An interagency commission has rejected the applications of the two companies that expressed the desire to participate in Ukraine’s first highway concession project, which involves construction and operation of a new Lvov-Krakovets highway. Documents for the competition were submitted by the Concession Transport Highways consortium (Ukraine) and the Bouygues company (France), the the press service of the State Automobile Road Service (Ukravtodor) announced.
"During consideration of the applications, the commission found that none of the companies was able to ensure funding for the concession project with its own or borrowed funds, as stipulated in the terms of the concession tender," the press service said.
The applicants were unable to provide confirmation from financial institutions with a credit rating no lower than AAA that it is capable of financing 85% of the cost of the project.
The companies called for review of the terms of the concession tender to allow the possibility of co-financing of the project with the government or provision of state guarantees of return on investment or other subsidies for financing construction of the highway.
In addition, one of the applicants was unable to confirm that it has been operating without losses for the past five years.
As reported previously, "Construction and Operation of the Lvov-Krakovets Highway with a Length of 84.4 Kilometers" is the pilot concession project in Ukraine. the the concessionaire’s investment will be recovered through collection of tolls, as well as fees for access and operation of road service facilities, roadside infrastructure, advertising, logistics centers, modern communication lines along the road.
The approximate period of construction of the highway will be four to five years. concession will be granted for up to 49 years. The concessionaire will be responsible for construction, maintenance, and repair of the road. According to Ukravtodor, a category 1-A highway is planned for construction. The highway will have four lanes and have an estimated speed limit of 120 kilometers per hour.
According to forecasts by Minister of Infrastructure Andrii Pyvovarskyi, the approximate cost of construction of the Lvov-Krakovets highway could reach USD 350-500 million. Ukravtodor announced the concession tender for the project in May 2015.