Vice-President Molterer: EIB facilitates large PPP projects

The Lower Austrian town of Zwettl will be considerably relieved of congestion and noise caused by car traffic. This will be due to the construction of about 10.6km of the city by-pass realised by a public private partnership (PPP). The European Investment Bank (EIB) is providing a EUR 29 million loan over a period of 27 years to the project. Financial close was reached today.

About 16,000 vehicles per day enter or leave the city on main arteries, of which approximately 1,600 are heavy goods vehicles. By mid-2017, when the opening to traffic is expected, the new by-pass will considerably relieve the existing streets currently used to cross the city from up to approximately 50 percent of the total traffic volume. Heavy goods vehicles will be redirected to the by-pass. For the inhabitants, this means less congestion and traffic accidents as well as significantly decreased levels of noise and air pollution. At the same time, the by-pass will improve road safety and the quality of life of the inhabitants.

EIB Vice-President Wilhelm Molterer referred to the large investment gap in the infrastructure sector. “The successful realisation of public infrastructure projects has long been relying on engagement by private investors. When tapping into this potential, the EIB and its instruments play a decisive role. By joining the financing of the by-pass, the EU bank is supporting this long-term project mounted by private partners. Furthermore, it is signalling to other promoters and potential investors that complex projects with long maturities can obtain reliable financing”, said Mr Molterer on the occasion of the financial close.

The project will be implemented by the State of Lower Austria as a public private partnership. The public promoter, represented by the Administrative Bureau for Road Works and Road Administration, will enter into a contract with the selected bidder. The private contractor will be responsible for the financing and design, the building of the city by-pass and to some extent the maintenance of the project. The contractor is the special purpose vehicle “Umfahrung Zwettl Errichtungs- und Betriebsgesellschaft mbh“, which was established by the companies Swietelsky and Leyrer+Graf for the sole purpose of the project. Remuneration of the contractor will consist of government provincial grant elements (milestone payments during the construction phase) and prorated remuneration according to road availability during the operation and maintenance phase. The borrower to the EIB is the project company; the final beneficiary is the State of Lower Austria. Apart from the shareholders’ own funds, 50 percent of the debt capital will be provided by Unicredit Bank Austria AG. Due to the EIB financing, overall project costs can be considerably reduced.

Infrastructure and transport projects are major recipients of EIB financing. Beside the Trans-European Transport Networks (TEN-T), this also includes by-passes contributing to de-congestion and a better separation between local and long-distance transit traffic. The EIB’s participation in PPP projects, as in this case the Zwettl by-pass, sends a positive signal to the PPP market in general, far beyond the individual project, as involvement by the EU bank requires the structure and content of PPP agreements to be sound, thereby attracting both potential lenders and promoters of infrastructure projects.