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IIIEuropeanInvestmentBank
Contact Person:
Team Members:
Supervisor:ENVAG:
(...)
(... )
(... )(... )(... )
Luxembourg, 12 November 2008PJrrREN/R&R/2008-1307/(...)
Projects DirectorateTransport & Energy Department
Operation nr.:
Sector Code:
Eligibility Code:
20080070
63214100010004010000030400010200
UPDATE TO APPRAISAL REPORT - stage 1
SLOVAK MOTORWAYS (PPP) D1 PHASE IConstruction of 75 km of the D1 motorway
- SFF option -
SLOV AKIA
TABLE OF CONTENTS
Page nr.
Fly-sheetSUMMARY FOR THE REPORT TO THE BOARD OF DIRECTORS1. PURPOSE, LOCATION2. CONTEXT/BACKGROUND3. VALUEADDEDIDENTIFICATION4. DESCRIPTION,CAPACITY5. PARTICULARTECHNICALOR TECHNOLOGICALASPECTS6. IMPLEMENTATION7. PROCUREMENT8. OPERATION9. ENVIRONMENTALIMPACT9.1 Key Issues10. MARKET,DEMAND11. INVESTMENTCOST12. PROJECT RELATEDCONDITIONSTO BE FULFILLED13. FINANCIALANDECONOMICPROFITABILITYAPPENDICESA.1. TECHNICALDESCRIPTIONA.2. PROJECT INFORMATIONTO BE SENT TO THE BANKANDMETHODOF
TRANSMISSIOND. ENVIRONMENTALSUMMARYSHEETF. PROFITABILITYANALYSISH. VALUEADDEDSHEETI. CONTACTS,REFERENCES, MISSIONS,CONSULTANTS
334455667788111111121313
141617204
AB BREVIA TIONS
SSK State Road Administration,manages the non-motorway road networkNDS National Motorway Company, in 2005 with the objective to prepare, implement, operate and
maintain the motorways (D roads) and expressways (R roads) defined in the "Plan of Developmentof Motorways'and Roads" endorsed 2005
Pcu passenger car unitAADT annual average daily trafficSEA Strategic Environmental AssessmentMoTPT: "Ministry of Transport, Post and Telecommunications"MoE: "Ministry of Environment"EIA: "Environmental Impact Assessment"EIS: "Environmental Impact Statement": in the Slovak system, summary EIA document issued by thePromoter, prepared by a qualified consultancy company.FEIS: "Final Environmental Impact Statement": in the Slovak system refers to a statement issued by theMoE and the MoTPT, validating the mentioned EIS.EMP: Environmental Monitoring PlanOJEU Official Journal of the European UnionERIAM Economic Road Investment Appraisal ModelERR Economic Rate of ReturnPPP Public-Private PartnershipVAT Value-Added Tax
Project: Slovak Motorways (PPP) D1 Phase 1 - Update to stage 1Operation nO:20080070
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Fly-sheet
PJ OPINION
SLOVAK MOTORWAYS (PPP) D1 PHASE I (Operation nr. 20080070)SLOVAKIA
(no)
(... )
Project: Slovak Motorways (PPP) D1 Phase 1 - Update to stage 1Operation nO;20080070
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SUMMARY FOR THE REPORT TO THE BOARD OF DIRECTORS
1. PURPOSE, LOCATION
The project concerns the partial completion of Slovakia's D1 motorway, which is part of the TEN-T.The D1 will eventually connect the country's principal cities Bratislava and Kosice and lead to theUkrainian border. There are 5 motorway sections included in the Project with a total length of 75km (about 15% of the total length of D1). The contract will be a 30 year DBFO concession. Theproject road crosses a mountainous region and a large number of structures and tunnels are to beexpected.
2. CONTEXT/BACKGROUND2.1 Monitoring experience
The Borrower and Final Beneficiary of the EIB loan will be a Special Purpose Vehicle which is notyet incorporated.
The Ministry/ the Public Promoter: Several other sections of D1 motorway have been financed inthe past, which up to now have been constructed by the state and financed via the state budget.
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2.2 Project background
The Slovak Republic has been involved in the preparation of the current motorway programmesince the mid-1990s1. The project concerns the partial completion of Slovakia's D1 motorway,which will eventually connect the country's principal cities Bratislava and Kosice and lead to theUkrainian border. The corridor is part of the TINA road network in Slovakia, and became part of theTEN-T after Slovakia's entry into the EU in 2004. The EIB has in the past financed several othersections of this motorway (D1 Svinia-Presov and D1 Mengusovce - Janovce as part of theMOTORWAY AND EXPRESSWAY PROGRAMME (2001-0588) CA/359/02/322 of 23.07.2002; D1Sverepec - Vrtizer under SLOVAK NATIONAL MOTORWAY COMPANY (2004-0430), CA/394/06of 07.03.2006 - EUR 180m authorized (...) ) which so far have been constructed on behalf of thestate and financed via the state budget, with additional EU CF support for the Mengusovce -Janovce section.
PresovPresov
13km16 km8km45 km60 km26 km
18.5 km8.5 km14 km11 km7km
7km19km
The motorway sections included in this project will be constructed and operated under a 30-yearconcession from operation startup, by a consortium of private companies which will assume
1 Early 1996 the Government of the Slovak Republic adopted the resolution 269/1995 "Development of motorways and internationalroads on the territory of the Slovak Republic", proposing the completion of a motorway network by 2005. Some of the EIAs for theproject date back to 1997.
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construction and availability risk. At the end of the maximum legal concession period the motorwaywill be transferred to the state. The tender procedure for the awarding of the concession is on-going using a Competitive Dialogue procedure and the selection of the preferred bidder is foreseenfor the first week of September 2008.
3. VALUEADDED IDENTIFICATION3.1 Consistency with EU priority objectives (Pillar 1)
The Project encompasses five new motorway sections of the already initiated D1 motorway highcapacity road link between the Zilina and Presov regions, connecting the country's principal citiesBratislava and Kosice. The D1 corridor is part of the TEN-T.
