On December 23, 2011, Russian Prime Minister Vladimir Putin took part in signing the agreement on the construction and maintenance of the Western High-Speed Diameter (“WHSD”) highway in St. Petersburg under a private-public partnership (“PPP”).
The agreement was signed by Saint Petersburg Mayor Georgy Poltavchenko, Andrey Kostin, VTB Bank President and Chairman of the Management Board, and Andrey Akimov, Gazprombank Chairman of the Management Board.
Construction and maintenance of the Western High-Speed Diameter highway will be carried out by the St. Petersburg Government, “WHSD” and the Northern Capital Highway consortium, consolidating VTB Group (VTB Capital, an investment business arm of VTB Group), Gazprombank, GPB Infrastructure Projects Limited (Cyprus) and such construction companies as Astaldi (Italy), Ictas Insaat (Turkey) and Mega Yapi (Turkey).
Under the 30-year agreement, the consortium members are expected to complete the construction of the central section of WHSD in three years, and to secure the commercial usage of the entire WHSD highway including capital and current repairs, and maintenance of the highway during the entire term of the agreement.
Launch of the WHSD central section construction has been scheduled for 2012, while full commissioning of the section is expected in 2015. The estimated investment into the project total approximately RUB 120 bln. The funds will be raised through borrowings, shareholders’ equity and the federal budget resources.
VTB Capital, Gazprombank, the state-run Bank for Development and Foreign Economic Affairs (Vnesheconombank), the European Bank for Reconstruction and Development (EBRD) and the Eurasian Development Bank (EDB) also signed a memorandum with the Northern Capital Highway firm on the basic principles and loan terms of the WHSD construction project. Under the following memorandum, the banks will work out the loan terms for the Northern Capital Highway which acts as a borrower. The memorandum envisages core draft loan terms of the project provided by the lenders. The project will also be partially backed by the Russian Investment Fund.
Andrey Kostin, VTB Bank President and Chairman of the Management Board, said “The Western High-Speed Diameter is the major Russian transportation project implemented under a private-public partnership. In fact, it is one of the largest PPP projects in Europe. I’m glad VTB will be actively involved in the construction and maintenance of a most technologically advanced highway in Russia.”
On August 9, 2011, the Northern Capital Highway won the tender held by the government of Saint Petersburg.
The central section of the WHSD with three bridges and a tunnel is the most technologically complicated one in terms of engineering. Under the following construction project, the companies also plan to apply high-tech bridge construction technologies, the advanced IT fee collection and traffic control systems, including the instant payment system.