$1.9bn Virginia tunnel P3 to close Q1 2012

A long-anticipated public private partnership (PPP) meant to upgrade tunnel travel in Virginia is headed for financial close in early 2012.

Elizabeth River Crossings, a consortium teaming Macquarie and Skanska, is looking to finalise a $1.9 billion deal to reconfigure a major thoroughfare in the Old Dominion State by the first quarter of 2012, according to a Macquarie spokeswoman.

The PPP, dubbed the Midtown Tunnel project, is an effort to upgrade an existing tunnel beneath the Elizabeth River in Virginia, as well as construct a brand new, two-lane, adjacent tunnel. The Midtown Tunnel project, conceived in 2007, is also intended to improve a second crossing, the Downtown Tunnel in Virginia.

The Macquarie-Skanska consortium has agreed to put up $318 million of their own equity, as well as $495 million in debt, toward the project, while Virginia itself agreed to volunteer $395 million. Virginia has said its contribution will go to reducing toll cost. 

The PPP is also following through on completing a $422 million TIFIA loan, which is expected to close shortly. TIFIA, short-form for Transportation Infrastructure Finance and Innovation Act, is a US federal government programme that provides long-term, low-cost credit to infrastructure projects.

The 'greenfield' component of the project, introducing a new, two-lane extension to the Midtown Tunnel, required substantial environemental and construction review.