Croatia Must Urgently Open Its Doors to Foreign Builders

Hrvoje Tuškan, the owner of the Karlovac company Geoblast, which is also involved in demolition, expects that the price of this service will continue to rise in the upcoming period. This will undoubtedly force the Ministry of Construction to correct the maximum price for building demolitions in public tenders for post-earthquake reconstruction. Namely, the experience from the first demolitions in Zagreb showed that no company with unrealistically low prices will engage in this work financed by the state.

Can the state fully limit demolition prices, as it did last year with the price of masks that began to soar? It is hard to believe. Only The Competition Protection Agency (AZTN) can do something about it, but economic analysts believe that only a completely open market that includes foreign companies outside the EU can stop the price increase.

The price of demolition will continue to rise

At a recent press conference, the director of the Reconstruction Fund, Damir Vanđelić, spoke about the problems they face in implementing decisions, such as the demolition of houses, because the prices regulated by regulations are too low. As a result, there is no interest from contractors for the demolition of buildings damaged in the earthquake, so the Fund is forced to seek donations to carry out the demolitions. Vanđelić emphasized that prices must be increased, which has been warned by the relevant authorities in the Ministry of Physical Planning, Construction, and State Property for the past four months.

The way construction service prices are prescribed in post-earthquake reconstruction seems to have been done superficially. It seems that the Ministry ignored the fact that each building is a case unto itself and that several important factors influence the price. Tuškan speaks about this when he says that the price of demolition depends on the size of the building, the type of its construction, the method of execution, and the location of the building, i.e., the distance from the waste disposal site… But the price of demolition is also heavily influenced by the price of energy – oil has become more expensive, and on the other hand, the lack of workers has forced entrepreneurs to raise wages. Tuškan says he is not surprised that no one has responded if the prices are unrealistically low.

– My company was engaged in the demolition of the chimney of the Sisak steelworks, the price was realistic, we were paid, but you must know that the demolition was organized by the owner of the steelworks, not the state – says Tuškan.

And Hrvoje Merki, the director of Vinkovci’s Eurcom, one of the largest demolition companies in Croatia, also believes that the prices of demolition services will continue to rise, and they did not even want to respond to Zagreb’s tenders. Both of our interlocutors speak quite convincingly, leaving an impression of determination in their positions, so it seems that there is no doubt about the continued rise in demolition service prices.

Companies Can Choose Jobs

How the Ministry of Construction will react to this, we do not officially know as they did not respond to our questions, but as we mentioned, the Reconstruction Fund has been warning them for months that something will have to change in the regulations and that the prices of building demolition services will have to rise; otherwise, no serious company will respond to the tenders issued by the Fund.

– The Ministry established a working group on Friday, June 11, for amending the subordinate legislation – the Program of Measures. The Fund has sent its proposal for amending the price and corrective factors concerning the building area – says Vanđelić.

And that the Ministry could indeed change the regulations is believed by the Croatian Chamber of Economy (HGK), where they say that in Europe, which means also in Croatia, governments strive for deregulation and leaving price corrections to market mechanisms. Precisely for this reason, a relaxation of the Ministry regarding the FZO’s request can be expected.

Read more in the new issue of digital and printed editions of Lider.