First of all, working at night, which increase not only timing but also the working costs.

After the reconstruction, from autumn 2016, Chisinau airport will be able to receive all types of aircraft without restrictions (including transatlantic flights), lighting system and alert airport will increase from the current category II to category III, which would make landing safer and will be available in time of the adverse weather conditions. Repair of runways and walkways will enhance the classification number of the coating (PCN) that means tight supply, with current PCN 51 to PCN 70. The capacity of the airport for departures will increase from the current 420 person/hour to 750 people per hour. POPPY will be able to serve at the peak of traffic in vessel 21 per hour (currently – seven-eight).

It is likely that it will be possible to make the work started on the first stage of reconstruction to the end.

No one can deny the fact that over the last two years the airport has shown positive changes. First of all it concerns of passengers and their meeters and greeters. And if now to stop this process by terminating the concession, it is unlikely that people will say “thank you” to those who are guilty in this.

At the government meeting on Monday were announced suspicions that the airport is being reconstructed at the expense of money derived from Banca de Economii. Law enforcement agencies should look where the money have gone to catch and punish the perpetrators, and, most importantly, to return the money the same way, how they were derived. The airport is really modernized and gives real positive results of its work. According to Petr Jardan the state budget has directed about 70 million lei for this purpose. When the airport was state owned in 2012, this figure made up 38 million lei.

So why the current government decided to cancel the concession signed by the previous government, despite the fact that Leanca government, and the government of Strelet approved this decision. If Avia Invest does not fulfill the terms of the contract, Moldova, seeking to live according to European laws, shall prove it, with the assistance of independent experts. After all drew the same state eminent foreign expert company Kroll – which stated that three banks actually withdrew money.

Airport Iasi, Bucharest, Odessa… all they really would like to get at least part of the passenger traffic from Chisinau. (May be some of them have lobbies and inhibiting the development of the Moldovan civil aviation and the failure of the concession?)

The flow in ICA is growing, and very significant. For 7 months of 2015 it amounted to 1,254 million people that are 35% more than 7 months of 2014 Petr Jardan said at the briefing on Monday that in January-July made 13086 air operations, which is 24.6% more than at the same period of the last year. The number of transit passengers (mostly from Russia to Europe) amounted to 60 thousand persons (growth of 160%). That is everything that for the Russians became profitable to fly to the South Europe via Moldova. From Chisinau it is daily 11 flights to Moscow, and already with Moldovan winter flights will be covered by all three major airports in the Russian capital’s Domodedovo, Sheremetyevo, Vnukovo.

Airports Council International Europe said MACK as a leader in the growth of passenger traffic among airports serving up to 5 million passengers per year with a rate of 34.8% for 2014, while the average in this category, in European airports, amounted to only 5.4%,” said Peter jardan.

He also said that a growing number of flights and new airlines, including LOT Polish Airlines, include IM-Avia and Ural Airlines. The low-cost airline WizzAir from October 27 wills start new flights to Bologna, and London. On December 18, the company Volotea will fly on the route Verona-Chisinau. National operator Air Moldova has opened new flights to Tivat, Madrid,Vienna, Moscow (Sheremetyevo).

Currently, the ICA serves 17 airlines flights in 29 cities in the world, but by the end of the year and the number of companies and number of cities will increase.

So who needs to raise a fuss over the concession of the International Airport Chisinau. The first thing that comes to mind – the government wants to distract public attention from the pressing social problems – the devaluation of leu, increase of tariffs, forthcoming September 6 of the mass protests.

If under any pretext, the concession agreement will be terminated, the state will have, first, to fully return the invested by the concessionaire investment, secondly, to make up for lost profits. Of course, one gets the impression that the Commission created by the government to terminate the concession, must find a loophole not to compensate and return the airport in the hands of the state, without paying a single euro. But it is unlikely that the concessionaire will remain on the sidelines, and certainly will request your money through the European legal organization, in fact – probably will get them. At the same time Russia will not remain silent. Back in 2013, the Prime Minister Medvedev, at the meeting of his government in passing meeting will protect Russian investments abroad and, in particular, mentioning the Chisinau airport. After all, as it was where it was discussed Russian investments in Avia Invest.

InfoMarket Agency has attempted to obtain the views of knowledgeable of situation of people about this situation. One analyst said that it is a political decision. Another smiled, noting that the current Prime Minister is able to make some substitutes.

Anyway, Moldova strives to live in the European legal field. Now it is no sense to nationalize the objects, as it was made by the sole authoritative decision.

Today, perhaps, already there is no sense to raise the question of how concession had been done. It is enclosed and concluded by the concessionaire, as it had a legal right for this. ICAis one few large objects which in the current crisis really works, but would not interfere into any variants.

If there is any termination of the concession agreement, it shall be exclusively considered in the legal field, in compliance with all international norms, so that everyone will be aware of the necessity of nationalization.

It is not the time for drastic decisions. Otherwise, retribution will face everybody. The retribution by making us pay higher tariffs for devaluation of the national currency. And nobody has answered for this yet…

Commentary by InfoMarket