The project is the first of the four packages that are included in the PPP Motorway Programmeofficially approved by the Slovak Government in September 2007. All the sections encompassed inthe project are fully within the limits of Stredne and Vychodne regions, both included by DG Regioin the Convergence Objective for the period 2007-2013. The motorway forms part of the TransEuropean Network for Transport. The project is therefore eligible under point (a) "regionaldevelopment" and (c) .common interest" of Article 267 of the EC Treaty.
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3.2 Quality and soundness of the investment (Pillar 2)
The project will improve accessibility, thereby fostering economic development and territorialcohesion in Slovakia. It will become the main link between the lesser developed regions of easternSlovakia and the thriving Bratislava region. Direct project benefits will consist of savings in traveltime, vehicle operating costs and accident costs. The project will improve passenger and freightflows nationwide as the D1 corridor is considered to be the backbone of the Slovak road transportinfrastructure.
The economic benefits of the Project, relative to the do-minimum alternative will come from usertime savings, the reduction of vehicle operating costs, improved safety and reduced environmentaleffects. (...)
The project management and procurement strategy may leave the project exposed to some keyrisks potentially affecting the quality and soundness of the investment:
. Full compliance with EU environmental Directives will have to be demonstrated beforedisbursement.
. Promoter capacity: Risks arising from the large investment volume of this PPP projectcombined with the lack of PPP experience of the promoter.
The initial proposed timetable until financial close was unrealistically short. Delays in the processhave already been experienced. However, not least with a view to the extremely difficult marketconditions for long-term funding, further delays cannot be excluded. (...) Bidders may have had tointegrate significant technical and price contingencies and mark-ups can be expected as they willhave to price all risks left with them.
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4. DESCRIPTION,CAPACITY
There are five project sections, of which the first three sections are adjoining: Dubna Skala -Turany (total section length 16.45 km), Turany - Kralovany - Hubova (total section length 13.60km), Hubova - Ivachnova (total section length 15.30 km), Janovce - Jablonov (total section length18.54 km) and Fricovce - Svinia (total sectio'nlength 11.20 km). All are located on the West - Eastcorridor of the country between Zilina and Presov. They all cross hilly to mountainous terrain andsome subsections will have to be inserted in narrow valleys with steep slopes. These constraintsrequire the construction of a number of bridges and tunnels totaling to some 1/3 of the total lengthof the project road. The motorway is a dual carriageway, two lane motorway.
Currently available information on the characteristics of the project refers to the outline designproduced by or on behalf of the National Motorway Company NDS, and available to the bidders.Design changes by a winning bidder are theoretically possible, although the procurement calendarfor this project and also the permitting process {by which substantial changes in the promoter's
Project: Slovak Motorways (PPP) D1 Phase 1 - Update to stage 1Operation nO:20080070
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design would require the reapplication for building permits, at the Concessionaire's risk) leaveslittle opportunity for bidders to propose design improvements.
The following table summarises the main characteristics of each of the project sections:
Note: length figures in km
The motorway is designed in category D26.5/100, which refers to the platform width (26.5 m, dualcarriageway, two lane motorway) and the design speed (100 km/h). Speeds are further reduced to80 km/h in tunnels.
5. PARTICULARTECHNICALORTECHNOLOGICALASPECTS
The road will cross a mountainous area in Slovakia and consequently, a high number of tunnelsand structures have been envisaged in the outline design. The technical difficulties that thesecould impose shall be further analysed during stage 11of the appraisal, although adversegeotechnical conditions in some of the tunnels are already known.
The Project requirements include motorway related technology (traffic management systems,emergency systems and signaling systems) both for the road and the tunnels. These shall beintegrated and linked to the Public Authority's premises and the Concessionaire's control room,operating on a real time basis. The fulfillment of this requirement will encompass a rather complexdesign, due to technical challenges of system integration.
6. IMPLEMENTATION6.1 Management
The Promoter (Slovak Ministry of Transport) has created a "PPP Task Force" that is managing ateam of Slovak and international consultants to develop and implement the PPP Programme, ofwhich the Project has been the first to be launched.
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During Design and Construction, the Concessionaire will appoint an "Independent Engineer" (anengineering consultancy) that will be approved by the Authority and whose duties will be to dealwith permits, quality of the works, construction progress and environmental issues. It will be theinterface between the Concessionaire and the Public Authority. This is the usual approach to thistype of contracts. However, the permitting processes in Slovakia (zoning, building permits andenvironmental authorizations) have formed some difficulties in previous Bank projects. At present,all the zoning permits have been granted and the Promoter has promised to obtain the BuildingPermits by the end of 2008 (before the contract award); whether the permitting process could leadto a residual risk to the Bank shall be further investigated during stage 11appraisal.
6.2 Timetable
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Currently the signature of the concession agreement and financial close are scheduled as soon aslegally possible after the announcement of the preferred bidder. Design and construction is due to
DubnaTurany- Hubova- Janovce- Fricovce-Total Skala-
TuranvHobova Ivachnova Jablonov Svinia
Lenath 75.09 16.45 13.60 15.30 18.54 11.20Lenath (Road) 67.89 16.45 9.00 13.30 17.94 11.20Length (Tunnel) 7.2 0 4.6 2 0.6 0Length(structures) 100 27 14 21 22 16Interchanges 8 3 3 0 2 0Rest Areas 4 2 0 0 2 0MaintenanceDepOt 1 0 1 0 0 0
Project: Slovak Motorways (PPP) D1 Phase 1 - Update to stage 1Operation nO:20080070
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start then and shall be finished between March and December 2011 according to the tenderrequirements.
Opening to traffic is foreseen for October 2010 apart from Kralovany - Hubova - Ivachnova, whereopening to traffic is proposed for July 2011. Overall Project completion is planned for December2011.
Overall, the duration of the design and construction phase seems tight, especially that this is thefirst road PPP project in Slovakia, and shall be further appraised at stage 11of the appraisal, once aConcessionaire's work programme is submitted. The experienced delays on the tender processare likely to be at least partially translated in the construction timetable and overall projectcompletion and opening to traffic can be delayed.
