Lithuania's first road PPP project officially opened to public

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Lithuania's first road PPP project officially opened to public

The government of Lithuania has announced that Palanga bypass public-private partnership (PPP) project has been officially opened to the public.

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 (US$40.3 million) over 25 years.

The contract was awarded following a selection process that began in May 2011. Financial closure was achieved in May 2013 and construction began in March 2014.

The bypass, which is 8.25km in length, is intended to divert transit traffic from Palanga seaside resort. It is estimated that over 75 thousand vehicles cross Palanga city during the summer season, the majority of which are trucks transporting cargo from Klaipeda Sea Port to Latvia. Those travelling directly to Latvia, Sventoji resort or Palanga international airport will be able to reach their destinations faster, whereas local residents will benefit from lower traffic, decreased air pollution and reduced noise levels.

Tadas Jagminas, director of Project Management Department at Invest Lithuania, stated:

"As Lithuania's first road PPP project, the Palanga bypass contributed valuable lessons which will strengthen further implementation of PPP in the Lithuanian transport sector. Invest Lithuania's PPP team participated in all project stages, from preparation of tender documentation to negotiations with investors. Therefore, we are pleased about one more project delivered in a timely manner."

Another potential PPP road project, Vilnius-Utena highway, has been submitted for final approval by the Lithuanian Parliament as is required by law for projects where the total required state payments exceed €58 million.

Like many countries in the region, Lithuania faces a growing demand for public infrastructure and services, and at higher levels of quality. For this reason, many are turning to PPP to stimulate the economy and deliver the investments needed to close the infrastructure gap.

Lithuania's legal framework for PPPs is acknowledged by international experts and multilateral financial institutions as highly compliant with global PPP standards. Meanwhile, The Lithuanian Government is expected to approve amendments to investment law regarding initiation of PPP projects by private companies.

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