Builders’ Chamber Registers Drastic Decline in Construction Output

Jerusalem, 25 October, 2022 (TPS) -- SOFIA, 25.10.2022 (BTA)
There has been a drastic decline in construction output, as the difficulties caused by the post-pandemic supply crises, the appreciation of materials, and the effects of high inflation were compounded by some problems that were artificially caused, said in an interview with BTA the Chairman of the Board of the Bulgarian Construction Chamber (BCC) Eng. Ilian Terziev.

The state does not pay for the work done not only by road builders but in all sectors, Terziev said.

If in 2020 the construction output was worth BGN 23 billion, in 2021 it dropped to BGN 16 billion and for the first half of this year it was only BGN 6.6 billion, said Terziev and added that the trend is downward. According to him, more and more construction businesses are forced to lay off employees. In his words, the drop in production is also bad news for the state budget.

He said that according to the latest data from the Central Professional Register of Builders maintained by the BCC, out of 6,669 companies registered 6,614 are Bulgarian and 55 are foreign. “It is too early to say how many domestic companies will drop out this year – so far they are about 500. But there are also new entries. Interestingly, there has been a drop in foreign companies: last year there were 63. Which means they are withdrawing from Bulgaria,” added the BCC Chairman.

He pointed out that the main obstacles to growth in construction in Bulgaria are the lack of adequate indexation, payment, and new contracts. “Construction is a sector that can quickly boost the economy, because it increases employment, turnover between companies, supplies of materials, services. It also increases the purchasing power of employees in the industry. The state benefits from a strong and functioning construction industry,” Terziev said.

According to BCC estimates, appreciation in the construction sector approximates 40%. “Many companies conscientiously have continued carrying out the projects assigned by the state and municipalities, they have invested in them, and we cannot be accused that the implementation of the operational programs has failed because of our actions. Two of them in particular: the Operational Programs “Environment” and “Regions in Growth” put a ceiling on the indexation, which is missing in the methodology,” Terziev commented on the recent announcement by the Ministry of Regional Development and Public Works that the prices of contracts implementing construction and renovation projects financed by the OP “Regions in Growth” could be indexed by 15% due to inflation and increased prices of construction materials. The Ministry’s guidelines for the OP “Environment” also include a 15% ceiling on indexation.

The BCC Chairman believes this decision makes the whole methodology for indexation in the construction industry meaningless. “My prediction is that things will not end well – neither for the state and municipalities, nor for the companies, nor for the citizens who expect the much-needed infrastructure,” he concluded.

Bulgaria’s builders celebrate their professional day on October 26, the Feast of St Demetrios.