Case Studies: A2 Motorway, Poland

From BENEFIT Wiki
Jump to: navigation, search
Project Overview

A2a.png
Figure 1: A2 Motorway Map, Poland

Source: AWSA official website
A2 Motorway – construction section Świecko-Nowy Tomyśl, Poland
Project Type: Greenfield
Contract Duration: 40 years
Budget:
EUR 1,600M
EUR 1,298 M for construction and EUR 237.5 M for indirect costs.
Project Time Line
Project Conceived: 1939
Tender Call: 1995
Contract Approved (signed): 1997 (Świecko – Stryków section)
Overall financial close: 2009
Other important dates for the project:
the Poznań ring road (the part of the A2 motorway) is excluded: 1998
Contractor of the Stryków – Konin section resigns: 2000
Section Świecko-Poznań is divided to sections: Nowy Tomyśl-Poznań and Świecko-Nowy Tomyśl 2000
Financial close of section Nowy Tomyśl-Poznań: 2000
Negotiations start on the Świecko-Nowy Tomyśl section: 2000
Agreement on the Świecko-Nowy Tomyśl section: 2008
Financial close of section Świecko-Nowy Tomyśl: 2009
SPV Autostrada Wielkopolska II SA is established for the Świecko-Nowy Tomyśl section: 2009
Commencement of works (July): 2009
Opening of motorway (November) 2011


Introduction

Due to its geographical location in the east/west corridor, the A2 Motorway will be a major part of continental European transport systems. It is a key element of the road infrastructure development needed to connect Poland with the European motorway network. Thus, the A2 Motorway is part of the TransEuropean Road Network (E30) from Cork, Ireland to Omsk, Russia and is located in Pan-European transport corridor II.

When completed the A2 motorway in Poland will run from west to east through central Poland, from the Polish-German border in Świecko/Frankfurt (Oder) through Poznań, Stryków (Łódź) and Warsaw to the Polish-Belarusian border in Kukuryki.

The Nowy Tomyśl – Świecko section was the missing link between the German A12 autobahn and the existing section of the highway in central Poland. The scope of the project (Nowy Tomyśl – Świecko section) includes:

  • 105.9 km of the new motorway with concrete pavement;
  • 76 bridges and flyovers, with 86 as the eventual target;
  • 2 motorway maintenance centres;
  • 6 complete motorway interchanges (Nowy Tomyśl, Trzciel, Jordanowo, Torzym, Rzepin, Świecko), with 8 as the eventual target;
  • 6 rest and service areas, with 10 as the target, equipped with parking lots, toilets, children’s playgrounds, 4 bars and 4 petrol stations;
  • closed toll collection system;
  • complete environmental protection equipment (AW SA, 2012).

Environmental protection constitutes approximately 25% of the overall construction cost, as 80% of the motorway runs through forest land and Natura 2000 protected areas. In the A2 motorway section Świecko - Nowy Tomyśl, constructed by AWSAII, there are 35 passages for large and medium animals; 71 passages for small animals; 48 culverts for reptiles; sound barriers; protective barriers for bats; 232 kilometres of fences; roadside planting; and drainage systems (ecological tanks, separators, sewage treatment plants).

The environmental protection programme also includes plans of environmental protection and social actions; localisation of environmental monitoring areas; cultivation of trees and bushes; habitat monitoring of plants and animals; life-saving programme for reptiles and amphibians; monitoring of bird nests, bat feeding grounds and beaver nesting sites; protection of anthills; waste management.

A2b.png

Figure 2: View of animal passage
Source: AWSA official website

The Contracting Authority (Public Party)

In 1994 an Act on toll motorways was introduced. On the basis of this Act (as amended) concession procedures were introduced. The responsible authority was the Ministry responsible for Transport, which, however, was continuously re-structured during the award procedure. The Ministry of Infrastructure was originally created in October 2001, abolished in 2005, and reorganised as the Ministry of Transport and Construction (2005-2006) and later again as the Ministry of Transport (2006-2007). Following the 2007 election of Civic Platform under Donald Tusk, the Ministry was again reorganised into the Ministry of Infrastructure. Then in 2011 the Council of Ministers abolished the Ministry of Infrastructure and replaced it with the Ministry of Transport, Construction and Maritime Economy.

The Concessionaire (Private Party)

The concessionaire for the A2 motorway section Świecko - Nowy Tomyśl is Autostrada Wielkopolska II S.A. (AWSA II) with shareholders:

  • Kulczyk Holding, 40%
  • Meridiam A2 West S.a.r.l., 40%
  • Strabag AG, 10%
  • KWM Investment GmbH, 10%

The General Contractor was A2Strada Sp. z o.o. a consortium of Kulczyk Holding SA (50%) and Strabag AG (50%), with Strabag AG as its main subcontractor. The consultancies Scott Wilson and AECOM undertook the construction design and traffic studies respectively.

