Moscow hosted
the 6th ‘Private Utilities Infrastructure Operators’ Russian Forum,
which is part of the event series of the ROSINFRA Infrastructure Congress. The
Forum was organized by the Roscongress Foundation and the PPP Development Centre.
Sberbank is the general partner and InfraVEB is the strategic partner.
The Forum
primarily focused on ways to raise private investment for housing and utilities
services, ecology, and urban land improvements. It was attended by
representatives of specialized government agencies, financial institutions,
utilities operators, technology providers, and potential investors. The PPP
Development Centre, with the support of InfraVEB, released an analytical review titled ‘PPPs in Public Utilities Infrastructure
and Urban Land Improvement’ specifically for the Forum. The review presents
statistics on the use of PPPs in the industry and key standard solutions.
According to the Centre, 2,769 projects worth RUB 722 billion are currently being
implemented in Russia in the utilities sector and they are mostly concentrated
in municipalities.
“Attracting
investors to the housing and utilities sector primarily means modernizing
facilities and renovating infrastructure. This is why the government, for its
part, is creating conditions for private business that is ready to invest in
this industry”, Adviser to the Russian President Anton Kobyakov said.
The Forum
kicked off with an open meeting of the public not-for-profit organization
Russian Ecological Operator (REO), during which the participants discussed the
waste management reform currently under way in Russia, funding for the
industry, the state support measures that are required, and the problems that
the market faces as it transitions to the new waste management system. The
meeting was moderated by REO Deputy CEO Alexey Makrushin. The market
participants noted the need for legislative amendments, difficulties with
negotiating tariffs and hammering down the rules of the game for investors,
lower prices for secondary raw materials as well as oversight and regulatory
risks.
In parallel,
the Forum included an expert session on judicial and antitrust practices in the
utilities sector. Using specific case studies as examples, the participants
examined the main problems that investors and public partners in the utilities
sector face, such as the transformation of lease agreements into concessions
and the failure to pay concession fees, among others. During a panel discussion
titled ‘The Evolution of Approaches to Funding Concession Projects in Heat and
Water Supply’, the speakers discussed problems related to raising debt
financing using the packaged solutions of Sberbank, their distinctive features,
and difficulties in their implementation as well as financing in the
non-packaged format and opportunities for the bank and the Housing and Public
Utilities Fund to participate in a single project. During a session devoted to
smart cities, experts spoke about the experience gained from using digital
solutions in the municipal sector and municipal solid waste and noted the
possible effects from them as well as how technologies will help optimize
processes and save money for consumers and businesses.
During the
Forum’s final discussion, the participants discussed the current state of the
public utilities sector, events planned as part of Russia’s national projects,
sources of funding for the industry, judicial practice, and smart technologies.
Housing and Public Utilities Fund Deputy General Director Olga Serdyuk spoke
about the Fund’s activities to provide financial support. She noted that it is essential
to prevent a sharp increase in tariffs for the population when carrying out
modernization and that this cannot be avoided without resources from the Fund. PPP
Development Centre Executive Director Maxim Tkachenko said that when developing
the utilities market, the problems that have accumulated in the industry cannot
be passed on to the consumer through tariffs and that capital grants remain a
key issue. Tkachenko noted that the PPP market in this industry has expanded
ten-fold over the last ten years, but it is noteworthy that the number of new
projects has been falling since 2016 while the average amount of investment has
increased. Private investments dominate in the public utilities sector, as 9
kopecks of budget funds are provided for each rouble of private investment. Roman
Sorokin, Deputy Director of the Housing and Public Utilities Department of the Russian
Ministry of Construction, said that improvements should be made to
infrastructure and the number of qualitative indicators concerning the
permissible level of wear and tear should be determined and used as a basis
instead of chasing after concessions.
The Forum
also featured uniquely designed master classes on the financial structuring of
public-private partnership projects and specific aspects of preparing and
executing energy service contracts.