A club of five banks have signed a memorandum of understanding to help fund the central part of St. Petersburg’s Western High-Speed Diameter (WHSD), a tolled motorway around the Russian city being procured as a public-private partnership (PPP).
Late last year, the Northern Capital Highway consortium – led by Russian banks VTB Capital and Gazprombank, but also including Italian construction company Astaldi and Turkish construction company Ictas Insaat – reached commercial close on the WHSD with the city of St. Petersburg, at a ceremony attended by Russian prime minister Vladimir Putin.
At the time, it was announced that Russian development bank Vnesheconombank, VTB Capital, Gazprombank, the European Bank for Reconstruction and Development (EBRD) and the Eurasian Development Bank signed an agreement to provide debt for the road project.
Oleg Pankratov, head of infrastructure capital & project finance at VTB Capital, told Infrastructure Investor how funding for the circa RUB120 billion (€2.97 billion; $3.79 billion) project will break down:
“About RUB50 billion will come from the federal government, with the winning consortium to provide the remaining RUB 70 billion. Of the latter, some RUB60 billion will be debt provided by the five banks with RUB10 billion of equity from the consortium members.”
Pankratov added he expected the WHSD to reach financial close during the first quarter of this year.
In a statement, Vnesheconombank said it was “ready to extend about 40 percent of the whole amount of credit resources” whilst the EBRD has already approved a loan of some €200 million in ruble financing for the project.
Northern Capital Highway’s wining proposal stipulated the city of St. Petersburg guarantee a minimum toll revenue of RUB9.67 billion a year. Should the actual revenue surpass this amount, the consortium will pay 90 percent of the excess to the city.
Once WHSD reaches financial close, it will become the first toll road to be operated within city limits in Russia and the fourth large-scale PPP to have closed in the country after Pulkovo Airport and the Moscow-Minsk M1 and Moscow-St. Petersburg highways.
The central section of the WHSD, to be completed in 2015, is the most technically complex part of the WHSD project to build, including three bridges and a tunnel.