The motorway operator is Autostrada Eksploatacja SA, a consortium of Kulczyk Holding SA (47.5%), Egis Road Operation (42.95%), A-WAY Infrastrukturprojektentwicklungs-und-betriebs GmbH (9.55%) and Autostrada Wielkopolska SA (1%).

Autostrada Wielkopolska S.A., with a slightly different shareholder structure to Autostrada Wielkopolska II S.A. is the concessionaire for the A2 Motorway section Nowy Tomyśl-Poznań, securing continuity in operations.

The shareholders’ contribution of more than EUR 186M (around 12% of the project cost) – is made up of shared equity (EUR 50M) and a junior loan (EUR 136 M).

The European Investment Bank contributed a project loan of EUR 958M (around 62% of the project cost) while the remaining EUR 388M (26% of the project cost) was provided by eleven international and Polish commercial banks, which have granted also a loan for VAT expenditures of up to PLN 150M (EUR 36M).

The following eleven (11) commercial banks are committing/ lending funds to the project: BBVA S.A. Bank, Pekao S.A., BRE Bank S.A., Caja Madrid, Calyon, Deustche Bank AG, Espirito Santo Investment, KfW IPEX-Bank GmbH, PKO BP, Societe Generale, WestLB (AW SA).

Users

The motorway is used by both freight and passenger traffic. Average daily traffic is projected to be 11-17.000 vehicles per day with 40% estimated to be heavy freight vehicles.

Key Purpose for PPP Model Selection

The Toll Motorways Act of 1994 allowed for the implementation of the PPP model. The Act sets out the conditions for preparation and financing, and the rules with respect to tendering, award, monitoring and conclusion of the respective agreements. The Act also identifies the responsible State Authorities.

The A2 is a crucial part of the TEN-T corridor II (North Sea – Baltic) and part of West-East European route E 30, extending from the southern Irish port of Cork in the west to the Russian city of Omsk in the east.

Several reasons lead to the use of the PPP-model:

  • growing infrastructure investment needs resulting from economic growth and the increasing pace of technological change;
  • dissatisfaction of users with the role of the state and its agencies as investor and manager of infrastructure property;
  • insufficient resources and financial capabilities of the state budget to cover the costs of capital intensive infrastructure projects;
  • strong need to connect the main Polish cities (Poznań, Łódź, Warszawa) with Western Europe;
  • growing trans-border movements of heavy vehicles in west-east traffic;
  • the high frequency of accidents on alternative routes, exceeding twice Polish average;
  • increased likelihood of construction being completed according to planned time and scope;
  • scale of cross-border traffic, with Świecko accounting for more than one-tenth of all traffic across the entire western Polish border. The bulk of the traffic (of which almost half is trucks) was directed to a single carriageway road No. 2. For this reason, the road parallel to the A2 highway was greatly overloaded.

The most important advantages of the PPP model are:

  • no increase of national debt, according to the EUROSTAT (2004) methodology;
  • budgetary savings, taking the burden of investment costs away from the public sector;
  • faster commissioning of new construction;
  • transfer of new technologies not used before in Poland(e.g ‘washbeton’ technology);
  • shared investment risk;
  • increased operational efficiency;
  • diversification of public development financing;
  • increased competition;
  • increased budgetary income due to taxes and fees paid by the private investor.

Emphasis was placed on delivering the motorway in time for the Euro 2012 Football championship. Critics raise the question of lowered standards of service, and high transaction costs (hiring of legal, technical and financial advisors). One may also come across the opinion that the use of PPP for infrastructural investments may weaken the position of the public administration (American Chamber of Commerce in Poland).

Project Timing

The A2 Motorway is very important for Poland as it provides access to both the West and the East. Following the experiences of other countries, on 27 October 1994 the Sejm adopted the Act on Toll Motorways. This permitted the use of licensing schemes and provided endorsement of the BOT (Build-operate-transfer) model, providing an answer to the need for funds in order to build modern road infrastructure.

The need for the A2 Motorway has been expressed since 1939 as a link between Berlin and Poznań. New plans to build the A2 motorway were formulated in the 1970s. Then the issue re-surfaced after the change of the political system in 1989. Soon after, in 1995, the project was tendered.

Project Locality and Market Geography

The East – West Axis of the country has been served by the National Route 2, which is parallel to the A2 motorway. This is a highly used single carriageway road with approximately 17,000 vehicles per day and a very high share of heavy vehicle traffic (almost a half of all vehicles in the border section of this road) (European Commission, 2009). The new motorway has considerably relieved traffic congestion.

Procurement & Contractual Structure

Tendering

The initial call was issued in 1995 and included two stages. Seven consortia expressed interest in the first stage according to Supreme Audit Office 1998 report “Act on toll motorways and Governmental Programme of Motorways Construction in Poland”.

Three bidders were involved in the negotiation stage. The contract was awarded two years after the expression of interest. The initial contract concerned three sections: Świecko-Poznań, Poznań-Konin and Konin-Stryków. The project was implemented according to the concession contract of 1997 (Urbanik, 2014).

