The 400 million euro Public Private Partnership for Thessaloniki Metro is on track

The die has been cast for the operation of the Thessaloniki metro with the participation of an private player. Attiko Metro has set the machinery in motion for the big tender worth 400 million euros, in order for the operator to be ready in 2023, when the delivery of the project is planned. The preparation of the international tender for the PPP (Public Private Partnership) contract for the operation and maintenance of the Thessaloniki metro line is accelerating.

Attiko Metro published yesterday an invitation for the selection of a financial advisor with which preparation will begin running. The trio of consultants, financial, legal and technical, will undertake with the assistance of Attiko Metro the preliminary actions for the preparation of the international tender, as well as its support during the tender process. The invitation for the legal adviser was made public on April 15. The estimated value of each of the two contracts amounts to 139,000 euros (excluding VAT).

One of the most important elements that remains to be clarified with the contribution of the financial advisor is the way and the payment mechanism of the private party, the duration of the contract, the sharing of risks, but also the operating framework and the form of the Special Purpose Company.

The project of the entry of a private provider in the operation and maintenance of a public project is so far unique in Greek annals, but internationally it is a tried and tested practice. The examples of the Copenhagen and Singapore subways are typical.

As the president of Attiko Metro, Mr. Nikos Tachiaos, recently stated, speaking at the ProdexpoNorth conference, the reasons that favor this model are related to competition, cost control, rationalization, and flexibility in personnel management.

In full development, the private operator will employ 300 staff. It is noted that in order for the joint venture to enter commercial operation and given that the Thessaloniki metro incorporates another innovation, ie trains without a driver, the staff will need special training, which will be done by the current construction contractors. So the margins are narrowing.

The schedule and cost of the projects

The Thessaloniki metro with the extension to Kalamaria will have 14.4 km of network and 18 stations. Regarding the two main ongoing construction projects, the main pending issue at the moment is the decision of the Council of State (Greece’s highest constitutional court) for the Venizelos station, which will of course determine from that point the timetable for the completion of the station. The rest of the project is proceeding without much change in the schedule, despite the pandemic.

As for the construction project budget, as mentioned in the call for a financial advisor, for the baseline project implemented by the contractor AKTOR-SaliniImpregilo-HitachiRailSTS / HitachiRailSpa consortium, the total price including  the accounting works (excluding VAT) amounts to 945.7 million euros, when the flat price of the contract amounts to 798 million euros without contingencies and revision. In addition, the budget for the extension to Kalamaria, implemented by AKTOR, with the contingencies, the review, and the accounting works has reached 399.8 million euros, against an initial price of 311.95 million euros.