6.3 Employment
Temporary employment (direct and indirect) during construction cannot be estimated, as the finalconstruction cost of the project is not known at this stage. This will be analysed during secondstage of the appraisal, once the arrangements of a future Concessionaire becomes known, so alsothe permanent employment for Operation and Maintenance of the highway is defined.
7. PROCUREMENT
7.1 Key Issues
The contracting authority is a public promoter obliged to comply with the relevant applicable EUproject legislation (EU directive 2004/18) and National Public Procurement legislation. The Bankwill require the Promoter to ensure that contracts for the implementation of the project have beentendered and awarded in accordance with this legal framework and will review the awarded tenderwith regard to this at Stage 11of the appraisal.
The promoter has complied with the requirement of publication of tender notices in the EU officialJournal for the contract notice -tender- (reference 2007/S 223-271152) dated 17.11.2007 and theOfficial Journal of the Slovak Procurement Office n° 223 dated 20.11.2007 under n° 05243-KOP.
The Project is being procured under a Competitive Dialogue process, for the first time in Slovakia.
7.2 Supporting information
For confidentiality reasons, the promoter has given limited information on the ongoing biddingprocess. According to the trade press, prequalification documents were submitted by 6 consortia:
The Slovak Ministry of Transport shortlisted 2 consortia on 29 January 2008, namely: (a) theSwedish-French consortium comprising Vinci Concessions and Skanska InfrastructureDevelopment; (b) the six-member consortium including French firms Bouyges Travaux Publics andColas, the Hungarian company Intertoll-Europe, the Portuguese firm Mota Engil, and the Slovakcompanies Doprastav and Vahostav-SK. A third consortium (named "ZPKM" Consortium,encompassing Hochtief PPP Solutions, Alpine and Western Carpatians Motorway InvestorsCompany) appealed the decision of not having been shortlisted and was reinstated by the SlovakProcurrement office (OVO) on March 2008. However, the MoPTP appealed this decision and theconsortium is finally out of the tender. Interim submissions have already been submitted and finalbids are due on 30 January 2009. No official information has been made available on the contentsand quality of the submissions received.
8. OPERATION8.1 Management
The road will be operated by the Concessionaire, which may enter into an Operation andMaintenance subcontract for this, subject to the Authority's approval. The O&M requirements areonly outlined in the tender documentation and drafts concession contract and will be specifiedthrough the Competitive Dialogue phase. Efficiently operating and maintaining the relatively short,non-continuous motorWay sections being part of the Concession project might create somedifficulties.
Project: Slovak Motorways (PPP) D1 Phase 1 - Update to stage 1Operation nO:20080070
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(...) The current portfolio of Slovak motorways is fully managed and operated by NDS. Operationalmatters shall be further analysed at stage 11of the appraisal.
8.2 Use, production
Notused.
8.3 Tariffs I operating costs
The availability payments by the State to the future Concessionaire will form the revenue base ofthe project. A nationwide motorway vignette system is in place for light vehicles, an electronictolling system is proposed for heavy vehicles. This would however not affect the revenues of theConcessionaire.
The annual costs of the Concession company including administration, operation, regular andheavy maintenance will be analysed during second stage of the appraisal. (...)
8.4 Employment
This will be analysed during second stage of the appraisal, once the arrangements of a futureConcessionaire become known.
9. ENVIRONMENTALIMPACT9.1 Key Issues
The project is subject to the requirements of EU Directive 97/11 Annex I, Le. full environmentalimpact assessment with public consultation. The environmental approvals fall under theresponsibility of the Ministry of Environment (for the EIA process) and the Slovak Authority forNature Conservation in Banska Bystrica (for Nature conservation and protected sites, includingNatura 2000).
The environmental legislation is reflected in the Slovakian EIA Law No. 127/1994 Coli. amendedby Law No. 391/2000 Coli. and by Law No. 24/2006 Coil. (transposing both Directive 85/337/EECas amended by 97/11/EC and the 2001/42/EC SEA Directive).
The EIAs for all the project's sections were concluded and the EIS2were issued between 1996 and1997. The FEIS3were issued between 1997 and 2002, before accession of the Slovak Republic tothe EU in 2004. They were undertaken in compliance with the applicable regulations at that timeand consequently, not fully in compliance with current EU environmental acquis. The promoter'sapproach to tackle this has .been to identify the potential environmental gaps and to complete ordevelop any required study, assessment, report or procedure to close them and align these initialEIAs to environmental regulations currently in force. Initially, the Bank identified the following mainenvironmental issues to be clarified:
Scope and legal validity of EIAsCompliance with Birds and Habitats Directives (particularly regarding Natura 2000)Compliance with EIA Directive (particularly regarding variant studies, public consultation andEnvironmental Monitoring Plans)Assessment of cumulative effects of the project
The environmental impacts of the project are the ones expected in a motorway greenfield projectcrossing a mountainous area of high environmental value: (being the main ones in this case:impact on protected areas, visual intrusion, territory severance, impact in fauna and flora and insurface and underground water resources). It is noteworthy the direct impact of the project in oneNatura 2000 site (Mala Fatra) and in the buffer zone of another one (Velka Fatra), apart fromseveral protected sites at national level. Mitigating and corrective measures have been proposedin each case.
2 EIS: "Environmental Impact Statement": in the Slovak system, summary EIA document issued by the Promoter, prepared by aqualified consultancy company
3 FEIS: "Final Environmental Impact Statement": in the Slovak system refers to a statement issued by the Ministry of Environment andthe Ministry of Transport, Post and Telecommunications, validating the EIS.
Project: Slovak Motorways (PPP) D1 Phase 1 - Update to stage 1Operation nO:20080070
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An environmental due diligence was carried out by the Bank with the support of two environmentalconsultancy firms4. The outcome of the due diligence was shared with the EC in the context ofArticle 21 procedure. The Bank's position is that all the previously listed environmental issues canbe validated if certain documents are provided (Zoning Permits and Building Permits), if theproject's final design and the final monitoring plan are approved by the environmental authority andif the EIA process (including Natura 2000 assessment) for the adjacent section of the projectVisnove-Dubna Skala is compliant with the applicable EU acquis. All these conditions will be fullyworked out during stage 11of the appraisal and additional conditions may also appear.