Contract Structure

The concessionaire was responsible for the design, finance, construction and operation of the Świecko-Nowy Tomyśl section of the A2 Motorway. Financial close included the analysis and development of the financial model as well as legal, financial and insurance advisors. The concession ends in 2037, when the road will be transferred to the State. Until then it will be operated and maintained by the concessionaire.

According to the Construction and Operation Agreement, the State Treasury leased the motorway development site where AWSA II (the concessionaire) was due to build the motorway within 2.5 years and operate it, for the next 25 years. The concessionaire is responsible for toll collection, road availability and maintenance in compliance with the relevant high standards. In return, AWSA II is remunerated by the public partner through an availability fee linked to the amount needed to secure repayment of loans and a fair return on the sponsors’ equity invested in the project (European Commission, 2009).

The State retains a regulatory and supervisory role over the concessionaire.

Risk Allocation

Little information is known with respect to risk allocation as the concession agreement is treated as confidential.

For this section, for the first time, an availability fee was adopted. This means that the risk of construction and maintenance is borne by the private partner, and the traffic risk (and revenue risk) by the State. (PARP, 2012)

The construction risk is borne mainly by AWSA II. As the construction price is fixed in advance, the concessionaire takes the risks of unpredictable events such as construction cost overrun, design deficiency, necessary additional construction works, ground conditions, availability of labour and materials, construction time delay, etc. In the latter case, the Polish authorities can terminate the contract agreement with AWSA II losing 30% of its equity.

The traffic risk is mainly borne by the State. Tolls are set by the State and the revenue from tolls is transferred to the State (European Commission, 2009).

A2c.png

Figure 3: Risk Allocation

Performance

Contract information with respect to performance requirements is not made available. Nonetheless, the project is performing well on a number of indicators:

  • The motorway was delivered six months in advance;
  • Forecast traffic for the year 2015 was estimated at 12,000-16,000 ADT (Average Daily Traffic) on the section Świecko-Rzepin and 8,000 ADT on the section Rzepin-Nowy Tomyśl. (“Strategy for development of main country roads 2004-2015”). Actual traffic (measured from 1.12.2011 to 30.10.2012) was 17,000 ADT and 11,000 ADT respectively, i.e. actual traffic has exceeded forecasts (AW SA, 2012).
  • There have been considerable road safety improvements with the operation of the A2 Motorway, as the safety of the alternative DK92 road has improved by almost 50%. In 2009, 239 accidents were noted (52 casualties, 320 injured), compared to only 142 accidents in 2011 (36 casualties, 179 persons injured).

References

  • American Chamber of Commerce in Poland Roads to Euro 2012. An Analysis of Poland's Road Infrastructure Current Status and the Development Opportunities,
  • Bogdanowicz, P., Piotrowski, P. i Bejm, M. (2009). Ustawa o partnerstwie publiczno-prywatnym. Komentarz. Warszawa: C.H. Beck.
  • European Commission. (2005). Trans-European Transport Network, TEN-T, Priority Axes, Projets. Brussels.
  • European Commission. (2009, 12 02). Aid for transport infrastructure - the construction and operation of the A2 motorway section Świecko - New Tomysl. Pobrano z lokalizacji
  • EUROSTAT. (2004). ESA95 manual on government deficit and debt - Long term contracts between government units and non-government partners (Part IV). Luxembourg: Office for Official Publications of the European Communities.
  • Gonet, W. (2009). Komentarz do ustawy o partnerstwie publiczno-prywatnym. Wzory umów i pism. Warszawa: LexisNexis.
  • Herbst, I., Jadach-Sepioło, A. i Marczeska, E. (2012). Analiza potencjału podmiotów publicznych i przedsiębiorstw do realizacji projektów partnerstwa publiczno-prywatnego w Polsce. Warszawa: Polska Agencja Rozwoju Przedsiębiorczości.
  • OECD. (2011). Public Procurement; Concessions and PPPs (Tom SIGMA Brief 18). Paris: OECD.
  • Panasiuk, A. (2009). Koncesja na roboty budowlane lub usługi. Partnerstwo publiczno-prywatne - Komentarz. Warszawa: C.H. Beck.
  • PARP. (2012, 3). Partnerstwo publiczno–prywatne w budowie i zarządzaniu autostradami w Polsce. Biuletyn partnerstwa pulibczno-prywatnego.
  • Program Budowy Dróg Krajowych na lata 2011-2015. (2011, 1). Ministerstwo Infrastruktury.
  • Urbanik, A. (2014, 02). Personal Interview. (A. Łukasiewicz, Osoba przeprowadzająca wywiad)
  • World Bank. (2011). Poland - Transport policy note : Toward a sustainable land transport sector. World Bank.
  • A.Łukasiewicz, 2014, A2 Motorway, in A. Roumboutsos, S. Farrell and K. Verhoest, COST Action TU1001 – Public Private Partnerships in Transport: Trends & Theory: 2014 Discussion Series: Country Profiles & Case Studies, ISBN 978-88-6922-009-8