Works to improve traffic congestions and road safety on the A1 in Yorkshire are being supported with a GBP 110 million (EUR 166 million) loan from the European Investment Bank, the European Union's long-term financing institution. The EIB's contribution is being financed through a back-to-back RPI-linked bond
The loan is for investment to upgrade 53 km of motorway between Darrington and Dishforth being carried out by Road Management Services (Darrington) Ltd. RMS is a special purpose company that has been awarded a 33 year concession to design, build, finance and operate (DBFO) this stretch of the A1 under the Government's public finance initiative. RMS is wholly owned by AMEC, Alfred McAlpine, Dragados and Kellogg Brown and Root.
EIB Vice-President Peter Sedgwick said: This project will significanty improve a strategically important north-south route that forms part of the Trans-European network. It is of European significance as it will have a positive impact on the flow of international as well as national passenger and freight traffic. Such PPP projects play a key role in the UK government's road building programme and are making an important contribution to lowering the cost of such strategic investment to the public sector. They also introduce private sector efficiencies and expertise into the construction and running the project.
Paul Evans, Chief Executive of RMS said: The EIB's support in financing the project through a special bond issue will help improve the investment's affordability and significantly lower the cost to the public sector. We have also introduced a novel mechanism into the concession conditions that will provide RMS with incentives to improve travel reliability and road safety, as well as achieve best value for the construction and maintenance over the project's life.
Upgrading works consist mainly of two new sections of dual three-lane motorway from Ferrybridge to Hook Moor, and from Wetherby to Walshford, as well as downgrading the A1 sections bypassed by these new motorway stretches to single carriageways, and the operation and maintenance of 31 km of existing A1 motorway.
The project will remove a key bottleneck and reduce travel times and accidents. The concession contract is designed to give RMS incentives to reduce congestion, improve journey time reliability, and improve road safety performance.
The A1 forms part of the Trans-European Network as the main highway connection between Europe, the south of England, the North East of England and Scotland. The new motorway capacity is estimated to be between 100 000 to 110 000 vehicles per day.
The European Investment Bank finances capital investment furthering EU integration, in particular: regional development, trans-European networks in transport, telecoms and energy, industrial competitiveness and integration, small and medium sized enterprises, environmental protection, energy security, and health and education projects. It also operates outside the EU within the framework of the EU's co-operation external policy. Owned by the EU Member States, the EIB raises its funds on capital markets (AAA issuer). In 2002, the EIB lent some EUR 40 billion, of which EUR 3.3 billion in the UK.