EDB signs an agreement to provide bank guarantees for the Western High-Speed Diameter project
St. Petersburg, 18 June 2014. Eurasian Development Bank and Northern Capital Highway (NCH) signed a framework bank guarantee agreement to protect the prepayment under the Western High-Speed Diameter toll road construction and operation PPP project. In accordance with the agreement, the Bank will provide NCH with bank guarantees for a total of up to RUB 2 billion for up to three years.
Under the PPP agreement entered into in December 2012, the Western High-Speed Diameter company (WHSD), the only stockholder in which is the municipality of St. Petersburg, undertook to make prepayments to NCH, project operator, for the purchase of construction materials. As a main condition for the receipt of prepayments from WHSD, NCH needs to provide bank guarantees to protect the total prepayment amount. These guarantees are fully backed with the contractor’s counter guarantees. This scheme made it possible for EDB to provide an additional lending limit for NCH and issue guarantees for a total of RUB 2 billion, in addition to the existing loan facilities used by NCH to finance its project costs, without affecting primary finance.
In addition to EDB, NCH involved VTB Bank and Gazprombank as sources of the required guarantees and is currently working with these banks proactively.
EDB is a member of the creditor syndicate, which includes VTB Capital, Gazprombank, Vnesheconombank and the European Bank for Reconstruction and Development (EBRD) and finances the construction of the central section of the road. The total amount of finance approximates RUB 60 billion, including RUB 10 billion provided by EDB.
The Western High-Speed Diameter is the world’s largest PPP project in the area of toll road construction. The project is included in the Federal Targeted Programme for the Development of the Russian Transport System
The Western High-Speed Diameter is a strategic investment project to develop transport infrastructure in St. Petersburg and form a strong transport network in and around it, which will make it a world-class transport hub. This Russia’s first urban toll road will have a length of 46 km and connect the northern and southern areas of St. Petersburg. It is expected to become one of the main solutions to the city’s traffic problems since it will help relieve traffic congestion in the central districts and provide a direct connection from the downtown area to Pulkovo Airport and federal highways.
Additional Information
Eurasian Development Bank is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth and the expansion of mutual trade and other economic ties in its member states. EDB’s charter capital exceeds US $1.5 billion. The member states of the Bank are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan. Read more at https://www.eabr.org.
Northern Capital Highway (NCH) is a consortium in charge of implementing the Public-Private Partnership Agreement with St. Petersburg on the construction and operation of the Western High-Speed Diameter toll road. The consortium comprises VTB Capital, Gazprombank, Astaldi (Italy) and Içtaş Inşaat (Turkey) as contractors, and Mega Yapi Inşsaat (Turkey) as contractors’ technical adviser. NCH finances and organises the construction of the technically most complicated central section of the Western High-Speed Diameter and will operate the entire road under a
Read more about NCH at https://nch-spb.com/