You're reading: Kolesnikov: Taxpayer costs for Euro 2012 exaggerated

Officials: Euro 2012 will cost only $14.5 billion.

Ukraine’s government recently slashed its overall estimate of how much it will take to get the nation ready for the Euro 2012 soccer tournament. Now, the government is saying that it will cost $14.5 billion overall – from public and private sources combined.

That is $5.5 billion less than the previous estimates of $20 billion. Planners cite several reasons for the welcome downward adjustment, but in general they say less spending will be needed in the hotel sector, by local governments, for training grounds and roadwork.

According to the revised plan, taxpayers will directly spend only $7.2 billion. Most of the other $7.3 billion will come from “other sources” of financing, including some private investment, officials say.

But do the numbers really add up to big taxpayer savings?

Roughly 70 percent of the “other sources” comes from public or semi-public companies, namely the state railway company Ukrzaliznytsia at $2.2 billion and the state road company Ukravtodor at $1.1 billion, which is expecting an additional $2.5 billion in government orders.

Neither Kolesnikov nor the Kyiv Post is right. Although taxpayers will, directly or indirectly, pay for the expenses of public companies such as the state-owned railway or roadwork company, you can’t tack on hotels or the building of stadiums.

– Ostap Semerak, an opposition lawmaker

Only about $2 billion or so is expected to come from private investments, mostly in building stadiums and hotels.

So, counting the state-run companies, the taxpayer’s bill from the latest action plan is closer to $12 billion.

Deputy Prime Minister Borys Kolesnikov, in charge of getting the nation ready for Euro 2012, has disputed previous Kyiv Post stories which estimated that taxpayers could spend up to $20 billion on the soccer championships. Kolesnikov said the $20 billion figure was the previous estimated cost of the overall project, and it has proven to be inaccurately high.

Kolesnikov has a good point, and the Kyiv Post incorrectly reported private investments as part of the public cost.

The Kyiv Post based its estimates on the government’s April 2010 plan, which was the only public source available. But since then, the Euro 2012 government program has undergone at least 20 revisions, nearly twice a month.

“Neither Kolesnikov nor the Kyiv Post is right,” said Ostap Semerak, an opposition lawmaker who sits on the legislature’s budget commission that monitors government spending. “Although taxpayers will, directly or indirectly, pay for the expenses of public companies such as the state-owned railway or roadwork company, you can’t tack on hotels or the building of stadiums.”

In addition, many investors listed in the various programs are unnamed and each action plan’s figures for each year from 2008 through 2012 change, so it is hard to assess the private-public mix in costs.

Other government agencies have been disclosing different spending figures as well.

Since President Viktor Yanukovych came to power last year, Kolesnikov has speeded up the government’s Euro 2012 preparation. In so doing, he has recaptured the confidence of Europe’s top soccer governing body, which has confirmed that Ukraine is on track to overhaul its creaking Soviet-era infrastructure before the June 8, 2012 kick-off date.

Recently, Union of European Football Association’s President Michel Platini admitted that UEFA may have erred in awarding the right to host the event to financially troubled Ukraine. The World Bank says 26 percent of Ukrainians live in poverty.

“We gave it to them. It was perhaps an error to have given it to them, but we gave it to them,” Platini told Agence France Presse on March 20. “It’s a great challenge: Ukraine isn’t Germany and is in time of crisis.”

Meanwhile, Euro 2012 co-host Poland’s estimated costs are $30.4 billion, 60 percent of which, or $18 billion, is coming from its own pocket and private investors. The European Union is covering the rest, according to Poland’s Euro 2012 National Agency, an option not available for non-EU member Ukraine.

This is the first time the Euro soccer championship is taking place in Eastern Europe, and the largest event for post-Soviet Ukraine, with 700,000 foreign visitors expected.

Poland’s Euro 2012 agency said it is difficult to compare its spending to Ukraine’s.

“Our financial structures are different,” said Mikolaj Piotrowski, the agency’s spokesperson. “We share information on common factors. We don’t have their figures and our costs are not shared.”

The important thing is that things are finished on time. We have no real view how things are actually done.

Martin Kellen, UEFA’s chief operating officer.

UEFA also wouldn’t talk about Ukraine’s spending.

Other nations have, however, hosted other big sporting events for much less than what Ukraine is expected to spend.

South Africa, for instance, spent an estimated $3.5 billion to host the world’s largest soccer event in the 2010 World Cup, according to the South African Public Service Commission, an independent body that investigates, monitors and evaluates public administration.

The United Kingdom’s BBC reported that Greece had spent $15 billion to host the 2004 Summer Olympics that required 22 or so venues, far less than Ukraine’s four stadiums.

UEFA has already admitted that it is only concerned with the final result – stadiums, hotels, airports and transportation links – not how money is spent.

“The important thing is that things are finished on time. We have no real view how things are actually done,” Martin Kellen, UEFA’s chief operating officer told the Kyiv Post.

Years ago, the government forecasted that 80 percent of the overall Euro 2012 cost would come from private investors. The reverse is true: It appears the public will foot 80 percent of the bill.

“They were dreaming. Their expectations were overly optimistic,” said Dirck Smits van Oyen, general manager of the Ukraine-Poland bid for Euro 2012.

Kolesnikov and the Euro 2012 national agency supervised by him have repeatedly said the previous government of Prime Minister Yulia Tymoshenko, in power until March 2010, fell behind on projects.

Tymoshenko’s press service has denied such accusations saying that despite the financial crisis her government managed to preserve Euro 2012 in all four Ukrainian host cities. Tymoshenko questioned the transparency of government spending. “Many projects today are artificially high,” Tymoshenko’s press service said.

Kolesnikov insists drastic steps were needed, including state-guaranteed loans for public companies and the awarding of single-bid government contracts. “There was no other option,” Kolesnikov told the Kyiv Post. “Otherwise we would have lost the right to host Euro 2012.”

The latest government plan is available in the Ukrainian language here.

Kyiv Post staff writer Mark Rachkevych can be reached at [email protected]