Government approves legislation amendments regarding Lithuanian airport concession

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Government approves legislation amendments regarding Lithuanian airport concession

Lithuania's Cabinet of Ministers approved a special law and other required amendments to regulations that would allow Lithuanian airports to be operated by a concessionaire.

Before coming into force these legal changes will also have to be approved by the Lithuanian parliament. Parliamentary committees should start hearings on the changes this year, though final adoption is not expected before the end of March 2016.

Under the current law, facilities of strategic importance can only be managed by state enterprises. The special law and several related additional amendments were drafted in order to remove any legal restrictions on private companies operating Lithuanian airports. However, asset ownership will remain with the state at all times.

The Lithuanian airports concession project is expected to be launched in the second quarter of 2016.

The full investment program of all three Lithuanian airports,Vilnius, Kaunas and Palanga, is set at approximately €250 million (US$274.7 million). However, a portion of this investment will fall beyond the scope of concession as some projects related to providing more efficient air transport infrastructure, ensuring a level of safety that meets international standards and improving environmental performance will be implemented separately.

The advisor to the government will be selected by the end of January 2016. Key tasks for the selected advisor include drawing up concession tender documentation and representing the public entity in the tender.

Tadas Jagminas, Director of the Project Management Department of the foreign investment development agency Invest Lithuania, stated:

"Airports nowadays are becoming much more than a facility for departing and arriving air passengers. The competitive business environment forces global airport operators to shift their focus to a commercial stream of income as well as to implement innovative solutions to increase operating efficiency. Lithuania is not an exception. As it continues to experience traffic growth in double digits, the timing is favourable to attract an experienced operator, which would not only ensure even more efficient operations and higher operating returns but would also grow connectivity."

We have recently reported that the European Investment Bank (EIB) is mulling providing project finance for the Lithuanian airports concession project.

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