At the Bilbao Exhibition Center (BEC) the Machine Tool Biennale is expected like “May water”, although it will take place this June, between 13 and 17. This is the most important event held by the exhibition complex located in Barakaldo, despite its name. . BEC executives hope that this year, already relatively normal after the worst of the pandemic, will have enough exhibitors and visitors to offset, at least in part, the large losses caused by the shutdown of activities caused by COVID-19. which fell just in an even year, the year of the biennale, which could not be held. For this reason, although “the war in Ukraine does not allow the recovery to be as good as expected”, as BEC CEO Xabier Basañez points out to elDiario.es/Euskadi, there is already a significant improvement in the organization’s budgets for this year, thanks in large part to exhibitors from more than 30 countries and visitors who are expected to be attracted by the world famous exhibition. To this we must add that the Bilbao Arena concerts and the activities of important fairs such as Expovaciones or Wind Europe have been restored, and that the BEC pavilions will also be used for the numerous OPEs that the administration is about to convene. . The months when the BEC was just one of the big COVID-19 “vaccination centers” are finally over.
The return to normal activity, while retaining the impact that war can have, has allowed the BEC to consider budgets for this year in which it will reduce the losses of previous years, but even then it will have a negative result of 15.14 million euros. If this prediction finally comes true, it will mark the fewest losses since BIC’s inauguration, as it has accumulated red numbers in its results since it began operations in 2004. The BEC still has a huge hole through which millions of people flee each year, weighed down by the payment of the financial debt to build it, which the Basque government and Biscay Provincial Council pay off half of each year and will continue to pay until 2031. with contributions in the millions, which will add about 804 million euros by this year. According to the data, the budget of the entire Ertsaintsa for 2022 is $725 million.
Last year, 19.74 million people were lost, in 2020 – 21.71 million, and in 2019 – 19.91 million. You have to go back to 2018 to find a similar figure close to the 15 million expected this year. Then the results fell to 16.34 million. In 2013, the hole reached 40.3 million euros. The high cost of building the imposing building that rises on Ansio land, with an area of more than 251,055 square meters and with six exhibition pavilions, exceeded $ 500 million, and the debt entered into to finance it, year after year, reduces results. In fact, looking at Ebitda, an indicator that shows earnings before contract debt interest, taxes, and investment depreciation, BEC’s finances come out better. However, only 2004 has positive post-launch EBITDA, 2006, 2008 and most recently 2016 with 277 million and 2018 with 2 million. Everything, by the way, even years, since the Biennale of Machine Tool Building, which speaks of the importance of this event in the accounts. Regardless, these were also years of heavy losses.
Euskadi BEC results
COVID-19 also affected the repayment of the BEC debt, which was extended for another three years due to the effects of the pandemic. Repayments ended in 2027, but the end of the pandemic and the need for institutions to dedicate more resources to the health crisis has forced them to reconsider the loans that institutions will continue to repay by signing up for annual capital increases. From 2004 to 2020, the Basque Government and the Biscay Provincial Council, the partners who fund the BEC and own 49.98% of the capital each, contributed between two 515.54 million euros to fund the debt, interest, and mitigate BEC’s losses. The remaining partners with symbolic shares in the capital, the city councils of Bilbao and Barakaldo (0.01% and 0.02% respectively) and the Bilbao Chamber of Commerce (0.01%) did not subscribe to the increase.
Currently, as confirmed by the CEO of BEC, 189 million euros of the principal amount of the loan remains to be paid, to which interest will need to be added. The new agreement signed with the bank assumes that only interest will be paid between 2021 and 2023, and not principal. For this, an extension of 11.6 million was made in 2021 and 10.5 million for February of this year, and the same amount will be next year. Between 2024 and 2031, the Basque government and the Provincial Council will sign an increase of 32 million euros, 16 million each. This means that another 289.2 million must be added to 515.54 million by 2031. This amounts to a total of 804.74 million euros, which will mean the launch of BEC for the public treasury. The contributions, which year after year, from the institutions or from the BEC itself, are reduced to a minimum due to the important induced economic impact that the activity of the fair entails in Biscay and in the Basque Country as a whole. To give a few examples, the impact was estimated at 45.5 million in 2021, 92.5 in 2019, or 134.7 million in 2018, the highest since its launch.
Euskadi BEC Extensions
This is not the first time that debts in the amount of 400 million loans intended to pay for the construction of the BEC, 250 million in the European Investment Bank (EIB) and 150 million in the pool of banks have been refinanced. In 2014, the loan expired along with the pool of banks and the renegotiation of conditions, together with the BEC’s loss of millions – in 2013 it lost 40.33 million – increased the contribution of the government and the provincial council, which has contributed an average of 24 million since 2004. – 12 each – on the basis of an agreement signed in 2002 on financing the construction of BEC. As of 2014, the two institutions’ annual contributions ranged from $30 million to $37 million. Between 2021 and 2023 they will be between 10.5 and 12 million people, and between 2024 and 2031 they will return to 32 million annually.
This situation contrasts with that faced by the Fikoba fair in Irun, bridging the gap that separates it from each other, both because of the size and the importance of the fairs it hosts internationally. Ficoba, which started in 2003 with an investment of 21 million euros and 70,000 square meters, “has no debt because the exhibition space has already been paid for and has an economic impact of 30 million dollars, and saving from COVID-19 – 19, which was the same for everyone, benefits,” says José Antonio Santano, mayor of Irun and chairman of the board of trustees who runs the fair, which is mainly owned by the Gipuzkoana city council. Santano believes that part of the BEC’s problem lies in the size of the building, which “was built with big fairs like the biennale in mind, but it doesn’t fill up the rest of the year.” “The rest will fit in Ficoba,” he says. This space, located on the border between Spain and France, consists of three pavilions, although the fair is now considering expanding the premises, which will also require institutional support. A decision and quantification of the investment may be determined after the summer.
Target until 2031: “So that institutions don’t put in another euro”
The question is whether the BEC in 2031, when debt repayments are completed, will be self-sustaining and beneficial, or should it continue to be funded by agency contributions. BEC CEO Xabier Basañez attributes the loss of these years to a “huge burden” of financial debt, and he hopes that “by the year 31, the activity will generate sufficient resources so that the government and the provincial council do not need to contribute a single euro more,” says he. In fact, remember that after the financial crisis of 2012, there is a recovery in Ebitda to almost balance between 2018-2019. “Had it not been for the pandemic, we would have managed to reach a positive Ebitda in 2020. Now we hope that this goal, which we set for ourselves in order to balance the accounts, will be achieved in 2023-2024 or, at the most, in 2025. …Not much further.”
At the moment, the aim is for this year to live up to forecasts that have been partially curtailed by the consequences that the war in Ukraine may have. “We are restoring 100% of fairs and activities, but not in the size and volume that we wanted,” he complains. As for the Biennale, there have not yet been any Russian or Ukrainian exhibitors, although there have been visitors, “but it won’t make a significant difference,” he says. What may affect is that the war in Ukraine “affects everything in general, from a loaf of bread to a liter of gasoline or electricity.” In any case, it will be “a magnificent biennale with 100% occupancy, a large number of exhibitors from over 30 countries, 3,000 exhibited machines and visitors from over 100 countries.” A Biennale that could mark a change in trend.
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