Russia grants Vinci first Moscow-St Petersburg concession

The Russians been talking about upgrading the 650km (405mi) road between Moscow and St Petersburg with toll concessions for about a decade now, during which time China's provinces have opened about 15,000 kilometers of toll expressway using scores of private companies investments. But the first stretch of the great Russian tollroad has at last seen a concessionaire selected - 43km or 27 miles awarded to Vinci in a 30 year tolling concession extendable to 35 years.  

This stretch goes from Km15 within the northwest suburbs of Moscow to Km58 and is mostly to the north and east of the old surface highway M10 and ends at a point where the motorway will cross it.

Road construction will be:

- Km15 to Km29 2x5 travel lanes,

- Km29 to Km35 2x4 lanes,

- Km35 to Km58 2x3 lanes.

The 10-lane segment of 2x5 lanes will serve traffic generated by Sheremetyevo International Airport, Moscow's main airport.

Vinci will have to find a total of about a $1 billion for construction and a total of $1425m to finance the project. About half this is pledged by the Russian state Investment Fund, the remainder from equity and debt raised on international capital markets

The concession is sponsored by the Russian  Ministry of Transport and the Federal Roads Agency. Construction of the whole toll motorway is estimated to cost $6.3b. Design provides for 34 interchanges and some 285 bridge structures.

The concession is estimated to provide an internal rate of return of 14.8% based on weighted average cost of capital of 5.2%.

The concessionaire is guaranteed a minimum revenue with the state promising compensation if the minimums are not reached.

Vinci

Vinci is Europe's largest concessionaire with revenue last year of E4781m (about $6b) and operating profit of E1966m ($2.5b). Vinci's largest toll property is the privatized toll motorway network ASF in the south and center of France, the largest grossing toll network in the country.

The company owns Cofiroute which has developed a tollroad network in the north of France.  

Three other groups bid in the Russian concession procurement which began in 2006.

Citigroup has been heavily involved advising on the financial aspects of the deal.

TOLLROADSnews 2009-07-27