Between 1993 and 1995 the Polish government undertook a debate on the proposed location and implementation methodology for a new network of toll motorways. This debate resulted in the decision to implement a 2,600 kilometre long motorway program constructed according to current European standards at a cost of US$15 billion. The program of building toll motorways in Poland is regarded as one of the most ambitious investment undertakings in the post-war history of Central Europe. The Toll Motorway Act of 27th October 1994 set this strategy into law and established the Agency for Motorway Construction and Operation (ABiEA) as the governmental entity responsible for the implementation of the motorway program.

The toll motorways will be constructed and operated by the concessionaire who has obtained a concession and signed a concession agreement for the construction and operation of the motorway on terms and conditions agreed upon during negotiations and stipulated in the agreement. Funds for the construction (except costs of the right-of-way purchase) should be raised by the concessionaires themselves. The granting of a concession for the construction and operation of the toll motorway will depend on the results of a two stage procedure.

Private consortia will carry out the task using the 'build, operate and transfer' (BOT) methodology. The shareholders of the company undertake to construct the motorway at their own risk. An effective combination of forces is expected from Polish and foreign companies working in full partnership. Building materials, high class equipment and labour are available in Poland. High technologies needed for construction and supervision as well as funds are expected to be provided by the concessionaire. In the case of non-traditional financing of the project, the concessionaire is also an investor who prepares and carries out the whole construction and operation process.

This method can use the following sources of funding:

• the concessionaire's own funds
• loans provided by commercial banks
• loans from international financial institutions obtained directly by the concessionaire
• the State Treasury which covers the costs of preparatory works and right-of-way purchase for the construction of the motorway and service areas. The Agency for Motorway Construction and Operation (ABiEA) which acts on behalf of the State Treasury is the competent authority for the right-of-way purchase.

The international financial institutions (IFIs) expressed their interest in the participation in the project subject to its economic and financial profitability. The ABiEA and IFIs have agreed that all tender participants should have the same conditions of access to potential credits and guarantees provided by these institutions.

The first tender process was begun in mid 1995 and at the end of 1996 the ABiEA had three tenders in progress:

• the concession for construction and operation of:
  • A-1 from Gdansk to Torun - 152.5km; (tender in progress);
  • A-2 from Swiecko to Strykow/Lodz - 362km - divided into three segments; (tender in progress);
• the concession for modernisation and installation of the toll system (this section is modernised and upgraded from financial sources provided and arranged by the State) of:
  • A-4 from Katowice to Krakow - 61km; (tender completed).

Three additional tender processes are ready to be started and the formal tender documents will be issued soon:

• A-1 from Torun to Lodz;
• A-2 from Strykow/Lodz to Warsaw and next to the eastern border (Kukuryki near the Belorussian border);
• A-4/A-12 from Zgorzelec/Olszyna (German border) to Wroclaw and from the A4 from Wroclaw to the Silesia region.

While the current motorway implementation strategy relies heavily on BOT financing methods, the Toll Motorway Act does not preclude the use of other implementation methodologies. Currently, one new segment of the A4 motorway between Wroclaw and Gliwice is being modernised and upgraded using traditional financing methodologies, and a second segment between Katowice and Krakow is being similarly modernised. Other implementation methodologies may be considered as the motorway program matures.

For further information please contact:

Agency for Motorway Construction and Operation
[Agencja Budowy i Eksploatacji Autostrad (ABiEA)]
Chalubinskiego 4/6 St., 00-928 Warsaw, Poland
tel: (48-22) 830 08 82
fax: (48-22) 830 03 42

Poland: The Motorway Development Program - initial projects and next steps

The task of integration with the European Union countries as well as maintaining the dynamic economic growth of Poland should be carried out concurrently with the construction of motorways, which will ensure an efficient transport system both within Poland and along the main transport corridors of Europe.

In Poland, motorway investment has been underway for some time. Serious steps aimed at motorway implementation were taken in the 1970s. Intensive work was carried out under the UN program 'UNDP - Polska 513'.

In the period 1990-1991, the previous layout of motorways and express roads was subject to detailed verification, and as a result, a number of import and modifications were introduced to adapt this layout to the new political and economic situation in Poland, and to the existing and European network of motorways planned to be constructed by the year 2002. One of the key decisions of the Polish authorities concerned the implementation of motorways as toll roads of 2,600km total length, with a targeted European quality standard, over a period of 15 years.

The Agency for Motorway Construction and Operation (ABiEA) was established under the Act on Toll Motorways of 27th October 1994 and started operation when the network of motorways was 257km long.

