Until now it was planned that the Riga Northern Transport Corridor project (hereinafter – the Project) will be implemented as the public-private partnership (hereinafter – PPP) project – meaning that the project is financed by the Private partner as well as by attracted financial resources (such as EU funds, State grant and other) at the beginning, and the Public partner performs gradual payments during several decades, reimbursing financial means of the Private partner, that have been invested. The payment system foresees that the Public partner starts to perform payments to the Private partner only after the Project has been successfully implemented, i.e. after the Riga Northern Transport Corridor has been constructed and put into operation. Payments of the Public partner will be performed in full only if the Northern Transport Corridor will be maintained according to the requirements set by the Public partner. Formally describing it is a scheme based on affordability payments.
More on the PPP in Latvia you may read here: http://www.ppp.gov.lv/
Initially it was planned that the PPP tender will be announced regarding the whole Project and the PPP contract will be signed until contracts of technical, legal and financial experts of the Project terminate (i.e. until the end of the 2012).
Nonetheless we must admit that the economical and financial crisis has had a substantial influence on the implementation of PPP projects in the region. If the decrease of a PPP project announcement and implementation in 2008 was seen mainly in social sphere (schools, kindergartens, cultural and sports objects etc.), then a considerable decrease in infrastructure PPP projects was seen during the 2009 and 2010 as well.
One of the most popular solutions in other European countries for implementation of high priority PPP projects during the economical crisis is a successive implementation of a project in several steps – in a construction order, separating a project in different sub-projects geographically or in any other way, therefore decreasing the scale of a project.
Very important part of financing the PPP projects is an effective use of the EU funds. Allocation of financial resources from the Cohesion fund for co-financing construction of the Segment 1 of the Project would be possible during the current EU funds planning period (2007-2013) by reallocation of planned but not implemented EU financing for other projects in Latvia, for example, due to the decrease of actual costs of other implemented projects, not used EU financial resources due to a lack of a co-financing or other reasons. To qualify for EU finances, a special Early Stage project that could be implemented until the end of current planning period, was developed. It is planned that the Early Stage project would include a partial implementation of the Segment 1 scheme, applying simplified technical solutions of the project (reduced number of lanes, one-level crossings), which will be comparatively easy to improve in a more distant future when needed.
A work has started on attracting EU finances for co-financing of the Project construction costs from different financial sources (including Cohesion fund, TEN-T, etc.) for the next planning period of EU funds from 2014 till 2020.
At the moment the granted co-financing from the EU must be used successfully – the TEN-T co-financing in amount of 50%, which has been acquired for financing of almost all preparation works of the Project. According to requirements on a use of the EU co-financing, the draft design and the Environmental Impact Assessment (EIA) for all phases of the Project route, technical, legal and financial studies must be finished, as well as draft PPP tender documentation must be prepared till June 30, 2012, at latest.