A Strategic Environmental Assessment (SEA) was not undertaken for this project as the planningand programmes of the D1 corridor began before the EU Directives came into force in July 20045.
9.2 Supporting information
The project is subject to the requirements of EU Directive 97/11 Annex I, i.e. full environmentalimpact assessment with public consultation. The planning, implementation, operation andmaintenance of motorways and expressways in the Slovak Republic fall under the responsibility ofthe Ministry of Transport, Posts and Telecommunications, through the state owned "NationalMotorway Company. (NDS) incorporated in 2005. For the PPP Motorways (including the project),the implementation role was delegated to a "PPP Task force" in 2007. The environmentalapprovals fall under the responsibility of the Ministry of Environment (for the EIA process) and theSlovak Authority for Nature Conservation in Banska Bystrica (for Nature conservation andprotected sites, including Natura 2000).
The environmental legislation is reflected in the Slovakian EIA Law No. 127/1994 Coli. amendedby Law No. 391/2000 Coil. and by Law No. 24/2006 Coil. (transposing Directive 85/337/EEC asamended by 97/11/EC and the 2001/42/EC SEA Directive).
The Environmental Impact Assessments (EIAs) for all the project's sections were finished and theEnvironmental Impact Statements (EIS, in the Slovak system, it is a summary EIA documentissued by the Promoter, prepared by a qualified consultancy company) were issued between 1996and 1997. The Final Environmental Impact Statements (FEIS- in the Slovak system FEIS refers toa statement issued by the Ministy of Environment (MoE) and the Ministry of Transport, Ports andTelecommunications (MoTPT), validating the EIS.) were issued between 1997 and 2002, beforeaccession of the Slovak Republic to the EU in 2004. They were undertaken in compliance with theapplicable regulations at that time and consequently, not fully in compliance with current EUenvironmental acquis. The promoter's approach to tackle this has been to identify the potentialenvironmental gaps and to complete or develop any required study, assessment, report orprocedure to close them and align these initial EIAs to environmental regulations currently in force.During the stage I of the project appraisal, the Bank identified the following main environmentalissues to be clarified:
Scope and legal validity of EIAsCompliance with Birds and Habitats Directives (particularly regarding Natura 2000)Compliance with EIA Directive (particularly regarding variant studies, public consultation andEnvironmental Monitoring Plans)Assessment of cumulative effects of the project
The environmental impacts of the project are the ones expected in a motorway greenfield project:(being the main ones in this case: impact on protected areas, visual intrusion, territory severance,impact in fauna and flora and in surface and underground water resources). It is noteworthy thedirect impact of the project in one Natura 2000 site (Mala Fatra) and in the buffer zone of anotherone (Velka Fatra), apart from several protected sites at national level. Mitigating and correctivemeasures have been proposed in each case.
( ENVlROS s.r.o, a qualified firm providing assistance in environmental consultancy and due diligence in the Czech Republic, Centraland Eastem Europe, for a wide range of clients including intemational and multi-lateral institutions (such as UN, EC, OECD, EBRDand the WB), supported by DEKONTA, a Czech environmental consultancy firm managing local consultants in Slovakia, for bringinglocal experience to the audit team.
S See the New Programme for Motorways and Expressways Construction, approved by the Govemment Resolution of SRNo.16212001,
Project: Slovak Motorways (PPP) D1 Phase 1 - Update to stage 1Operation nO:20080070
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The findings of the environmental due diligence to date are as follows:
. Scope and legal validity of EIAs:o Available EIAs cover the whole projecto Zoning permits have been issued for all the project sections within the term of validity
of the FEIS statements, following the Slovak legislation, validity of FEIS isautomatically extended accordingly. All zoning permits are currently in force, except inSection 3, Hubova-Ivachnova section, for which an extension is to be expected shortly.Consequently and according to Slovak legislation, all FEIS will be in the samesituation, once the extension is obtained. In all cases, applications for Building Permitswere submitted on 02.09.2008. These applications are still pending approval andsome additional documents have been requested by MoTPT to complete all customaryrequirements. According to MoTPT, building permits can be expected by the end of2008. As per the Slovak legal system, the granting of building permits automaticallyvalidates all the previous permitting stages of the project (zoning permitting andenvironmental approvals among them).
o A condition will be incorporated by which Zoning and Building permits will be sent tothe Bank, fully in force and in acceptable terms before first disbursement.
. Compliance with Birds/Habitats Directives (Natura 2000):o The promoter executed Habitats and birds assessments between 2007 and 2008.
Compliance with Birds and Habitats Directive has been certified by the competentauthority in Slovakia. An environmentally sensitive area was identified in section 2 ofthe project, Turany-Hubova, in which the proposed technical solutions suffered anumber of variations during the EIA process.
o The Promoter shall, before first disbursement, provide the Bank with documentaryevidence that the requirements of the Habitat Directive have been fulfilled (Forms AlBor equivalent).
. Compliance with EIA Directive: the EIA procedure is in accordance with the nationallegislation, which transposes the Council Directive 92/43/EEC. The EIA documentation hasbeen elaborated with an adequate level of detail and refers to all requirements stipulated bythe valid legislation. In particular:o Variant studies: variants were adequately defined and studied as part of the EIA. It was
verified that the variant selection took into consideration the outcome of the publicconsultation and environmental studies.
o Public Consultation: The public consultation process is considered to be acceptable for thefollowing reasons:
i. It was carried out and documented in conformity with the Slovakian ActNO.127/1994, transposing in this respect the European Directive 85/337/ECamended by 97/11/EC.
ii. Consultations took place during project preparation stage, back in the late nineties(first round) and at zoning permit stage between 2005 and 2008 (second round).
iii. After spot checking, the affected population seem to be very well informed andgenerally in favour of the project.
iv. There have not been significant changes in the environment and in the relevantstakeholders in the surroundings of the project area since the public consultationtook place.
o Environmental Monitoring Plans (EMPs): According to the current practice of MoTPT,EMPs are defined at three stages: first is Zoning Permit, second is Building Permit andthird is Project Implementation. The Bank will require the final EMPs to be be approvedby the environmental authority as a condition before disbursement.
