The First Highway Infrastructure PPP Project In The Baltic States According To DBFM Model – Challenges And Opportunities

Abstract

Kekava Bypass public-private partnership (PPP) project is the first highway infrastructure PPP project in the Baltic States to be implemented according to Design-Build-Finance-Maintain (DBFM) model. Its objective is to solve the “bottleneck” of the TEN-T network road section entering Riga City with only one lane in each direction. The duration of the project is 23 years, including 3 years for design and construction of the infrastructure and 20 years for its maintenance. Kekava Bypass consists of the main road 17.22 km, auxiliary roads 20.66 km, 2 tunnels, 5 two-level road junctions, 1 bridge (all in all more than 100 lane km), 2 pedestrian bridges/tunnels etc.The Latvian government required that the assets of the Kekava Bypass project are classified off government balance sheet during the whole duration of the PPP contract. Thus, the Kekava Bypass PPP tender documentation was elaborated strictly observing this off-balance sheet treatment frame. Eurostat assessed the project documentation and issued its opinion that the project corresponds to the off-balance sheet criteria.Latvian State Roads on behalf of the Ministry of Transportation launched Kekava Bypass tender in December 2018. The tender was implemented in four sequent phases, namely, the qualification phase, the submission of initial offers, negotiations with the selected bidders about the initial offers, the submission of the best and final offers. On August 13, 2020, Latvian State Roads announced the winner and the financial due diligence phase to be performed by financial institutions started.