RIGA, Sept 23 (LETA) - On Tuesday, the Cabinet of Ministers decided that public-private partnerships may now be used in construction of defense infrastructure in Latvia, the Defense Ministry informed LETA.

An expert task force, set up by the Defense Ministry and the Finance Ministry and made up of representatives from the Central Finance and Contracting Agency, Valsts Nekustamie Ipasumi (State Real Estate, VNI), and public-private partnership experts from the European Investment Bank, agreed that priority projects with the highest investment potential included construction of residential and administrative zones and road infrastructure at Selija military base, as well as warehouse infrastructure in Kuldiga Region.

Public-private partnership means that no payments need to be made from the state or municipal budgets during the preparation and implementation of a project - construction and availability risks are to be transferred to the private partner.

The private partner will be responsible for design, construction, financing, and, after completion, maintenance of the facilities for 30 years. The private partner will receive the first availability payment around the beginning of 2030.

At the moment, the total construction costs of the two projects are estimated at EUR 403 million. More precise and comprehensive cost calculations, including the annual availability payment, will be determined after detailed financial and economic assessments.

These assessments and other documents for the public-private partnership model will be prepared in cooperation with the European Investment Bank and an international consultancy firm funded by the bank, which has experience in implementing public-private partnership projects. Project management will be ensured by VNI.

The Cabinet has tasked the Defense Ministry with starting financial and economic calculations for the development of the residential and administrative zones, road infrastructure at Selija military base, and warehouse infrastructure in Kuldiga Region in accordance with the public-private partnership principles.

The project has been designed to avoid a significant negative impact on the general government budget balance and debt, since financing will be provided by the private partner. Implementation of the project will be another important step in strengthening and developing Latvia's defense capabilities.

"In response to the geopolitical challenges and threats posed by Russia's war in Ukraine, we are actively implementing the National Armed Forces Development Plan for 2025-2036, approved in 2023. Based on international experience, the public-private partnership model has been identified as one of the most effective formats, which we will now be able to apply in defense infrastructure construction," emphasized Defense Minister Andris Spruds (Progressives).