. Cumulative Effects of the Project: It can be concluded that:o Cumulative effects derived from the traffic increase induced by the complete D1 motorway
entering into operation have been adequately addressed.o Cumulative effects related to direct impacts caused by the future development of the
adjacent sections of the motorway could be an issue in the future continuation of theproject towards the west from the current starting point of Dubna-Skala, which will crossthe Natura 2000 site named Mala-Fatra.
Project: Slovak Motorways (PPP) D1 Phase 1 - Update to stage 1Operation nO:20080070
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o The Bank will verify acceptability of the EIA process and compliance with applicableEnvironmental legislation in this adjacent section ("Visnove-Dubna Skala" section, includedin the second package of de D1 Motorway PPP Scheme) before first disbursement.
A Strategic Environmental Assessment (SEA) was not undertaken for this project as the planningand programmes of the D1 corridor began before the EU Directives came into force in July 20046.
Environmental due diligence was carried out by the Bank with the support of two environmentalconsultancy firms7.The outcome of the due diligence was shared with the EC in the context ofArticle 21 procedure and it was concluded that the project can broadly be accepted from theenvironmental standpoint and all the previous issues can be validated if certain conditions are met:(see section 12 of the report).
10. MARKET, DEMAND
The project sections of the D1 will primarily serve long-distance traffic between the western andeastern parts of Slovakia. On the parts closer to the industrial hub and automotive cluster of Zilina,this will be overlaid with some commuting traffic. Alongside with the positive economicdevelopment of Slovakia, traffic in the project corridor has grown at an average rate of 6.5% p.a.since 2000 and now reaches 21,000 vehicles per day (vpd) on the western end of the project,falling to below 10,000 vpd towards the eastern end. Heavy vehicle share reaches 15-20%.International traffic is very limited. Traffic levels towards the western end now exceed the nominalcapacity of a 1x2 lane road at good levels of service. The quality of the existing 118trunk road isgenerally good. For much of the corridor, the 118 road follows a narrow river valley and passesthrough local cities and villages. Although some crawler lanes exist, overtaking possibilities arelimited.
A nationwide motorway vignette system is in place for light vehicles. An electronic tolling system isproposed for heavy vehicles, which is expected to cover both. motorways and trunk roads.Therefore, the system will not give an incentive for heavy vehicles to avoid motorways.
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11. INVESTMENTCOST
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12. PROJECT RELATED CONDITIONS TO BE FULFILLED
12.1 Disbursement conditions
Conditions will be fully worked out during stage 11of the appraisal, but are likely to include:
Zoning and Building permits for all the project sections, fully in force and in acceptable terms,will be sent to the Bank before first disbursementThe Promoter shall, before first disbursement, provide the Bank with documentary evidencethat the requirements of the Habitat Directive have been fulfilled (Forms AlB or equivalent).The final Environmental Monitoring Plans shall be approved by the environmental authoritybefore disbursement.The Bank will verify acceptability of the EIA process and compliance with applicableEnvironmental legislation in an adjacent section ("Visnove-Dubna Skala", included in thesecond package of de D1 Motorway PPP Scheme) before first disbursement.
Further conditions may be defined during stage 11appraisal.
12.2 Undertakings
6 See the New Programme for Motorways and Expressways Construction, approved by the Government Resolution of SRNo.162/2001
7 ENVIROS s.r.o, a qualified firm providing assistance in environmental consultancy and due diligence in the Czech Republic, Centraland Eastern Europe, for a wide range of clients including international and multi-lateral institutions (such as UN, EC, OECD, EBRDand the WB), supported by DEKONTA, a Czech environmental consultancy firm managing local consultants in Slovakia. for bringinglocal experience to the audit team.
Project: Slovak Motorways (PPP) D1 Phase 1 - Update to stage 1Operation nO:20080070
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Undertakings may be defined during stage 11appraisal.
13. FINANCIAL AND ECONOMIC PROFITABILITY
Economic ProfitabilityThe economic benefits of the Project, relative to the do-minimum alternative, will come from usertime savings, the reduction of vehicle operating costs, improved safety and reduced environmentaleffects. (...)
(...)
Financial ProfitabilityThe proposed project will come under the existing motorway vignette system for cars and lightvehicles, and the electronic toll system proposed for heavy vehicles. The Concession is howeverdecoupled from the related financial flows, and is based on availability payments. It is expectedthat an adequate FIRR will be ensured by the State's availability payments to the futureConcessionaire. Economic and financial profitability will be analysed during stage 11appraisal.
I
Project: Slovak Motorways (PPP) D1 Phase 1 - Update to stage 1Operation nO:20080070
APPENDICES
A.1. TECHNICAL DESCRIPTION
Purpose, LocationThe project concerns the partial completion of Slovakia's D1 motorway, which will eventuallyconnect the country's principal cities Bratislava and Kosice and lead to the Ukrainian border. Thereare 5 motorway sections included in the Project with a total length of 75 km (about 15% of the totallength of D1). The project road crosses a mountainous region and a large number of structuresand tunnels are to be expected.
DescriptionThere are five project sections, of which the first three sections are adjoining: Dubna Skala -Turany (total section length 16.45 km), Turany - Kralovany - Hubova (total section length 13.60km), Hubova - Ivachnova (total section length 15.30 km), Janovce - Jablonov (total section length18.54km)andFricovce- Svinia(totalsectionlength11.20 km). All are located on the West - Eastcorridor of the country between Zilina and Pre~ov. They all cross hilly to mountainous terrain andsome subsections will have to be inserted in narrow valleys with steep slopes. These constraintsrequire the construction of a number of bridges and tunnels totaling to some 1/3 of the total lengthof the project road. The motorway is a dual carriageway, two lane motorway.
