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Development of smart city infrastructure and attracting investment in housing and utilities discussed at Private Utility Infrastructure Operators Forum

10 December 2018
Развитие инфраструктуры «Умных городов» и привлечение инвестиций в ЖКХ обсудили на Форуме «Частные операторы коммунальной инфраструктуры»

On 5–6 December Moscow hosted the Private Utility Infrastructure Operators Forum, which focused on public-private partnership in modernizing utilities infrastructure, ecological protection, and improving the urban environment. The event forms part of the ROSINFRA Infrastructure Congress series, which is organized by the PPP Development Center and the Roscongress Foundation, and features Sberbank as General Partner.

The Forum’s business programme began with a panel discussion dedicated to the digitalization of urban infrastructure and the housing and utilities sector. In attendance was Andrey Chibis, Deputy Minister of Construction, Housing and Utilities of the Russian Federation. Speaking at the event, Chibis commented that the Smart City standard, which will be used to implement new technology across the country, is due to be approved by the end of the year. This form of digitalization will positively affect resource management, transport infrastructure, and public safety. He noted that the requisite technology already exists, and is ready to be rolled out. The relevant information has been compiled and published for general viewing on the Smart City Solutions Bank website. Among the companies to give presentations on the cornerstones of implementing a smart infrastructure were Rostec, Rusatom, Rostelecom, SAP, and POLYPLASTIC Group. Chibis also proposed that those present considered participating in planned Smart City pilot projects.

A study was specially commissioned for the forum, in which the PPP Development Center, Housing, Utilities and Urban Environment Association, and the law firm LECAP summarized PPP practice in building infrastructure for smart cities. The paper primarily focused on potential pathways for building digital infrastructure and passing legislative amendments which would provide opportunities for attracting private investment in the sector. It claimed that as of the end of 2018, 90 PPP projects to develop smart city infrastructure are currently under way in Russia, with 56 being initiated within the last three years. To date, total capital investment in these projects has reached RUB 34.6 billion, with private investment accounting for RUB 27.5 billion, and RUB 7.1 billion coming from public coffers.

Waste management was also a key area of focus at the Forum. Head of the Federal Service for Supervision of Natural Resources Natalia Sokolova commented that the reforms are already being successfully implemented in several dozen regions. Under current plans, the only cities to be granted additional time until 2022 will be those with Federal status: Moscow, St. Petersburg, and Sevastopol. Other regions should expect the transition to the new waste-management system to begin on 1 January 2019.

The environment was another cornerstone of discussions. Prospects for introducing green financing mechanisms were examined, as was the creation of a sustainable bonds market in Russia. The Ministry of Economic Development and Ministry of Finance of the Russian Federation, together with the Bank of Russia, Moscow Exchange, and VEB.RF were cautiously optimistic with regards current development in the area. It was noted that Russia, in considering the creation of this market, was moving in step with the times and global trends. Investors in the form of Sberbank and Leader Asset Management highlighted the fact that debt financing was no panacea, and that it was essential to overcome the gulf between the way green financing is perceived in Russia and the West. LECAP is already preparing advantageous solutions for the market.

Elsewhere, heads of private enterprises in the housing and utilities sector took part in discussions with regional and municipal government representatives. Coming under focus was the application of out-of-the box solutions developed by Sberbank to attract private funding in the utilities sector. Most of those present spoke of the need to simplify such solutions. Representatives from a financing organization expressed their willingness to meet their clients half-way, albeit within specific boundaries.

The second day of the Forum (6 December) featured an educational seminar on key aspects of developing and implementing PPP projects in the utilities sector.