Moscow’s vehicle traffic levels make toll roads good business opportunities for investors
New Concession Company to build northern relief road of Moscow Kutuzov Avenue – Eugene Gerden writes
New Concession Company has won a tender for the building of the Northern relief road of Kutuzovsky Avenue, a major radial avenue in the Russian capital Moscow. The firm is part of Leader company (one of Russia's largest management companies), owned by Yuri Kovalchuk, a well-known Russian businessman, who is reportedly close to Russia’s president Vladimir Putin.
It is planned that the building of the new road will be part of the programme for the development of Moscow’s transport system, which will run until 2020, and is valued at nearly US$209 billion (RUB 1 billion).
The company has already signed a concession agreement with the Moscow government on the implementation of the project for 40 years. The new road should be commissioned by 2018-2019. The contract includes maintaining the new road over the next 35 years following its commissioning.
According to Maxim Reshetnikov, head of the Department of Economic Policy and Development of the Moscow government, despite tough conditions of the tender, set by the Moscow city government, it was able to attract serious investors to the project.
According to Anatoly Gavrilenko, CEO of Leader, the volume of investments in the project will vary in the range of US$1-1.3 billion (RUB 40-50 billion).
Under the conditions of the project, the road will be completely built at the expense of the investor, who will be also responsible for the design of the new road, as well as setting a tariff for its use. Under the conditions of the tender, at least 15% of the planned investments should be allocated from the investor's own sources and should not be borrowed.
According to an official spokesperson of the Russian Ministry of Transport, this is probably the first project in the Russian road building industry that does not involve any forms of state support during its implementation, in particular financial. In addition, the Moscow government did not provide any guarantees of the profitability of the project to the investor.
The new relief road will be 11km in length and will be comprised of four lanes, two in each direction.
According to Marat Khusnullin, deputy mayor of Moscow, there are plans to take into account the experience of the French city Nice. It features a long toll road that passes through the coastal zone and is fully integrated into the city’s urban transport network.
The road will be a continuation of the existing toll road, bypassing Odintsovo. This other tolled link was also built by the consortium of companies, headed by Leader. The new route will bypass an area in the Moscow region, which is known for its elite housing. It will run from Molodogvardeyskaya transport interchange in the western part of Moscow to Moscow City, (a commercial district in central Moscow, located near the Third Ring Road in the Presnensky District of western Moscow).
The new road will also run along the Smolensk direction of the Moscow Railways, a subsidiary of local railway monopoly Russian Railways that handles half of Russia's suburban railway operations.
This will be a non-stop traffic toll road, with a capacity of 40,000 cars/day. It is planned that its commissioning will help to significantly reduce traffic congestion in the centre of Moscow.
The toll will be set at US$2.50 (RUB 150). Payback period of the project is estimated at about 15 years. Investments will be recouped by tolls, which will be collected by the investor until 2055. The design speed of the road will be at least 100km/h.
An official spokesperson of the New Concession Company said that the company is ready to pay 70 million rubles to the Moscow City Government as a concession payment and to take over 50% of the costs of the preparatory works for the project.
Among the other bidders for the project were VTB Capital, an investment arm of Russian financial conglomerate3012 VTB Group and 3014 Gazprombank, one of Russia’s largest banks. Both companies have already said that the conditions of the tender gave Leader a strong position.
According to Gavrilenko, among the planned contractors for the building of the new road will be such companies as Avtostrada, one of Russia’s largest construction companies, LLC "Promenergo, and ARKS Group of Companies. Gavrilenko has also added said that contractors for the project will be selected in 2016.
In the future, the city also plans to announce a tender for the building of the southern relief road of Kutuzov Avenue. The length of the planned toll-free road will be 10.5km, while construction costs will reach 50 billion rubles. Interest in the project has already been expressed by Inteko, one of Russia’s largest building companies and AFC Systema, a financial holding, which is owned by Russian billionaire Vladimir Evtushenkov. However implementation of the project has already sparked criticism from some Russian analysts and top officials, due to environmental issues.
