A Public Private Partnership (PPP) project to reconstruct the A14 Vilnius-Utena highway has been approved by the Lithuanian Parliament on the 22nd of December, 2015.

According to Mr. Tadas Jagminas, Director of the Project Management Department of Invest Lithuania, the project will be the largest ever PPP project in the road sector in Lithuania.

The highway Vilnius-Utena was initially constructed several decades ago. Over the last ten years traffic has nearly doubled, causing the concrete road to become bumpy and therefore both uncomfortable and unsafe to drive on. As a result, there has been strong political will to implement this project and the need for this project has been highlighted by both the Government and the Ministry of Transport and Communications, the Ministry of Finance and the Government approved the reconstruction of the road under the PPP model in July, 2014 and parliamentary approval was the final step in the PPP authorisation process.

Vilnius-Utena highway will be the biggest PPP project in the road sector in Lithuania as well as Baltic states.

The project’s scope encompasses the design and reconstruction of individual poor-quality sections of the Vilnius-Utena highway totaling 58.1 kilometers. Additionally, following completion of the reconstruction work, regular maintenance of up to 72.1 highway section is due to be carried out.

The project is intended to guarantee the availability of the infrastructure of the Vilnius-Utena highway for the full 13 year term of the project and beyond. With reference to the parliamentary approval, the overall project, in terms of future availability based payments, has a total budget of €169 million (VAT incl.). The total project investment is estimated at €80 million (US$100 million).

According to Mr. Tadas Jagminas, Director of the Project Management Department of Invest Lithuania, the next step for the project owner – The Lithuanian Road Administration under the Ministry of Transport – is to prepare tender documentation. He said:

“Taking into consideration that in May, 2015 the pilot Lithuanian road PPP project Palanga Bypass went into operation and Lithuania already has experience with PPPs, the public procurement procedures for this project may be commenced as early as the middle of 2016. We believe we will be able to ensure adequate competition for this tender, and that we will attract investors with proven experience in implementing projects of such size.”

Lithuania already has experience of such ventures, the PPP method was successfully adopted in the construction of the Palanga bypass. The project was among six PPP pilot projects approved by the Lithuanian government in 2009. The Lithuanian Road Administration selected Kauno tiltai and Siauliu plentas to design, build, operate, and finance the Palanga bypass contract, worth €36 million over 25 years.