French infrastructure investor Meridiam, Finnish pension Ilmarinen and local developers Destia and YIT have been awarded a mandate by the Finnish Transport Agency to design, build, construct, finance and maintain a stretch of highway in the south of the country.
The €650 million, 53-kilometre road will connect Koskenkylä and Kotka, in southern Finland, and is part of a larger motorway connecting the UK to Russia – European roadway E18. The road should open for traffic in 2013, with the concession contract lasting for 15 years.
While a formal decision was reached by the Finnish Transport Agency in recent days, a service agreement has yet to be signed as financing details are finalised. Presentation documents from a previous government roadshow stated that the European Investment Bank will provide the majority of the project’s debt, with the Nordic Investment Bank and commercial banks to provide the remainder, split about equally.
The road project is being procured under Finland’s ‘life cycle model’, a variant of the availability payment system. It means the concessionaire will receive a base fee for making the road available to users in good condition, but there will be other factors that can add to or subtract from that fee. These include certain performance, environmental and technical criteria, according to a presentation from the Finnish Road Administration, the country’s roads agency.
The ‘life cycle model’ has already been successfully used in Finland, including for another stretch of the E18 highway, connecting Muurla to Lohjanharju, awarded to UK developer John Laing in 2005.