October 14, 2019

October 14, 2019

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October 11, 2019

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Plans for Poland’s Mega-Airport Progress Rapidly

The Polish government is rapidly moving forward with plans for Poland’s new mega-airport. Proposed implementing legislation has been prepared and circulated for initial comments, an extensive concept document has been prepared, the office of the project’s plenipotentiary at the Ministry of Infrastructure has taken shape, an advisory council for the project has been appointed, and a tender is being prepared for selection of a consortium to design the project, with such selection to be concluded by the end of 2018.

This major infrastructure project – now officially called Solidarity Airport – Central Transport Hub (abbreviated as CTH) (in Polish: Port Solidarność – Centralny Port Komunikacyjny (abbreviated as CPK)) – involves:

  • Construction of a new hub airport 40 km from Warsaw
  • Reconfiguration and extension of Poland’s rail network with CTH as its hub
  • Extension of the nearby A2 motorway along with numerous ring roads
  • Closure of Warsaw’s existing Chopin airport and transfer of its airport functions to CTH
  • Development of a new city neighboring CTH

The target date for initial operation is 2027.

Overview

The plan for CTH foresees initial passenger capacity for 45 million passengers annually, with the ability to expand to 100 million. CTH is to be a growth catalyst that will enhance connectivity and hub connectivity. It will serve to develop long-haul connections and intercontinental traffic. The accompanying investments in rail infrastructure aim to reduce travel times from Poland’s largest cities to CTH to 2-2.5 hours, and 15-20 minutes to central Warsaw. Planned road investments would involve up to 248 km of new or expanded roadways. The project will cover 3,000 hectares (30 sq km). Further, the new city would support up to 100,000 employees working at CTH and, ultimately, create a global metropolis from the agglomeration of Warsaw, Lodz and the new CTH city. The total estimated cost (up to 2027) is PLN 30.9-34.9 billion (€7.43-8.39 billion).

For further details, see Poland Adopts Ambitious Plan for Its National Transportation Hub.

Special Implementing Legislation

Draft legislation that would comprehensively regulate issues related to the implementation of this project has been made public. The draft covers these main issues:

A special purpose vehicle (SPV) called “Central Transport Hub LLC” would be created to ensure efficient implementation of the project, in particular, obtaining all administrative permits, acquisition of necessary properties and management, as well as procurement. Most importantly, the SPV is specified directly as the investor in CTH. The SPV would be 100% owned by the State Treasury, but it could establish subsidiaries, including joint ventures with private partners.

A plenipotentiary is named to implement CTH and oversee the SPV. Currently, such plenipotentiary, Mr. Mikolaj Wild, acts on the basis of a resolution of the Council of Ministers, but he would automatically become the plenipotentiary on the basis of this law when it takes effect. To ensure effective coordination of government agencies, he is also granted supervisory authority over “Polish Airports” State Enterprise (which operates Warsaw’s Chopin Airport and holds interests in 11 other Polish airports, as well as passenger, freight and aircraft handling services at Polish airports), the Polish Air Navigation Services Agency and the Civil Aviation Agency.

An implementation document will be prepared by the SPV as the basic document presenting the project plan, including environmental, financial and technical analyses, along with a planning proposal. The Council of Ministers will need to approve the plan and confirm it as a public purpose investment, which means that specific procedures for required administrative decisions may be carried out faster.

A reservation plan will be included, meaning that the Council of Ministers will designate areas on which specific principles of real estate management spatial planning will be applied. The SPV will have pre-emption rights related to the acquisition of land for investment and other special rights. This reservation will last up to 4 years. Already, local communities and residents have raised concerns associated with the de facto freezing of their real estate for this period (the affected locality, Baranow, would like to hold a non-binding referendum on this issue on 17thJune). The reservation plan will involve social consultations, which can also significantly extend the process.

A land development decision must be applied for by the SPV and issued by the voivodeship office. This decision will supersede any local spatial development plans. It will specify the boundary of the entire investment, requirements as to infrastructure and utility investments, the scope of the investment, environmental requirements, real estate subject to expropriation and real estate subject to rights of limited use. This decision will be a key milestone for the project to proceed. As a consequence of the decision, required land is automatically expropriated, with provisions for appropriate compensation. Based on the decision, building permits can be issued, either for the entire investment or for its stages.