Currently available information on the characteristics of the project refer to the outline designproduced by or on behalf of the National Motorway Company NDS, and available to the bidders.Design changes by a winning bidder are theoretically possible, although the procurement calendarfor this project and the permitting risk (linked to the building permits) shifting over theConcessionaire in case significant changes in the promoter's design are proposed, leaves littleopportunity for bidders to propose design improvements.
The following table summarises the main characteristics of each of the project sections:
Note: length figures in km
The motorway is designed in category D26.5/100, which refers to the platform width (26.5 m, dualcarriageway, two lane motorway) and the design speed (100 km/h). Speeds are further reduced to80 km/h in tunnels.
Calendar
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DubnaTurany- Hubova- Janovce- Fricovce-Total Skala-
TuranvHobova Ivachnova Jablonov Svinia
LenQth 75.09 16.45 13.60 15.30 18.54 11.20Length (Road) 67.89 16.45 9.00 13.30 17.94 11.20
Length (Tunnel) 7.2 0 4.6 2 0.6 0Length(structures) 100 27 14 21 22 16Interchanges 8 3 3 0 2 0Rest Areas 4 2 0 0 2 0MaintenanceDepot 1 0 1 0 0 0
Project: Slovak Motorways (PPP) D1 Phase 1 - Update to stage 1Operation nO:20080070
A.2. PROJECT INFORMATION TO BE SENT TO THE BANK AND METHOD OF TRANSMISSION
1. Dispatch of information: desianation of the person responsibleThe information below has'to be sent to the Bank under the responsibility of:
The above-mentioned contact person(s) is (are) the responsible contact(s) for the time being.The Borrower shall inform the EIB immediately in case of any change.
2. Information on specific subiectsThe Borrower shall deliver to the Bank the following information at the latest by the deadlineindicated below.
3. Information on the proiect's implementationThe Borrower shall deliver to the Bank the following information on project progress duringimplementation at the latest by the deadline indicated below.
Company - Concessionaire to be known only at/after stage 11appraisal -Contact personTitleFunction I DepartmentAddressPhoneFaxEmail
Document I information DeadlineForm A, Form B First disbursementAny monitoring or assessment reports required by Within 60 days of presentation tothe Competent Authority for Environment andlor Competent AuthorityNature Conservation
Document I information Deadline Frequency ofreporting
ProjectProgressReport Every six months- A brief update on the technical description, (30.11,31.05.)
explaining the reasons for significant changesvs. initial scope;
- Updateon thedate of completionof eachof themain project's components,explainingreasonsfor anypossibledelay;- Updateon the cost of the project, explainingreasons for any possible cost increases vs.initial budgeted cost;- A descriptionof any major issuewith impactontheenvironment;
- Update on procurement procedures (outsideEU);- Updateon the project's demandor usageandcomments;- Any significantissue thathas occurredand anysignificant risk that may affect the project'soperation;
- Any legal action concerning the project that maybe onqoinq.
Project: Slovak Motorways (PPP) D1 Phase 1 - Update to stage 1Operation nO:20080070
4. Information on the end of works and first year of operationThe Borrower shall deliver to the Bank the following information on project completion and initialoperation at the latest by the deadline indicated below.
Document I information
Project Completion Report, including:- A brief description of the technical characteristics of the
project as completed, explaining the reasons for anysignificant change;
- The date of completion of each of the main project'scomponents, explaining reasons for any possible delay;
- The final cost of the project, explaining reasons for anypossible cost increases vs. initial budgeted cost;
- The number of new jobs created by the project: both jobsduring implementation and permanent new jobs created;
- A description of any major issue with impact on theenvironment;
- Update on procurement procedures (outside EU);- Update on the project's demand or usage and comments;- Any significant issue that has occuffed and any significant
risk that may affect the project's operation;- Any legal action concerning the project that may be
onqoinq.
Date of deliveryto the Bank15 month after opening oflast section to traffic(delivery date according toCUffent project timetable:31.03.2013)
Enqlish
Project: Slovak Motorways (PPP) D1 Phase 1 - Update to stage 1Operation nO:20080070
ENVIRONMENTAL SUMMARY SHEETOyerall Envlronmantal Assessm~nt
Slovak Motoways (PPP) )1 Phase I
20)8(070 1____Invesh>en: Project 9
~ ~
D.
ProjectOperation nO
Type ofEID financing
Promoter
(..)
Project Des;crlptlon
SEA carried out
EIA Screening
EIA StagesMAM& "'BMProjects
MCMPrejeds
Environmental
Leg!!1 Framework
SocialA$ses:sment
NlIture ConservationSites
Climate ChangeAspects
Site Visit Md anyother ObselVlltlons
Major Proj~ct Ri\ks
Overall Assessment
~EEnviro. Monitoring
Conditions
SICY"kMinistry 01 'renporl Post "nd Telecoms (contreclJng euIhor[y). The project wm be Inp!elnelT.ed andDIed b'f eIDl'lvate Concess oneire
The project concens rons:ruc:lon 01 75km 01 new mobI'WelY. :Jell'!01 the C1 corrldJr If"northern SI)veltltl.between ZIin"endPresovendon:he -eN-T.There ere 5 P'ojecI sections. 01 whlc~the r..stth-ee ~ ere
eldjJlnlng: CtJbr6 Sl:e118- TLrllO'f(16.45 km). TU'M) -KrelkMln,' -Hubcv6113.60kID),Hubov6-lvechrDv6 (15 30km), Jenovce -Jel::loncv (19.54 km) erd Frcoyce- SvI1Ie !11.20 kID). . They CfOSShlll\'tO onount,,1nous tenalnwtlch .viii reqt.lre tie construction of eInunbet of bridges and tunrets :oIellng 10 some 113 )f tte taelllengh ofItheS projed rood. The onoIcrwoy Is" dual cerrlogeov"Y. two 1_ rrotorw"'f.
