Hospitalet-La Torrassa section of the HSL of the Barcelona approach

May 12, 2014

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In relation to the construction work carried out in the Hospitalet-La Torrassa section of the HSL of the Barcelona approach and the cost overruns that, according to some media reports, have been incurred in its execution, OHL would like to state the following:

1. Geotechnical situation

The land in the area where the construction of the section awarded to OHL was to be executed and the adjacent area were filled almost to the surface with water, sand and mud from the Llobregat river delta.

The Renfe suburban train ran on the surface and the Ferrocarriles de la Generalitat de Cataluña (FGC) line also ran at a depth of around 15 meters.

In order to build the HSL line below the two pre-existing Renfe and FGC railroad lines it was necessary to excavate to a depth of over 30 meters, so that the AVE tracks could be laid between two vertical walls over 30 meters in depth designed to contain this excavation.

2. The Adif project

The vertical walls envisaged in the Adif project were inadequate, as they were expected to be built using concrete slabs, and water and mud could seep through the joints, which would give rise to subsidence.

It was therefore a project whose execution posed these risks, and this was conveyed from the outset and on several occasions to the then chairman of Adif, Antonio González Marín, and the Minister of Public Works, Magdalena Álvarez.

The project had technical shortcomings that needed to be addressed. From the outset, OHL proposed executing the tunnel using a tunnel boring machine, a procedure that prevented seepage and land movements which could affect the two pre-existing railroad lines in the area. Execution using a tunnel boring machine would have involved an approximate cost of 125 million euros, with a two-month reduction in the contractual deadline.

The Adif management rejected the solution involving the use of a tunnel boring machine and demanded that construction work be carried out according to the awarded project, even though it needed to be adapted to the geotechnical requirements of the land in order to make its execution feasible.

When water and mud seepage and sand movements and subsidence occurred during the execution of the original project (some of which caused damage to FGC), Adif commissioned modified emergency construction work in order to address the technical problems posed by the original project.

3. Execution of construction work

In October 2007 OHL had already executed 90% of construction work, and therefore only 10% remained to be completed.

In October 2007 the then chairman of ADIF, Antonio González Marín, and the Minister of Public Works, Magdalena Álvarez, disregarding any procedures and with no justification whatsoever, decided to replace OHL with SACYR for the execution of the aforementioned remaining 10%.

SACYR executed this construction work using the resources, facilities and subcontractors that had been working for OHL, and completed the work on February 13, 2008, four months later.

In addition, the previous Adif management opened financial responsibility disciplinary proceedings against OHL to make up for the bus expenses incurred during the period the FGC line had remained closed and to compensate the damage caused to FGC and Renfe. The proceedings were upheld by the new Administration.

4. Cost overruns due to shortcomings in the Adif project

Some media reports have stated recently that the final cost of this contract, which had an initial budget of 107 million euros, had been 354.7 million euros.

OHL is aware that, for 90% of the contract, the final budget amounted to 214.3 million euros, although ADIF deducted from this amount 34.2 million euros, as a result of the financial responsibility disciplinary proceedings. This amount of 214.3 million euros included the changes that had to be added to the initial project to make possible its execution, and also contained price revisions and VAT increases.

As for the rest, i.e. the difference between the 214.3 million and the 354.7 million claimed by the media, OHL is not aware of its existence and of its destination.

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