Advising on Latvia's first PPP scheme

Currie & Brown act as lenders’ technical advisor on a complex European PPP infrastructure project.

The 17.5km Kekava bypass is a landmark infrastructure project and Latvia’s first public-private partnership (PPP). It streamlines the passage of people and goods between Riga in the North and Bauska in the South of Latvia, and on into Lithuania. It achieves this by directing traffic around the densely populated town of Kekava, accelerating travel for road users and dramatically improving quality of life for residents. 

The average waiting time on the road from Riga to Vilnius, Lithuania was 30 to 40 minutes. It is estimated that the new bypass will reduce this by 20 to 30 minutes, accelerating journeys, supply chains and trade. 

The project was initiated in 2018, when the public entity; the Republic of Latvia represented by the Ministry of Transport and Latvian State Roads, put the project out to tender through a public-private partnership scheme. This successfully closed in 2021, when the two-year design and construction phase started. The project is now entering a 20-year operational and maintenance phase, which will run until 2043.  

We acted as the lenders’ technical advisor to the European Investment Bank, Nordic Investment Bank and TIIC, providing expertise and professional advice on the PPP scheme. Our team undertook technical due diligence on the project, provided support throughout the negotiation and closing stages, and provided construction monitoring throughout the design-construction period. The team will monitor the operation and maintenance services for the duration of the project.

The first of its kind project was made more complex by external factors, including the COVID-19 pandemic and war in Ukraine. These created materials and labour shortages and price fluctuations. We advised on mitigation measures, including early procurement to secure the price of materials and their availability. Our detailed methodology covering on-site storage, security, and insurance of materials procured was closely followed throughout the design and construction phase.

Added to this, winter weather, including storms and heavy snow, made it difficult for construction to progress. We monitored the impact of this on project timelines and developed mitigation measures, which included increasing the subcontractor labour workforce and accelerating work when possible. 

Our extensive experience advising on PPP projects across Europe and globally, meant that we were able to surface potential challenges to the Special Projects Vehicle (SPV). We could then recommend remedial actions before they became issues. We were also able to draw on our experience to provide benchmarks for comparative analysis and decision-making. 

Stephanie El Khoury, project lead, Currie & Brown comments: "It has been a privilege to lend our expertise to the first PPP project in Latvia. These projects are complex but instrumental in delivering key infrastructure that connects communities and supports economic growth. We look forward to supporting the project through the operation and maintenance phase and applying our pan-European expertise to other PPP projects as the model gains popularity across Europe and globally."

Juris Fridmanis, General Manager, Kekava ABT, comments: "Currie & Brown’s expertise, professionalism and collaborative approach have been instrumental to the success of this project to date. As a first for Latvia, this project and the PPP model have received a lot of interest. It has been hugely reassuring to have such an experienced team advising us, and we look forward to working with them into the operation and maintenance phase and on future collaborations."