Five banks agree loan for €2.9bn Russian road

The banks are providing some €1.45bn of debt for St. Petersburg’s Western High Speed Diameter toll road, which is being billed as the world’s largest toll road PPP. VTB Capital and OJSC Gazprombank are the project’s sponsors.

St. Petersburg’s emblematic Western High Speed Diameter (WHSD) toll road has received an important financing injection, with a syndicate of five banks backing sponsors VTB Capital and OJSC Gazprombank with some RUB60 billion (€1.45 billion; $1.8 billion) of debt.

The banks – including VTB Capital, OJSC Gazprombank, Vnesheconombank, the European Bank for Reconstruction and Development and the Eurasian Development Bank – are funding roughly half of the RUB120 billion required for works taking place between 2012 and 2015. The federal government is contributing RUB50 billion of the required amount with the sponsors contributing RUB10 billion in equity.

The total cost for the 46-kilometre highway connecting the north, centre and south of St. Petersburg will amount to RUB 206 billion, leading the sponsors to bill it as “the world’s largest PPP project in the toll road construction sector”. 

The city of St. Petersburg will guarantee a minimum toll revenue for the project of some RUB 9.67 billion a year, not exposing the winning consortium to traffic risk. Should the actual revenue surpass this amount, the consortium will pay 90 percent of the excess to the city.

WHSD is the fourth large-scale PPP to have closed in Russia 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.