According to Darya Levchenko, press secretary of the Department of Economic Policy and Development of the Moscow city government, building of the northern and possibly southern relief road will force the Moscow city government to suspend implementation of other planned projects. These involve building of two radial highways between Kutuzovsky Avenue and Zvenigorod highway, one of the most important highways in western Moscow.
New Concession Company has won a tender for the building of the Northern relief road of Kutuzovsky Avenue, a major radial avenue in the Russian capital Moscow. The firm is part of Leader company (one of Russia's largest management companies), owned by Yuri Kovalchuk, a well-known Russian businessman, who is reportedly close to Russia’s president Vladimir Putin.
It is planned that the building of the new road will be part of the programme for the development of Moscow’s transport system, which will run until 2020, and is valued at nearly US$209 billion (RUB 1 billion).
The company has already signed a concession agreement with the Moscow government on the implementation of the project for 40 years. The new road should be commissioned by 2018-2019. The contract includes maintaining the new road over the next 35 years following its commissioning.
According to Maxim Reshetnikov, head of the Department of Economic Policy and Development of the Moscow government, despite tough conditions of the tender, set by the Moscow city government, it was able to attract serious investors to the project.
According to Anatoly Gavrilenko, CEO of Leader, the volume of investments in the project will vary in the range of US$1-1.3 billion (RUB 40-50 billion).
Under the conditions of the project, the road will be completely built at the expense of the investor, who will be also responsible for the design of the new road, as well as setting a tariff for its use. Under the conditions of the tender, at least 15% of the planned investments should be allocated from the investor's own sources and should not be borrowed.
According to an official spokesperson of the Russian Ministry of Transport, this is probably the first project in the Russian road building industry that does not involve any forms of state support during its implementation, in particular financial. In addition, the Moscow government did not provide any guarantees of the profitability of the project to the investor.
The new relief road will be 11km in length and will be comprised of four lanes, two in each direction.
According to Marat Khusnullin, deputy mayor of Moscow, there are plans to take into account the experience of the French city Nice. It features a long toll road that passes through the coastal zone and is fully integrated into the city’s urban transport network.
The road will be a continuation of the existing toll road, bypassing Odintsovo. This other tolled link was also built by the consortium of companies, headed by Leader. The new route will bypass an area in the Moscow region, which is known for its elite housing. It will run from Molodogvardeyskaya transport interchange in the western part of Moscow to Moscow City, (a commercial district in central Moscow, located near the Third Ring Road in the Presnensky District of western Moscow).
The new road will also run along the Smolensk direction of the Moscow Railways, a subsidiary of local railway monopoly Russian Railways that handles half of Russia's suburban railway operations.
This will be a non-stop traffic toll road, with a capacity of 40,000 cars/day. It is planned that its commissioning will help to significantly reduce traffic congestion in the centre of Moscow.
The toll will be set at US$2.50 (RUB 150). Payback period of the project is estimated at about 15 years. Investments will be recouped by tolls, which will be collected by the investor until 2055. The design speed of the road will be at least 100km/h.
An official spokesperson of the New Concession Company said that the company is ready to pay 70 million rubles to the Moscow City Government as a concession payment and to take over 50% of the costs of the preparatory works for the project.
Among the other bidders for the project were VTB Capital, an investment arm of Russian financial conglomerate
According to Gavrilenko, among the planned contractors for the building of the new road will be such companies as Avtostrada, one of Russia’s largest construction companies, LLC "Promenergo, and ARKS Group of Companies. Gavrilenko has also added said that contractors for the project will be selected in 2016.
In the future, the city also plans to announce a tender for the building of the southern relief road of Kutuzov Avenue. The length of the planned toll-free road will be 10.5km, while construction costs will reach 50 billion rubles. Interest in the project has already been expressed by Inteko, one of Russia’s largest building companies and AFC Systema, a financial holding, which is owned by Russian billionaire Vladimir Evtushenkov. However implementation of the project has already sparked criticism from some Russian analysts and top officials, due to environmental issues.
According to Darya Levchenko, press secretary of the Department of Economic Policy and Development of the Moscow city government, building of the northern and possibly southern relief road will force the Moscow city government to suspend implementation of other planned projects. These involve building of two radial highways between Kutuzovsky Avenue and Zvenigorod highway, one of the most important highways in western Moscow.