Ccmment IPlannlng01the DI ccrrldor beg"n be'ore EU)lrecllves come Intolorce Ir ~2004 (New Frogfeunnefor MJlorNelYSMd ExpresswelYs.2001)
r A - Fill Ell', Anno~ I --- EJ Ervirc. E igibilit~ Code
3rd Party C01cern
Pf~nni:JQ c~ns#nt or :I1Jtho:i~rion Ql'IlK~ (~r"~, <10.)
Put>fic inform«i of d<tcfllio<>
Ccmmen: (..)
N~tional
EU
INellIonIIILellIW1'olo.12'/1934.3911200). 2.i2006 COl rirrcrlngNmond end EUleglskllbn
IDirective 85.037. em.nded by 97111 end 20(3135
Inemattonal
Ccmmen: The :wojecthyol,les eInun\ber01~eory res!ttlen\erts end there a nJmber cl celUrlcasespen<IIng,To;)Or.vleNod at Stelge. of !to opproisell,
Sivnifcanl efect [~ ForEUIAccedingl..e..cces$iorICandidat~coun:rie$:
If no £iQnficant 31fe:I, =omA r;;~8 (sianiflCant efec', Form B L~~Type Jf site ~ E.Natura 2000 ,.-----
CCFF CB CCTAF [:.:8 Carton Funds
Visa by car on 22 May 2008. The algnnlenl cro~8$ ag-iculural and SlJ(Jurban I9nd and nallal sae.. The terrainIs roIIln3tOrnoLnt"heous. wllhs"",,, sections h """row velleys wt.h sleepslopes,(Veh Rl.-er ~_y). t wIcress several "VIIIer courS3S h 1IIaclIcI. and OY3t'passes. S9Y9"aI tll19l3 al'3 aI!o envis;lged. The road 'NiIIclip
Ithe boundery cl "loIsIu'" 2JOOsae (M FoIr,,) end the bu'ler zone 01 encther (Vek" fetro) Md of so othefareas of envIrcnmental Interest. Resettlement cl _81 f~ wI be reQJlrej. M31nI'np(ds end mllgatlrv
me.sures heve been lcentWIed The project wII resJlt In unovoi:lebl. signlllcent res duoI impocts.
R!~.~._r.~.t.If1.~m
I
T1e ~rojCJCl 'I"iIICIOS~ eIMlum 2000 sile m the :MJflerelrM)f eI"IoIter aiel. StMdtlfj
[~ EJ inpecls end oniIigolingmeasure. ere expected. Irrpecis dling co,str..lciion con be rdevonl'Prcposed mIIigGIin\;end compeullting lDeelsures""'. reduceenvlr~ntellrlsks elter projecl cJmPelicn. .
Irnt::ortentlmpecls will toke pIeIc. cluing corslrLctlon. end the ",-arkssh" b. cIos~ rncnllo'ed. Environmentalconditions helve be~ Included n the bLlIdirO pcrml elPPiCedion.unevoi\1tlble mejor reslcUell mpecls c beexpec!.d.
REQuired ~ Perfomance Indlcatcr(s;
The Promoler ., bel:>!'e 'lrsl disbursomenl, .ubnIiIlothe Bank: (I) Za>in!: end Bulding P...mls (M)document...yelli:ience that the requirements 01he hlbiliIIs Directivehave Men fulflled :lii)docLmenlarvellijence that ftnalEM' he. been approve:! by the conpel.nt outroray (Iv; The BonI<viii veril~ ec:eptebiU:y 0' the EIAprocess endcOll1p1ianceWa1 8!:pliCobIe legislation ir "Vlsr)()"f8-Cubn!I Sl:ala' section
01 06.11.:;ooB,
Project: Slovak Motorways (PPP) D1 Phase 1 - Update to stage 1
OperationnO:20080070
ProjoctOperation n.
AREAS OFIMPACT
LocationAir
Waler
Lend
Humans
Flora, FaLna endOther Natural Assets
Noise end Vlbretion
Visual Impact
Severance
Culural Heritage
ConstructionAir
Weter
Lend
Humans
Flora, FaLna endOther Natural Assets
Culh Herlage
OperationAir
W"'er
Land
Humans
Flora, Fauna andOther NOlI Assets
CUltural Herlage
Residual Impact Assessment
MAIN IMPACTS IEMISSIONS
MITIGATIONMEASURES
ACCEPTABILIlY(of residualImpacts)
COMMENTS IPROJECT RISKS
I 11 III IV"ShWI0.. I
. 0 0 0
o . 0 0
00. 0
00. 0
o . 0 0
o .00!:J . !:I D
Positiv. L.ss oongHtion on .lIistingrCMds.net p,arlioutul, in urb.......OnrnMtS wIIlmpr.,.,...qualil,. TMpr...,.""",_R,.Ho ,.-mov'" from some>olt.s'.ou"...." using .listlng 18RoodI.. MMiIn Ruzomborok
s.v.r. wM., OOWMSsh.aIlbe- Construotion 01Yioduots and--.., Cfo.sodbt_..... owrpus.s. Corr.-ctiveomt>..SUf.SmotOfW"" Ar.... with signifJc h..... bMn dtflned MM!..undI>rgroundWM" f"OWO.. wt. ooo....ob...so orOSSK
Amount of mM.,JaI d.sdnMH to TMlInoIIooollon 01_ dlspos'"1¥'KIilwil Mp.net on tM final borrow ........ willhw. to b.de-sign.Dispos..and borrow oppr bt'M ......onm_......s wll hw. to M ldentifWd. _k,.
