Slovakia moves forward with D1 road

The Slovakian authorities and a Hochtief/Alpine/FCC/Western Carpathian Motorway Company consortium have reached commercial close for a €2bn section of the country’s D1 highway. The road is the last in a package of three road PPPs originally launched by the government. Financial close is targeted by the end of June 2010.

A €2 billion section of Slovakia’s D1 highway has moved nearer to completion, after the government signed a public-private partnership contract with the winning consortium.

D1: could close
before elections

The contract was signed last week with a Hochtief/Alpine/FCC/Western Carpathian Motorway Company consortium, with financial close targeted by the end of June this year. However, a local industry source said the deal is likely to close earlier, since Slovakia will be holding elections in early June. The contract is the third road PPP launched by the government, the other two being the R1, which has already reached financial close, and another section of the D1, which is scheduled to close soon.

This latest contract comprises a section of the D1 between Žilina and Martin, in the north of Slovakia, and will run over 24 kilometres. The contract also includes the construction of the country’s largest tunnel, set to connect the villages of Visnove and Dubna Skala over 7.5 kilometres. Capex for the deal is estimated at close to €2 billion but its net present value rises to €3.65 billion. The concessionaire will receive availability payments – a form of government contribution regulated by certain contractual parameters – over the length of the 30-year contract.

In related news, the deadline to reach financial close on another section of the D1 highway, the connection from Martin to Presov, will be delayed from February 15 to late March, the source said. The delay was reportedly requested by the European Investment Bank (EIB), to review documentation related to the project.

The EIB will contribute €1 billion to the Martin-Presov section of the D1, but this requires a legislative change on the Slovakian government’s part so that it can guarantee up to €800 million of that amount. The European Bank for Reconstruction and Development is also on board with another €250 million. A group of 12 structuring commercial banks is working on reaching financial close for the €3.3 billion deal and is likely to contribute a debt package of at least €1.5 billion.