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VTB Capital has announced that its subsidiary Two Capitals Highway and Vnesheconombank (VEB) have signed a cooperation agreement to finance, build and operate the 543 km - 684 km section of Moscow - St. Petersburg toll road in Russia.
The memorandum outlines VEB's intention to participate in financing the project alongside VTB on the agreed terms of the concession agreement for the 140-km section of the M-11 previously signed between State Company Russian Highways (Avtodor) and Two Capitals Highway.
Capital investment in the project will total about RUB76.8 billion (US$1.39 billion) and will be financed through a state grant of RUB57.6 billion, as well as external financing and funds provided by the shareholders.
Construction will start in early 2015 and is scheduled for completion in 2018.
Vasily Titov, First Deputy President and Chairman of VTB Bank's Management Board, commented:
Infrastructure investments are a strategic business area for VTB Capital. We continue to actively expand this business and remain a leader in implementing private-public partnership infrastructure projects in Russia. We have successfully completed a number of large-scale projects, and I am certain that the extensive experience of our team will help us implement this project at the highest level.
The Moscow-St Petersburg motorway is a strategically important federal investment project to develop Russia's transport infrastructure. The modern high-speed road is planned as a major thoroughfare linking the two largest cities in Russia.
The construction of the new M-11 highway started with the sections closest to areas with the highest transport loads. As of today, construction works are underway on the 15-58km section of the road following the signing of a concession agreement in line with the Russian Federation Government Decree No. 511-r dated 24 April 2007. In late 2011, a long-term investment agreement was signed with a view to building the 258-334km road section (a bypass of the city of Vyshny Volochyok) on the basis of a life cycle contract scheme.