Construction and Operation of New Lviv - Krakovets Highway

1. Construction and Operation of a New
Lviv – Krakovets Highway
Concession Tender Overview
Kyiv - 2015
THE STATE ROAD AGENCY OF UKRAINE
(UKRAVTODOR)

2. The development of a country’s road infrastructure is essential for its modernization. The
government of Ukraine, cognizant that the country lacks modern highways, is embarking
upon a bold effort to develop the country’s infrastructure.
Considering that the construction of new highways requires considerable investment public-private
partnership (PPP)/concession is one of the best mechanisms for attracting investment. Cabinet of
Ministers of Ukraine recently allowed the launching of a concession tender for construction and
operation of a 84.4 km toll road between Lviv, Ukraine’s seventh largest city and the Krakovets on
the border with Poland. The road will connect Ukraine with Poland’s existing highway
infrastructure.
This tendering of the construction of the Lviv-Krakovets road and related concession shall
serve as a pilot project.
If successful, it shall be used as a model for similar road projects in the future, including two
potential future toll road concessions, divided into two phases, which the State Road Agency of
Ukraine (Ukravtodor) has already identified.
Ukravtodor is pursuing a public-private partnership / concession in order to quicken the
development of modern highways in Ukraine. Furthermore, the concession approach will lessen the
burden on the national budget, both during the construction and operation of the toll road. The PPP
approach is also intended to improve the quality of road construction.
Introduction

3. The New Lviv-Krakovets Highway:
Background Information
Background Information:
•The existing Lviv-Krakovets (M10) road belongs to the international transport corridor №3
Berlin / Dresden-Wroclaw-Lviv-Kyiv (European transport network TEM-T);
•The M-10 passes through a number of population centers, leading to increased accidents,
environmental degradation and the need for low speed limits;
•The new 84.4 km road of the 1-A category is designed to bypass the population centers of the
northern part of area by construction of a bypass road.
•The new highway will connect Ukraine and Poland at the Krakovets border crossing, which has
a capacity of 5,000 trucks per day.
•Ukravtodor has set aside the necessary land for the highway and developed the concession
bidding documentation according to international best practices.
•Rules for any concession tender and its timing was approved by Cabinet of Ministers of Ukraine
Resolution № 1521.
•The selection Committee meeting will include the Lviv Regional State Administration.
•When the tender is ready it will be printed in official media (Governmental newspapers "Golos
Ukrainy” and "Uriadovy Kuryer") and websites.

4. The New Lviv-Krakovets Highway:
Concession Tender Preparation Background
2003
• Construction documents were developed and approved, bringing the idea to the
project stage
2004
• Land acquisition documentation was developed and approved
• The archaeological inspection was completed
• Land officially was set aside for construction of the highway
2013
• A competition commission was created for the concession tender
• The tender documentation was developed with the support of international
consultant (EGIS Ukraine) and the conditions of competition.

5. The Legal Basis of PPPs
Construction and operation of concession roads in Ukraine are regulated by the laws of
Ukraine, decrees, orders and legal acts of the Government.
The most relevant laws are:
• The Law on Roads
• The Law on Concessions
• The Law on Concessions for Construction and Operation of Roads
• The Law on the Sources of Financing the Road Sector
• Law on Public-Private Partnerships
These laws include provisions for:
• Compensation in a case actual traffic flows are lower than predicted
• Separate concessions for reconstruction, major repairs and operation of roads
• Different payment models (e.g. tolls, availability payments, subsidies and
compensations)
• State support of the PPP through project co-financing and provision of state
guarantees

6. The main concession terms include:
• The concessionary is Ukravtodor, the State Road Agency of Ukraine, which falls under the
authority of the Ministry of Infrastructure of Ukraine
• Ukravtodor will provide the land necessary for construction of the new highway
• The concessionaire provides 100% of construction financing
• Toll revenue will be directed to the State budget of Ukraine
• The concessionaire assumes the risk of construction and operation cost overruns
• Government makes decisions on granting concession, payment mechanism, state
guarantees provision and maximum fares
Source of investment reimbursement includes:
• Availability payments from public partner
The main criteria for determination of the tender winner:
• Demonstrated experience in similar projects and financial conditions
• Ability to complete and open the highway within the allotted time or faster
• Cost competitiveness
The New Lviv-Krakovets Highway:
Key Concession Terms

7. Cabinet of Ministers
(KMU) approves:
•Terms of the concession
tender
•Maximum Toll
•Ukravtodor assumes
management
responsibility of the
concession
Concessionaire
Constructs New
Highway
• Forms agreements with
insurance companies
•Secures loan (if necessary)
•Forms all necessary
construction and
operations-related
contracts
Concessionaire
completes
construction
• Ukravtodor awards
fee for operational
readiness upon
approval of completed
highway
Toll highway begins
operations
• Tolls paid are
transferred to the
state budget
• Ukravtodor receives a
portion of these
payments
Concession Process and Financial Structure

8. Location of Current Road and Planned Highway
Lviv - Krakovets
Броди
Краковець
Львів
The planned highway between Lviv
and Krakovets (84.4 km)
The existing M-10 road with bypass around Lviv (109.3 km)
Existing traffic flow: 8400 cars/day

9. Main Technical and Economic Parameters
Lviv-Krakovets Road
Road length 84.4 km
Road category 1-А
Number of lanes 4
Lane width 3.75 m
Width of subgrade 27.5 m
Road shoulder width 3.75 m
Area of land allocation 570 hectares
Estimated period of construction 4 years
Estimated construction speed 120 KM/year
Intended potential traffic flow 14-18,000 vehicles/day
Concession term 49 years
Volume of earthworks 16.6 million m3
Adjacent structures (viaducts, overpasses, etc.) 169
Transport intersections in different levels 4
Intersections and junctions 31
Guard rails/barriers 349.7 km
Platform for petrol stations 4
Large platform for vehicle servicing 4
Small platform for vehicle servicing 2
Recreational areas 4
Public transportation infrastructure 4

10. The Lviv-Krakovets highway is ready for construction to begin. Since the beginning of the
project:
• Project documentation for the construction of an 84.4 KM highway has been developed
and approved by the Government
• The draft of land acquisition has been developed and approved
• Preliminary works for the first stage of construction are completed
• Archaeological works are carried out
• Plots of land for road construction are allocated
• Working documentation for the first and third phase of construction is prepared
Status of Project

11. Contact Information
Sergii Pidhainy
Head of Ukravtodor
Tel: +380 44 287 24 05
Fax: +380 44 226 22 81
forec@ukravtodor.gov.ua
Tereziya Babych
Head of International Cooperation and Investment Division, Ukravtodor
Tel. +380 44 287 74 08
Fax: +380 44 287 41 18
tereziya@ukravtodor.gov.ua
www.ukravtodor.gov.ua