Page 45 - U4SSC Compendium of practices on innovative financing for smart sustainable cities projects

People-first elements

• Improved access to national transportation network: The travel time from the Samara region or
Togliatti city to Moscow will be reduced by five hours.

• Regional connectivity and new jobs: The toll road and bridge will remove major bottlenecks
in international transport routes from China to Europe. More job opportunities in machine-
building, chemical, petrochemical and agricultural industries in the region are expected as a
result of the new transit route.

• Access to new markets: Small- and medium-size businesses will gain access to new markets by
utilizing an efficient mode of transportation for their goods.
• Reduced traffic and congestion: The toll road removes transiting traffic from the city.

Financing model:

The project was funded through an unsolicited proposal. The initiative for this project was developed
by a private entity then proposed to the government. If the project idea is accepted, the government
announces a tender for a concession on a website for a period required by Russian legislation. If no
better offer comes along, the initiator gets the concession deal. If there is a better offer, then the
better offer gets the concession deal, and the initiator receives between 0.5 and 1 per cent from
the capital investment amount as a remuneration for the initiative. In this project, the initiator was
also chosen for the concession.

Half of the project cost will be covered by the government of the Samara region – close to the
border of Russia with Kazakhstan – and the remaining cost will be covered by a special-purpose
company called Bypassing Togliatti.

• The unsolicited concession proposal resulted in a minimal revenue-guaranteed concession co-
financed with a federal capital grant (approximately 50 per cent) and project finance through
private equity and commercial debt (amounting to about 50 per cent of the total CapEx).
• All project finance (about 50 per cent of the total CapEx) will be paid back approximately 14
years after project completion.

• All debt is in local currency from local sources. The senior debt interest rate is fixed through
utilization of the special facility run by the national development bank. Caps on the cost of
equity/subordinated debt and the cost of senior debt used in the concession agreement comply
with requirements set by the Federal Ministry of Transportation for provision of the capital grant.

Payback model: Tolls are collected by the concessionaire to recoup the investment. Payments will
range from USD 3 for cars to USD 18.20 for lorries. In the event of insufficient revenue, the revenue
deficit is paid by the conceding partner. Any excess revenue from the tolls is shared 50/50 between
the private and public partner.

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