New concession agreement for US$1.5 billion Russian road project

New concession agreement for US$1.5 billion Russian road project

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The Russian Direct Investment Fund (RDIF), the sovereign wealth fund of the Russian Federation, AVTOBAN, a Russian road-building company, and Makyol, a Turkish construction company, have announced a joint agreement to establish a consortium to build and operate the fourth section of the Moscow Central Ring Road under a 30-year concession agreement.

The 530km Moscow Central Ring Road is being developed in five sections, each under a different public-private partnership. It is intended to stimulate development in the areas around the capital and tackle Moscow's notorious traffic congestion, taking 120,000 vehicles off the overloaded 110km Moscow Ring Road every day. The road will have 4-8 lanes in each direction

The fourth section of the Central Ring Road is 96.5 km long. Under the terms of the concession agreement, the cost of construction is RUB85.4 billion (US$1.5 billion), of which the concessionaire will provide RUB49.7 billion (US$877 million) and private investors will provide RUB35.7 billion (US$630 million).

As reported on this platform, the tender for the project was launched in September 2014RDIF and AVTOBAN signed a concession agreement for the project in June 2017.

The other sections are at various stages of development. Stroigazconsulting was awarded the contract for the 49.5km first section in May 2014. Construction commenced with a groundbreaking ceremony in September 2014. The estimated construction cost was RUB49 billion (US$1.3 billion at the time). 

The tender for the third section was launched alongside that of the fourth section, in September 2014. Only one bid was submitted, and thus the project was awarded to a consortium comprising AVTOBAN, OJSC and Sacyr Concessions. Despite Sacyr leaving the consortium in July 2016, financial close was achieved in March 2017.

The contract for the fifth section of the road has also been awarded, but at the time the successful bidders were not disclosed.

Initially, the total investment required for the road in entirety was estimated at RUB300 billion (US$10 billion at the time). Of these, RUB150 billion were to be provided by the National Welfare Fund, RUB74 billion from the state budget, and the remaining RUB76 billion from private investors.

Once the five sections are complete, the construction of the Ring Road will continue and it will become part of the pan-European highway from London to China, via Berlin and Moscow.

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