There are a few countries in Europe which are able to finance motorway construction entirely from the State budget, and Poland surely is not one of these countries. For this purpose, the Polish authorities decided to start the development of the Polish motorway program using non-traditional financing methods. In this case, funds for the construction (except costs of the right-of-way purchase) should be raised by the concessionaires themselves. They can use their own funds, loans provided by the commercial banks, and loans from international financial institutions. The State Treasury covers the costs of preparatory works and right-of-way purchases for the construction of the motorway and service areas. The Agency for Motorway Construction and Operation (ABiEA) which acts on behalf of the State Treasury is the authority responsible for the right-of-way purchase.

In the case of non-traditional financing, a concession is required. The selection of the concessionaire is carried out by the Agency for Motorway Construction and Operation by way of a two stage tender procedure involving prequalification and then limited tender for the selected prequalification participants.

Limited liability as well as joint stock companies whose seat is in Poland and that have share capital amounts equivalent to a minimum of ECU10 million can participate in the tender procedure.

An evaluation committee appointed by the Minister of Transport and Maritime Economy assesses the prequalification document and the tenders. Upon completion of the tender procedure, the Minister of Transport and Maritime Economy issues a concession in the form of an administrative decision. Such a concession can be granted for the construction and operation, or solely for the operation of a motorway or a segment thereof.

Following the grant of the concession, ABiEA and the concessionaire negotiate the conditions of the concession agreement, which will be a basis for the concessionaire subsequent.

Implementation of the Motorway Construction Program under a new system of financing (licensing).

A-4 Katowice - Krakow (61km)

On March 27th 1997, the Minster of Transport and Maritime Economy granted a license to Stalexport SA, Katowice, to operate the above mentioned A-4 section.

At present, AHCO and Stalexport SA are negotiating the terms of the license agreement. The negotiations are expected to conclude in the second half of this year. The Stalexport SA work on the A-4 section from Katowice to Krakow is anticipated to commence in the autumn of 1998. Throughout the license period, the licensor will be required, amongst others, to refund the EBRD loan of ECU45 million obtained by the Polish government under Loan Agreement No 150 of October 22nd 1993 for modernisation of the Katowice-Krakow section. According to the understanding between AHCO and Stalexport, the government will begin to repay the loan, and the licensor will refund the expense together with accrued interest.

A-2 Swiecko - Strykow near Lodz (362km)

On March 19th 1997, the Minister of Transport and Maritime Economy granted its permit to Autostrada Wielkopolska SA. In April 1997, AHCO commenced negotiations with the company selected about the terms of the licensing agreement for the construction and operation of this motorway section. Negotiations are expected to conclude by the end of 1997, which will enable the licensor to undertake work, most probably, in the middle of 1998. Construction work will first be commenced on the section which was regarded as a priority based on an independent study of anticipated A-2 traffic and revenue, currently conducted by the licensor upon recommendations of the EBRD and other institutions and banks interested in co-financing the project. The results of the study will largely determine the success of the entire investment.

A-1 Gdansk - Torun (152.5km)

An independent tender committee was appointed by the Minister of Transport and Maritime Economy to handle evaluation and selection of the offer submitted on March 28th 1997 by the consortium made up of Gdansk Transport Company SA, comprising Bechtel of the USA and Gdanskie Przedsiebiorstwo Robot Drogowych under the second stage of its tender proceedings. By the end of June 1997, the tender committee is expected to complete its work.

Planned Tenders

A-4 Wroclaw (Bielany) - Katowice (Murckowska) (187.2km)

Given that in May/June 1997, the Agency for Motorway Construction and Operation (AHCO) plans to announce tender proceedings to award licenses for construction and operation of the A-4 as stipulated under the Polish motorway construction program, a number of variants have been analysed to arrive at an optimal division of this motorway running from the Western border to Katowice (Murckowska) into sections to be then tendered seperately and in order to structure the best possible solution of the State Treasury's share in A-4 financing.

Accordingly, based on these analyses, in May/June 1997, AHCO plans to announce tenders for:

1. implementation of a toll system on the section of Wroclaw to Nogawczyce, to be constructed as a toll-free motorway by the A-4 Motorway Construction Office in Opole;
2. construction and adoption of a toll system on the section from Nogawczyce to Sosnica;
3. adoption of a toll system on the section between Sosnica and the Batory Junction;
4. operation and maintenance of the A-4 on the section between Wroclaw and Katowice (including maintenance of the Batory-Murckowska section).

A-4/A-12 Zgorzelec/Olszyna - Wroclaw (Bielany) (227.5km)

Another section for which tender will be announced in order to grant a construction and operation license will be the A-4/A-12 section from Zgorzelec/Olszyna to Wroclaw (Bielany). The tender will be held with respect to the following:

1. modernisation and adoption of a toll system for the section from Krzyzowa to Wroclaw;
2. construction, modernisation and adoption of a toll system on the section from Olszyna to Krzyzowa;
3. construction and adoption of a toll system for the section Zgorzelec - Krzyzowa;
4. operation and maintenance of the A-4/A-12 motorway section for Zgorzelec/Olszyna to Wroclaw (Bielany).