FWs.u......nt wll tw r-..o.ss., In c.t..U.d m...sur.s wMlbfo.fiMdsom. oosos.1n _ Voh V....,. _ In IInaId.sIgnmotOfW., wiI run '''MM> 010...,to urban ........ giwnconstr.aints
NMur.. 2000 ....... FAtra" will MitigMIngrIM'''SUff'ShrH bHnbe-banSYfiSN bt th. proit'ot. _Iod and Introduood os 0-V...... Fatr."Is ..Iso too.rH In oondl.1on In _ buiIdIng....mIttM vieiniti.. of the-Prt. r8'qUe'st.lnwntorg 01reftovant
so.cieos has beoendon.NasI_lmpoct.o soma..ban Mitig.ating .s...es wlDM¥e.s .ands.m.mt'nts (t.e dollnod_...., In_ fin"Sutovo). Posit""'lmpt inurb.n eNsign.whioh Is to .pproved b,are.. ourr1J cross.-d b, 1-18 _ _onrnont" oompot_rood /Mart.. Ruzombofook ouIhofk..TM e.essrw.., wll oross L.r outs haw bHn woidt'd.p_tic........ ...s withhigh Dei_d m..sur.s to bf.defiMdJoIIndsc.ao.v.1ueInt..oop<ion 01100.. paths, roods, c.t.a.d me.s....s willbeocMfirMd.IIndo.att" n.ss.s. In IInaIdos....No pMtioul... ImpaoOts Aroh_glo.. monitoring during
oonstructlon
Dus'_"1on In ...Ihworks Mltig..ing ....os...s.o bo dof.....d-.et truelc.opt'f.lltion .at".iltfd dt>Signst.ge
Allriver orossWlgs are vt.llducts. fw1kigMIng .s....s to M cNfirwdwith pot.nliollmpooc during .lito.t-llhd ct.sign stconstruction or opeor.ation.
tmp.ct.... some enW.n, Standard mltigotlng m.os....seonsitive.1'f.S (otcs. to proposedprotltCted sit.. -habitats orcultur"h.rk_.Dist...b.ano. to Inhabitants In Un.auoid¥)l. Impact in som.oen_ ar..s during oonstruction. o.s.s
St.ancbrs: imp.aots in ro.d HMMt.atsInventor"s hw. Menconstruction. Some high v...... performed.llnd rf'MyM'K '"sp.o"s (big mamm",) ... h.W' Men deoted .andpr...nt In some .e... _Of_Construction m.., "'.et th..habit.ats and rniftration COfridors
No significant Impoc. St.-nd_d pr8'W'ntNe me.sur.sDfODOsod
C02 emissions Less OongeStlon on existingrGads .andpartioul.rl'.... urbanenvironments willimprove ..quali<,.
Posslb.. 011spills and sod_nO Oiltnt.rcors willM provided Inintrusion rN" crossings. AI cuts winh.awo
longitudinal cuIv...s
s.v.t.ano. of the territor, S.....fits.... dHolMd to M gr.at.rthan .xt...nalities.
Positive> Not requited
F.un. fMalitM-Sinroad crossmgs. Mitigating fM'as....s to bfock>finf.dNoise .'foetion to birds Inn.sting .atdetailed design st
riods.NoM Not r.quirf'd
00. 0
00. 0
00. 0
(oo)
o 0 . 0
o . 0 0
00. 0
o . 0 0o . 0 0
o 0 . 0
.00 0(oo)
. 000
o .00
o . 0 0.00 0
Project: Slovak Motorways (PPP) D1 Phase 1 - Update to stage 1OperationnO:20080070
Social Assessment
L_ Project SlovakMotorways(PPP) D1PhaseIL- Operationn° 20080070
INr. Areaofimpact Acceptabili1y WithConditionsCommen1sonprojectrisks
PopulationMovementsEa-including1 resettlementand
migration.(seeSAGN1)
VulnerableGroups- Eaincludingwomen,2 minoritiesand
indigenouspeoples.(seeSAGN2)
CompliancewithILO Eacore labour standards3 and impacts on (oo)
employment.(seeSAGN3)
Attentionto Eaoccupationaland4 communityHealth&
Safety.(seeSAGN4)
Outreach- Eaconsultation &
5 participation withshareholders andstakeholders.
(see SAGN 5)
Project: Slovak Motorways (PPP) D1 Phase 1 - Update to stage 1Operation nO:20080070
F. PROFITABILITY ANALVSIS
(..)
Project: Slovak Motorways (PPP) D1 Phase 1 - Update to stage 1Operation nO:20080070
H. VALUE ADDED SHEET
12.11.2008VALUE ADDED SHEET - INVESTMENT LOAN
PILLAR 1: Contribution to EUObjectives Medium
COP Priority Obiective(s)Convergence(EU27)TENs(TransportandEnergy)
Other Obiective(s)- none-
IMediumMedium I
- nla -
Project: Slovak Motorways (PPP) D1 Phase 1 - Update to stage 1Operation nO:20080070
I. CONTACTS,REFERENCES, MISSIONS, CONSULTANTS
1. Mission dates and participants
(..)
2. Key Personnelconsulted
MoT PPP unitNational Motorway Company (NOS)Minister of Transport
3. Main documents consulted
Tender documentation (in English)Data Room documents (in Slovak, limited translations)Technical/economic feasibility study (in Slovak, ad-hoc translation)
Project: Slovak Motorways (PPP) D1 Phase 1 - Update to stage 1Operation nO:20080070
PILLAR2: Quality and Soundness of theInvestment
(... )
(... )
The Bank has been able to broadly verify compliance with the EU environmental aquis. However someaspects of environmental due diligence will have to be completed during stage 11of the appraisal,particularly with regard to the acceptability of the EIA process and compliance with applicableEnvironmental legislation in the adjacent section ("Visnove-Dubna Skala" section, included in the secondpackage of the D1 Motorway PPP Scheme).
(...) .
2. Environmental Sustainabilitv
Environmental rating Acceptable with majornegative residual impacts
(B2)
3. Other Qualitv Elements
Promoter capability: design and implementation phasePromoter capability: operation phasePromoter: monitoring track record (if applicable)
Not documentedNot documented
Not applicable
The project management and procurement strategy may leave the project exposed to some key riskspotentially affecting the quality and soundness of the investment:- Full compliance with EU environmental Directives will have to be demonstrated before disbursement.- Promoter capacity: Risks arising from the large investment volume of this PPP project combined with
the lack of PPP experience of the promoter.
(..)
PILLAR3: EIS Contribution (..)
(u.)
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