Case Studies: “Slavyanka” Roads, Russian Federation

From BENEFIT Wiki
Jump to: navigation, search
Project Overview
Slav.png
Figure 1: Slavyanka Roads
Roads in the residential area “Slavyanka” (Pushkin District of St. Petersburg), Russian Federation
Project Type: Greenfield
Type of Project Financing: Public-Private Partnership (PPP)
Contract duration: 12 years (including construction period – 2years)
Budget: 1.6 billion rubles
Project Time Line
June 9, 2012: Publication of tender notice
August 17, 2012: Prequalification bids
August 20, 2012: Prequalification results
October 10, 2012: Award of the PPP agreement on construction and maintenance of roads in the residential area “Slavyanka”.
January 24, 2014: Start of operation.

Introduction

The project comprises the construction and operation of roads with a total length of 7.7 km in the residential area “Slavyanka”, in the Pushkin District of St. Petersburg.

The aim of the PPP project is to ensure the transport accessibility of the new residential district “Slavyanka” of the Pushkin District of St. Petersburg by the construction of free public roads and organization of their maintenance in accordance with a Public-Private Partnership agreement in accordance with the Law № 627-100 “On Participation of St. Petersburg in Public-Private Partnerships”.

Under the PPP agreement, the private partner is obliged to design and build the roads using equity and debt and to maintain the roads during a 10 year period, transferring the object of the agreement to the public partner under the contract of sale, including instalment payments for St. Petersburg.

The road consists of 12 road sections each of which is a standard public road with a different length as depicted in Table 1.

Table 1: Key characteristics of roads under contract

Road facility Name Length Number of traffic lanes
Road facility 1 Severskaya St. 817 m Minimum 4
Road facility 2 Turovskaya St. 297 m Minimum 4
Road facility 3 Izborskaya St. 297 m Minimum 4
Road facility 4 Polotskaya St.(from Kolpinsky Highway to Ring) 404 m Minimum 4
Road facility 5 Polotskaya St.(from Ring to Passage 2) 601 m Minimum 4
Road facility 6 Rostovskaya St.(from Severskaya St. to Ring) 471 m Minimum 4
Road facility 7 Rostovskaya St.(from Small Ring to Big Ring) 422 m Minimum 4
Road facility 8 Rostovskaya St.(from Ring to Galitskaya St.) 498 m Minimum 2
Road facility 9 Galitskaya St. 682 m Minimum 2
Road facility 10 Big Ring 1190 m Minimum 3
Road facility 11 Small Ring 507 m Minimum 3
Road facility 12 Passage 2 1553 m Minimum 2

Other related road infrastructure should also be provided, such as public transport stations, regulated and not regulated pedestrian crossings and junctions, sidewalks and lawns, and a system of modern and energy-efficient street lighting.

The project feature is that it is not a unique or complicated project, but it can serve as an example of the creation of regional and municipal free public roads. Currently, the roads in the residential area “Slavyanka” have been built and are in operation.

The Contracting Authority (Public Party)

The authority authorised to sign and fulfil the conditions of the PPP agreement on behalf of the city of St. Petersburg is the Government of St. Petersburg.

The organizer of the tender for the conclusion of the PPP agreement is also the Government of St. Petersburg. Interactions between the competition organizer and the participants of the tender and other stakeholders, including exchange of documents, are carried out through the Investment Committee of Saint-Petersburg acting on behalf of the Government of St. Petersburg. Control for fulfilment of the conditions of the agreement before commissioning of the roads is the responsibility of the Construction Committee, and after commissioning, that of the Administration of the Pushkin District. The Committee on City Property Management signs a lease agreement with the private partner.

The Concessioner (Private Party)

The private partner is the company “SlavDorService” Ltd. – a subsidiary company of the “Baltros” company group, which is one of the biggest developers and construction companies of the Northwest region of the Russian Federation and also the developer of the residential area “Slavyanka”. The main activity of the company is integrated development for housing construction.

“SlavDorService” Ltd. is 99% owned by “DSK Slavyansky” Ltd. and 1% - by “Zanevsky” Ltd. “SlavDorService” Ltd., as well as “DSK Slavyansky” Ltd. are included in the company group “Baltros”.

The company “SlavDorService” Ltd. was created especially for the purpose of roads construction in “Slavyanka” of the Pushkin District of St. Petersburg.

Users

The users –are the general public, legal entities and individuals having the right to use public roads in accordance with the legislation of the Russian Federation on the roads and roads activities.

The main aim of the use of roads is ensuring the accessibility of the residential area “Slavyanka”.

Key Purpose for PPP Model Selection

Value for money was the main driver for adoption of the PPP solution.

Project Locality and Market Geography

The roads with the total length of 7.7 km are located in the territory of the residential area “Slavyanka” of the Pushkin District of St. Petersburg.

The residential area “Slavyanka” situated in the south of St. Petersburg in the municipal district Shushary is one of the biggest projects of the integrated development of territory in the Russian Federation. It includes 135 apartment buildings constructed in a land of 220 ha, while the planned population of the area is 40-50 thousand inhabitants. Thereby, the roads built are very important primarily at the local level, since they provide convenient and high-quality access for the inhabitants of the municipal district Shushary.

Procurement & Contractual Structure

Tendering

The bids of participants during the tender procedure for the PPP agreement on construction and maintenance of the roads in the residential area “Slavyanka” were evaluated based on the following criteria:

  • The size of principal payment for the entire object of the agreement (maximum – 1,76 billion rubles). Weight– 0,80.
  • Construction period of the object of the agreement (maximum – 730 days). Weight – 0,10.
  • The size of compensation of the maintenance costs by a participant as a percentage of regulatory costs for maintenance (maximum – 100%). Weight – 0,10.
  • The size of rental fee for the land (minimum – 156000 rubles per quarter).
  • The extent of implementation by a participant of conditions on the use of land.

