Croatia’s New Airport Terminal Opens the Door to Investment
The recently inaugurated passenger terminal more than doubled the airport’s capacity to 5 million travelers per year. © Zagreb Airport
From the air, visitors about to touch down in Croatia take in views of its rocky, indented shore—a spectacular sight that sets up grand expectations. But until recently most travelers who arrived at the main airport in Zagreb got a more disappointing impression of the country. The passenger airport terminal, built in 1962, was unable to accommodate the millions who transit through Croatia every year and had not caught up to modern travelers’ standards.
That changed this month, when Zagreb International Airport’s new $450 million passenger terminal opened following a three-year construction period. A consortium supported by IFC led the public-private partnership (PPP) behind the project, which has highlighted Croatia’s private sector development potential.
The new 65,000 square meter terminal, which more than doubles the airport’s capacity, is expected to spark meaningful economic growth by improving the country's infrastructure, boosting tourism, and attracting more businesspeople and potential investors from the region and beyond.
A Pioneering Partnership
Expansion of capacity at Zagreb International Airport was key to this 30-year concession to finance, design, construct, and operate a new, state-of-the-art passenger terminal. The structure, which welcomed its first passengers on March 28, can now accommodate 5 million travelers per year, compared with the former capacity of 2 million.
Under the concession, the operator is responsible for managing of the entire airport until 2042, including refurbishment and maintenance of runways, the cargo terminal, car parks, and future property developments. Also included is the construction of a new 1.8-kilometer access road to connect the new terminal to the local road network. The old terminal will be converted and leased for airport users.
Zagreb airport’s PPP is notable because for the first time in Croatia, private firms involved in a transport concession project have assumed passenger volume risks, enabling the country to upgrade essential infrastructure without adding a burden to state finances. Construction of the terminal generated more than 700 jobs at its peak, with an average of 400 jobs over the duration of project.
This is a clear signal of a stronger, more mature private sector, and the project—the first airport concession in Croatia—is expected to serve as a model for similar transactions in the region.
Collaborating for Better Infrastructure
In addition to IFC, the consortium behind the airport construction includes Aeroports de Paris Management, Bouygues Batiment International, TAV Airports, Viadukt, and Marguerite Fund. IFC committed about €54 million to the project, including a loan of up to €35 million and an equity investment of nearly €19 million. The European Investment Bank, Deutsche Bank, and Unicredit Bank Austria provided additional financing.
The project has received a number of awards in recognition of its innovative structuring. It won the European airport deal of the year 2013 from Project Finance Magazine and was also named the Best Project Finance Deal and the Best PPP in Central and Eastern Europe by EMEA Finance magazine.
To learn more about IFC’s work in infrastructure, visit www.ifc.org/infrastructure
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Published in March 2017