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Krakow Fast Tram (stage IV) – PPP agreement for PLN 1.1 billion signed
On 21 December 2020, the City of Krakow Roads Authority and a consortium of PPP Solutions Polska 2 sp. z o.o. and GÜLERMAK Ağır Sanayi İnşaat ve Taahhüt A.Ş signed a contract to build a tram line in the form of a public-private partnership for a period of 24 years, worth PLN 1.125 billion, making it the largest PPP project of its kind in Europe. The project is also ranked third in the history of the Polish PPP market in terms of capital expenditure (among projects in which a contract has been concluded since the PPP Act came into force in 2008).
The private partner is obliged to design, build (in 40 months) and then operate for 20 years a new 4.5 km long (9 km of track) section of the "Krakow Fast Tram (stage IV)" tram line, from the al. Jana Pawła II/ul. J. Meissnera junction to Mistrzejowice, including a 950 m long tunnel under the Polsad Roundabout. The European Investment Bank (EIB) has initially said it is willing to finance the project.
The uniqueness of the "Krakow Fast Tram (stage IV)" project is also evidenced by the fact that it is one of several PPP pilot projects selected by the government (in various sectors). Based on the experience gained during its implementation, guidelines for other cities will be draw up containing information on, e.g. how to raise PPP funding for infrastructure projects, which is particularly important in the context of the approaching end of EU funding for such projects in the next budget perspectives.
A consortium comprising DZP, Mott MacDonald and Crido had the pleasure of providing comprehensive legal, economic, financial and technical advice in this pioneering project to the City of Krakow Roads Authority, whose team, headed by Director Marcin Hanczakowski, with the support of Project Coordinator Zbigniew Rapciak and attorney-at-law Marzena Juśkiewicz, cooperated successfully with the advisers. The Ministry of Development Funds and Regional Policy is also actively involved in the project, both by financing the advice of the adviser consortium and by day-to-day substantive and organisational support from the ministerial Public-Private Partnerships Department. The adviser consortium worked for the Contracting Authority at each stage of the project, from project structuring, through drafting the tender documentation (e.g. PPP agreement, Functional and Utility Programme, financial model preparation instructions), negotiating during a competitive dialogue, representation before the National Appeal Chamber, to evaluation of economic operators’ bids and conclusion of a contract with the private partner.
The project is being carried out by an interdisciplinary team at DZP led by Marcin Krakowiak, Partner and Head of the Infrastructure & Energy Practice, Michał Przychoda, Senior Associate and PPP expert, supported by Tomasz Darowski, Partner and infrastructure project expert, and Michał Wojciechowski, Senior Associate and public procurement expert.
Report on contract signing and commentary by representatives of the City of Krakow Roads Authority, Krakow City Hall and GÜLERMAK Ağır Sanayi İnşaat ve Taahhüt A.Ş:
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