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Mon June 17 2024

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Italian-Turkish JV to build €3bn Russian highway

10 Aug 11 Italian and Turkish contractors are set to build a €3bn (£2.6bn) Russian road scheme following the announcement of the preferred bidder.

Construction partners in the winning team are Astaldi of Italy and Ictas Insaat of Turkey.

The government of St Petersburg has named the NCH consortium led by VTB Capital as the the preferred bidder for the construction of the central section of Western High-Speed Diameter (WHSD) Northern Capital Highway. The consortium will subsequently operate the entire stretch of the toll road. The other member of the consortium is Gazprombank.

WHSD will create the first toll road operated within city limits in Russia. It is the largest project in Russia implemented within the framework of the public-private partnership mechanism. WHSD’s central section is the most technically complex to build part of the road and includes three bridges (among them two cable-stayed) and a tunnel. The expected investment is estimated by NCH at approximately €3bn and will be financed through a combination of debt and equity, as well as the federal grant.

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NCH’s bid proposes a WHSD toll revenue guarantee of at least RUR9.67bn (£200m) per annum. Should the actual project revenue exceed this amount, NCH will pay 90% of the excess to the city. It is expected that following the construction of the central part of the road, toll revenues from the Western High-Speed Diameter traffic will soon reach the level of the minimal revenue guarantee, which means that the city will not have to allocate significant funds from its budget to support the project. The level of the minimal revenue guarantee proposed by NCH was significantly lower than that proposed by its competitor enabling significant budget savings.

NCH is expecting to sign the public private partnership agreement with St Petersburg in December 2011.

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