The draft legislation establishes the SPV and the administrative structure in the government responsible for project implementation. But major issues remain. The government’s concept document presents these transparently, summarized in a SWOT analysis. Some major issues are:

Profitability and Financing

CTH’s mission is to be a profitable innovative transportation hub. The concept document states that the financing plan still needs to be developed, and the draft law does not address the SPV’s financing. No single financial model applies to the air, rail and road components of the project.

Restructuring the Operations of LOT Polish Airlines

As CTH is a hub, its spokes will be the high-speed rail connections, and LOT will no longer focus on serving Poland’s regional airports. Low-cost carriers will focus on point-to-point service from regional airports, and carriers based in hubs such as Frankfurt, Paris and Amsterdam will seek to do the same. LOT is seeking to handle 10 million passengers in 2018, but this is still quite short of the planned capacity of CTH.

Project Management

CTH is the most complex infrastructure project to be undertaken in Poland. Successful implementation will involve not just the airport component, but also a major improvement in the infrastructure and operations of the Polish railways. Ensuring synchronized implementation of all components is a unique undertaking.

If it succeeds, it will be transformative.

© Copyright 2019 Squire Patton Boggs (US) LLP

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About this Author

Peter Swiecicki, Warsaw, Squire Patton Boggs, Infrastructure Financing Lawyer, Privatization Matters Attorney
Partner

Peter Swiecicki is the Managing Partner of our Warsaw office and his practice includes some of the largest infrastructure financings and privatizations in Central and Eastern Europe. His experience includes financings of the largest and most complex toll motorway project in Poland, as well as the main gas pipeline and the tallest office building in Central Europe.

Peter has served as an advisor to the Government of Kuwait on PPP projects, and advised on the financing of the Żywiec Hospital PPP project.

He has...

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Igor G. Hanas International Investment Lawyer Squire Patton Boggs Warsaw
Senior Associate

Igor Hanas’ practice focuses on the energy and industrial construction sectors, and infrastructure projects, including the PPP model. Igor advises foreign and domestic investors, general contractors and service providers on all aspects of turnkey projects, starting from procurement and negotiations, through financing, performance, corporate and contractual issues and cross border technology import to handover of the investment.

Igor advises clients in regulatory matters including license (concession) issues in relation energy, chemical and natural resources sectors.

Additionally, Igor advises clients in the energy sector with respect to PPA and CPA, O&M agreements and other commercial contracts related to day-to-day operations.

He also represents clients before public administration authorities, common courts and the National Appeal Chamber in projects of the above-listed types.

Prior to joining the firm, Igor was an associate at the Warsaw office of an international law firm for a number of years and worked at a financial institution which is part of an international financial group.

Experience

  • Representing a global energy engineering construction firm in public procurement proceedings, negotiations with investors concerning the construction of a new power station of a capacity of 1,000 MW in Elektrownia Ostrołęka S.A. worth US$1.7 billion.

  • Representing a global energy engineering construction firm in public procurement proceedings, negotiations with investors, including representation before the National Appeal Chamber and district courts, concerning the construction of two new power stations of a capacity of 1,000 MW and 910 MW respectively, worth US$1.7 billion and US$1.3 billion, respectively and a combined cycle power plant in Warsaw Żerań (PGNiG Termika project) worth US$700 million.

  • Advising European and Asian EPC companies applying to the Polish Stage Grid for a public bid in Poland to design and construct high voltage electricity transmission lines and transformers, including the Poland - Lithuania energy bridge.

  • Advising international group of EPC contractors (Energy Service and Water Process Divisions) in turnkey retrofit/modernization/fuel conversion projects in Polish energy groups: PGE Energy Group, Tauron Energy Group, Energa Energy Group, ZE PAK Group, Dalkia and EDF. Legal assistance at all stages of proceedings: from public procurement and private proceedings stage, through performance of the project, cross border matters and technology transfer until the handover of the investments.

  • Negotiating commercial contracts for global chemical company subsidiaries operating in Poland with the oil & refinery industry and the copper mining industry.

48-22-395-5537