All agreed loans

Latvia. AS Kekava ABT

Date of agreement: 16 Jul 2021
Country: Latvia
Customer: AS Kekava ABT
Amount in EUR: EUR 61.1 million
Maturity: 21 years
NACE sector / loan type: Land transport

Project

The loan has been provided for AS “Kekava ABT” for co-financing the construction of the Kekava Bypass road project, which is to become the first major public-private partnership (PPP) project in Latvia.

AS “Kekava ABT” is a newly incorporated company set up to design, build, finance and operate the “Kekava Bypass” road project under a PPP agreement with the Latvian Ministry of Transport.

The project comprises the construction and maintenance of a 17.5 kilometre stretch of road bypassing the town of Kekava, of which 14.4 kilometres will be newly built and 3.1 kilometres existing road. The new bypass will be a modern four-lane bypass with parallel roads, bridges and tunnels.

NIB is co-financing the project together with the European Investment Bank (EIB). 

The public partner in this project is the State Ministry of Transport, on whose behalf the project has been negotiated and will be implemented by Latvijas Valsts Celi (LVC, Latvian State Roads).

The borrower, AS “Kekava ABT”, has been created by, and is owned by the consortium. The consortium consists of the Luxembourg-registered infrastructure fund TIIC 2 S.C.A. SICAR as well as Latvian construction firms AS A.C.B. and CBR SIA Binders. The consortium was chosen by the Latvian State Ministry of Transport as the preferred bidder after the conclusion of a tendering process for the project. The partnership contract validity period is 23 years.

Fulfilment of NIB's mandate

Productivity:

Kekava Bypass will become a part of Trans-European Transport Network (TEN-T) and Via Baltica (E67) – a 1,722 km road joining six countries from Prague to Helsinki. The project foresees construction of 14.4 km of a new road and reconstruction of 3.1 km of existing road to build a bypass around the Kekava town.

The road in question (A7/E67) is one of the most intensively used roads (both by passenger and cargo traffic) in Latvia, given its proximity to Riga and the border-crossing with Lithuania. The E67 international corridor spans from Helsinki to Prague and is a strategically important road for the Baltic countries. The part of the road in question has special significance to the Latvian-Lithuanian movement of people and goods.

Currently, the annual average daily traffic, especially in the section from Kekava to Riga, is too high for the existing road profile and traffic throughput. This has a considerable negative effect on the average traffic flow speed, which is significantly below the permitted speed during peak hours. It also negatively affects driving comfort and increases risks related to road traffic accidents.

Beyond the impact of lost productivity for individual drivers, the cost for a business due to traffic gridlock can be substantial such as delays, missed shipments and higher operating costs.

Thus, the new bypass is expected to improve the mobility of both labour and goods by improving the traffic flow, reliability, safety and predictability of travel times, and by minimizing gridlocks and congestions.  

Environment:

The project is not assessed to have any significant environmental impacts.

Sustainability summary

The public disclosure of the project was carried out in 2017 based on the approved Environmental Impact Assessment (EIA), and the road route is designed in accordance with the solutions approved in this assessment. 

The main positive impact of the project is the improvement of traffic flow and safety. This also helps to reduce the level of air pollutants. In addition, the noise impact is assessed to decrease along the same section due to planned noise protection. The noise and air emissions will, however, increase around the new bypass corridor that will cross areas currently little affected by such emissions.

The bypass is not assessed to cause any negative impacts on groundwater areas or protected areas or any significant negative impacts on protected flora or fauna species.

The bypass will cross a protection area for archaeological objects, where burial places of soldiers from WWI and unexploded ordnance can be encountered. However, no burials have been identified within the route corridor. Nevertheless, a procedure to deal with potential findings is defined in the PPP contact and the legislation in force.

Press release

NIB finansē apvedceļa PPP projektu Latvijā