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Transport in Russia: Supporting the Development of Major Infrastructure as a Cornerstone of Economic Growth

14 February 2019
Транспорт России: обеспечение развития магистральной инфраструктуры как основы роста экономики


Development of transport infrastructure is the largest project in terms of scale and financing

“Today the comprehensive plan for expansion and modernization of transport infrastructure is the largest project in terms of scale and both federal and private co-financing; its share in the total amount allocated for national projects is 20%,” Evgeniy Ditrikh, Minister of Transport of the Russian Federation. 

“Transport is a key kind of infrastructure that every citizen of the country is involved with on a daily basis. In the last few decades this sector has been heavily underinvested, and now, in order to turn it into an economy driver, Russia has to both fix the existing infrastructure and develop a new one, taking it to the next technological level,” Pavel Chistyakov, Vice President, Infrastructure Economics Centre.

Modernization of transport infrastructure will boost investment attractiveness of Russian economy

“The comprehensive plan <…> will provide us with a whole new infrastructure that will not only give new opportunities to business, our people, but also will fuel the inflow of investment into economy, and its growth,” Evgeniy Ditrikh, Minister of Transport of the Russian Federation.


Shortcomings of legislation

“We need to introduce amendments to the Tax Code, to economic legislation, that will facilitate the interaction between the state and the business, and in some cases will provide tax deductions,” Dmitry Mezentsev, Chairman of the Council of the Federation of the Russian Federation Committee on Economic Policy. 

Railway infrastructure overloading

“We carry out transportations using the infrastructure, the topology of which has not changed over the last 30 years <…> Taking into account the growth of transportation load and a significant increase of export, out of 24,000 kilometres of heavy-traffic lines around 8,000 are overloaded,” Vadim Mikhailov, First Deputy Chief Executive Officer, Russian Railways. 

Lack of comprehensive solutions for transportation management 

“We need to invest into the air traffic control system. We are operating record-breaking numbers of take-offs and landings, but we lack reliable good solutions. The second problem is the training of the air staff in Russia,” Sergey Kravchenko, President of the Boeing International Russia.

Complicated system of project approval

“We basically have very few mechanisms of coordination between the federal government and regional business. If we have gone through all authorities, including the commission headed by the vice-president, submitted all documents, then in terms of finance everything is worked out. If we want to meet the deadlines and carry out projects, let’s bring decisions to a close. We have to quickly refine and implement the system. We have only six years left,” Andrey Kostin, President, Chairman of the Management Board, VTB Bank.

“We have a construction project for a new airport in Omsk. We possess expertise, the governor has expressed his willingness, and there is a need, but we failed to become part of the transport infrastructure development plan. Do we have to wait another five years?” Evgeniy Chudnovskiy, Director General, Airports of Regions.

Delay in preparation of business projects

“The problem comes not from the side of the state, but from the side of the market. We are being late with a number of projects that the comprehensive plan has to bring to the regulator – they are nine times less; the capacities of infrastructure contractors that are able to build all this are 14 times less. And the required instruments for the launch are only 1.2 times less, which means that the instruments from the regulator have been prepared. The capital amount that can be attracted to this market from non-budgetary sources is only 3.2 times less,” Albert Yeganyan, Chair of the Board, InfraONE, member of the General Council, Business Russia.


Creating conditions for attracting private investment

“Forty percent of our investment go into infrastructure. Russia has one of the best concession legislations among many countries. Approach involving concessions, when the state allocates capital grants for the investor to get the minimal return, and the investor strives to reduce the capital grant, allows investors to enter the project, substitute the governmental funds and become more efficient than the state,” Kirill Dmitriev, Chief Executive Officer, Russian Direct Investment Fund (RDIF).

Including regional propositions into the comprehensive plan

“Today there are 20 regions that have prepared their requests to include their justified propositions into the comprehensive plan. We would like the chamber [Federation Council] to become our partner in managing the implementation of the comprehensive plan. Support of the regional propositions will provide a shared benefit,” Dmitry Mezentsev, Chairman of the Council of the Federation of the Russian Federation Committee on Economic Policy.

Refinement of regulatory mechanisms

“The bridge across the Pur [river] is the case when a single paragraph in a road legislation can create a new bridge (it was approved in the first reading), when we will be allowed to build toll roads and roads without alternatives in Arctic. And people move around for free. Pay is only introduced for the facilities that do not exist today,” Dmitry Artukhov, Governor of Yamalo-Nenets Autonomous Area.

Long-term planning

“We have not six, but five years left for the implementation of the [comprehensive] plan. We need to discuss the next step. And we wish that by 2024 we will have the pool of projects, and we will be able to begin constructing rather than spend time and money on discussion and decision making. The next plan should be based on high-speed transportation lines,” Natalia Trunova, Vice-President, Center for Strategic Research.

Coverage in mass media and social networks

“The comprehensive plan is the dream of many generations coming true. The decision has been made to build a 70 kilometres long highway bypass around Volgograd. Now all automobile transport goes through the city. We have many such projects planned. Tell people about that,” Andrey Bocharov, Governor of Volgograd Region.