Lithuania readies second road PPP

Following the successful close of the Palanga bypass project last year, the Vilnius-Utena PPP is seeking government approval to proceed.

Lithuania’s Ministry of Transport and Communications has submitted the Vilnius-Utena highway public-private partnership (PPP) for government approval. The PPP – based on availability payments – has a budget of €175 million.

Rimantas Sinkevicius, Minister of Transport and Communications, pointed out that the highway, which links capital city Vilnius with the north-eastern industrial city of Utena, has become increasingly unsafe as traffic has doubled over the last 10 years – and that reconstruction was needed immediately.

“We urge Parliament to approve project implementation via PPP, especially as the government has a positive view on such projects,” said Sinkevicius in a statement released by government agency Invest in Lithuania. “In addition, we already have experience of such ventures – this PPP method was adopted in the construction of the Palanga bypass.”

While the Vilnius-Utena project has been approved by the Ministry of Finance, it requires endorsement by government and parliament before public procurement procedures can begin.

The project would involve the design and reconstruction of highway sections ranging between 21.5 and 93.65 kilometres. Following completion of the reconstruction, periodic and regular maintenance of the highway would be carried out. Reconstruction works are slated to commence in 2016.

The Palanga bypass contract, worth €36 million over 25 years, reached financial close in May last year. Approved by the government in 2009, the design, build, operate and finance (DBOF) contract was awarded to Lithuanian construction firms Kauno Tiltai and Siauliu Plentas. Completion of construction is scheduled for the second quarter of 2015.

Lithuania has been working to improve its PPP framework over the last few years as the government has announced plans to use PPPs more broadly than before to provide public services.

At the time of the Palanga bypass financial close, the country had plans to launch more than 10 projects with an estimated total capital investment of more than €300 million. Target sectors included roads, car parks, street lighting, courts, detention facilities and other social infrastructure.