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Price soars on Warsaw metro as deadlines loom

Poland's plans to host UEFA's Euro 2012 football championships suffered a major setback last week when bids for a vital 6.5km metro line in Warsaw came in 100% over budget.

Some local officials were so shocked by the offers they received that they walked out of the meeting with bidders last week.

Three consortia headed by Alpine Bau Deutschland, Dragados and Mostostal Warszawa entered bids ranging between £1.4bn and £1.5bn.

Local authorities in Warsaw had intended to spend only £700M on the project.

The bids are being assessed on a 70% contract price, 30% delivery time basis.

The project is the city's second metro line and is considered crucial to Poland's plans to host the 2012 championships.

An extension to the existing north-south line in the city is under construction.

Each consortium bidding for the second line submitted an identical completion time, estimating 42 months for delivery, broken down into 10 months of planning, 30 months of construction, and two months for commissioning.

According to local media reports, the bids included contingencies of approximately £240M to cover penalties for missing completion deadlines.

The last major public works completed in the city was Warsaw Airport's second terminal, which was hit by a two-year delay as it failed to get fire safety permits. Rows also broke out over fines the authorities imposed on the contractors for the delay.

To ensure the second metro line gets built despite its dramatic price rise, Warsaw is seeking central government finance and is considering using cash from a planned sale of Eurobonds. If the project goes ahead, the city is also likely to divert funds from other schemes, with Warsaw Mayor Hanna Gronkiewicz Walcz's saying at least one major bridge project will have to be scrapped.

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