Astaldi and Ictas Insaat set for St Petersburg

17 August 2011

Northern Capital Highway (NCH) consortium, which includes Astaldi from Italy and Ictas Insaat from Turkey, has been named the preferred bidder by the Government of St Petersburg, Russia, for the right to construct the central part of the city's Western High-Speed Diameter (WHSD), and subsequently operate the entire stretch of the toll road.

The consortium is comprised of investment banks VTB Capital and Gazprombank, with Astaldi and Ictas Insaat.

The expected investment is estimated by NCH at approximately RUB120 billion (€3 billion) and will be financed through a combination of debt and equity, as well as a federal grant of approximately RUB51 billion (€ 1.23 billion).

WHSD's central section is the most technically complex to build part of the road and includes three bridges - two of them cable stayed - and a tunnel.

The first toll road to be operated within city limits in Russia, WHSD is described as a strategically important investment project both for the city and the Russian Federation that will determine St Petersburg's development as a major international transport hub.

WHSD is said currently to be the largest public-private partnership project in Russia.

NCH's bid proposed a "minimal" WHSD toll revenue guarantee by the city of St Petersburg of RUB9.67 billion (€232.5 million) 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 said to be significantly lower than that proposed by its competitor, enabling significant budget savings.

The consortium has already received debt financing proposal from VTB and Gazprombank, which are the second and the third largest banks in Russia.

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

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