Three companies, “SlavDorServise” Ltd., “NSK-Monolit” Ltd. and “General Construction Corporation” JST applied for participation in the competition. But only two companies, “SlavDorServise” Ltd., and “NSK-Monolit” Ltd. continued to participate in the tender, since the third company “General Construction Corporation” JST did not pass the pre-selection having not met the requirements of the tender documentation.

The contract was awarded to "SlavDorServis" Ltd., which presented the best bid with the highest rent amount (160 thousand rubles per quarter).

Contract Structure

The terms of the agreement of the 12-years PPP contract included:

  • Construction period – 14 months;
  • Operation period – 10 years;
  • Term of signing of sale contract – not later than 3 months after the start of operation of the roads or after the date of state registration of the ownership of the private partner;

Legal framework of the agreement:

  • St. Petersburg Law No. 627-100 “On St. Petersburg’s Participation in Public-Private Partnerships”, 25.12.2006
  • St. Petersburg City Government Decision No. 346 “On Measures for the Development of Public-Private Partnerships in St. Petersburg”, 31.03.2009
  • St. Petersburg City Government Decision No. 347 “On Measures to Realize Law No. 627-100”, 31.03.2009
  • Decree of the Government of St. Petersburg No. 673 “On the Conclusion of PPP Agreement on the Construction and Maintenance of the Roads in the Residential Area “Slavyanka” of Pushkin District of St. Petersburg and the Lease Contract of Land for Construction”, 02.07.2013
  • Decree of the Government of St. Petersburg No. 672 “On the Form of Participation of St. Petersburg in Public-Private Partnerships", 02.07.2013

The contract is a Design Build Finance Maintain (DBFM) type. St. Petersburg provides the private partner the land for construction and operation of roads, the property right of which belongs to the private partner during the period determined in the agreement, after which the partner transfers the roads to the ownership of St. Petersburg and maintains them during the entire period of the agreement.

The city will pay the private partner the principal payment in equal instalments during the period of maintenance, including interest rate on instalments, and also compensate the maintenance costs of the private partner (availability fee).

The private partner bears all the costs and expenses related to the fulfilment of obligations regarding the construction and maintenance of the roads. The public partner has the obligation to pay the principal payment and compensate the maintenance costs of the private partner, which are provided in the agreement. In the case of non-fulfilment or improper implementation of the obligation by the private partner, the sum of compensation of the maintenance costs is reduced.

The total amount of financing from the part of the private partner in the project is 1.1 billion rubles, in addition:

  • The interest rate for instalment payment is 12%;
  • The Redemption price of roads is 1,18 billion rubles:
  • Road facility 1 – 174,9 million rubles
  • Road facility 2 – 58,6 million rubles
  • Road facility 3 – 65,5 million rubles
  • Road facility 4 – 83 million rubles
  • Road facility 5 – 90,5 million rubles
  • Road facility 6 – 107,6 million rubles
  • Road facility 7 – 95 million rubles
  • Road facility 8 – 63,3 million rubles
  • Road facility 9 – 76,9million rubles
  • Road facility 10 – 194,4million rubles
  • Road facility 11 – 84,5million rubles
  • Road facility 12 – 95,2million rubles

The size of government expenditure on the maintenance of the roads is 98% of the regulatory costs for maintenance.

Risk Allocation

Risks taken by the Government:

  • underfunding of the government obligations;
  • changes of the project on the initiative of the Government,
  • town-planning constraints,
  • failure to provide land plots,
  • archaeological finds.

Shared risks:

  • inflation,
  • problems with permits,
  • detection of communications, impeding the implementation of the project,
  • delay of operation due to the illegal actions of the authorities of St. Petersburg,
  • environmental risks,
  • changes in legislation,
  • invalidity of contracts for the project,
  • force majeure

The risk allocation is depicted in Figure 2.

Slav1.png
Figure 2: Risk allocation

Performance

The project reached its goals and ensured the accessibility of the new residential district “Slavyanka” of the Pushkin District of St. Petersburg.

The PPP agreement did not contain specific operational performance requirements. These requirements were included in a bidding documentation. Penalties against the compensation of maintenance costs were included for insufficient performance.

With respect to Construction Management performance, the project was delivered on time, to budget and with minimum disturbance to the local environment.

References

  • Decree of the Government of St. Petersburg No. 361 “On Granting of Subsidies in 2015 for Maintenance and Repair of Road Facilities in Accordance with the PPP Agreement on the Construction and Maintenance of the Roads in the Residential Area “Slavyanka” of Pushkin District of St. Petersburg”, 22.04.2015.
  • Decree of the Government of St. Petersburg No. 672 “On the Form of Participation of St. Petersburg in Public-Private Partnerships", 02.07.2013Decree of the Government of St. Petersburg No. 673 “On the Conclusion of PPP Agreement on the Construction and Maintenance of the Roads in the Residential Area “Slavyanka” of Pushkin District of St. Petersburg and the Lease Contract of Land for Construction”, 02.07.2013
  • Decree of the Government of St. Petersburg No. 908 “On Approval of the Additional Agreement No. 2 to the PPP Agreement of the Construction and Maintenance of the Roads in the Residential Area “Slavyanka” of Pushkin district of St. Petersburg”, 25.09.2014
  • PPP: the experience of St. Petersburg. Monthly informational and analytical magazine "Highways".http://archive.izdatelstvo-dorogi.ru/2012-11-01/platdorogi/gchp.html
  • Roads and schools in the "Slavyanka" on the base of PPP will be built by "SlavDorServis" http://www.dormost.spb.ru/enews/view/2028