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National Projects Need Public-Private Partnership

25 April 2019
Нацпроекты нуждаются в государственно-частном партнёрстве

This assertion was made in the analytical report ‘ROSINFRA. Simple and Honest about Investment in Infrastructure and Public-Private Partnership in Russia’, which was specifically prepared by the PPP Development Center for the 6th Russian PPP Week Infrastructure Congress. As part of the study, experts tried to depict the situation with the development of global infrastructure and the main trends for the next few years.

The review focused, in particular, on the national projects that are being implemented in Russia, which have become policy documents for the country over the next five years. Russia is currently spending 2.8% of GDP on infrastructure, but this spending should reach 5% by 2024 so as to prevent a deficit. In absolute terms, the country needs to spend RUB 25.9 trillion over the next six years. A total of RUB 25.7 trillion has been earmarked for 13 investment projects, including extra-budgetary funds of RUB 7.7 trillion. However, infrastructure does not count for all national project funds. According to expert estimates, only RUB 15.3 trillion may be directly spent on infrastructure development.

Given the shortage of budget funds, experts believe it would be logical to actively utilize public-private partnership mechanisms. But it seems officials have completely forgotten about PPP in the structure of national projects, the experts say. Of course, there are extra-budgetary sources in the national projects. But, first of all, these are funds from state-owned companies, such as Russian Railways and Rosatom, and second, PPP mechanisms will not necessarily be utilized even if the money is coming from an «ordinary» private investor. All projects can be divided into two groups. The first is directly funded from the federal budget. The second is funded from the budgets of the regions, including the use of inter-budget transfers from the federal budget. Neither the first nor the second group has clear rules for spending money through PPP mechanisms. Rather, on the contrary, the rules are spelled out in the logic of direct budget investments.

However, there are still exceptions, for example a concession will be used to build a coal terminal at the Lavna port in Murmansk. Another terminal may be built in Taman using the same mechanism. In order for PPP mechanisms to work on a massive scale within the framework of national projects, transparent and understandable rules first need to be created for their funding, experts say. There are national projects that have almost no declared extra-budgetary funds in healthcare and education. That means these policy documents do not rely on PPP in principle. At the same time, Russia has already gained decent experience in utilizing PPP in these sectors.

«Our country already has successful experience implementing projects of national importance using public-private partnership tools. It is essential to expand this experience to other sectors of the economy and make the institution of PPP more efficient and transparent for both business representatives and government agencies. Expanding the practice of using PPP tools will significantly speed up the implementation of investment projects», Advisor to the Russian President Anton Kobyakov said.

Over the past year, 353 projects have been implemented using PPP mechanisms, which is 33% less than a year earlier. However, the volume of private investment, by contrast, increased to RUB 451.7 billion in 2018 from RUB 247.5 billion in 2017. This growth was mainly due to two mega-construction projects — the Elegest-Kyzyl-Kuragino railway line (RUB 126.6 billion of private investment) and the Northern Latitudinal Railway (RUB 103 billion). A total of 3,422 contracted PPP projects with total private investment of RUB 2.182 billion are currently being implemented in Russia.

According to the Center’s estimates, preparations are under way to implement another 302 potential PPP projects in the country with total investment of RUB 1041.1 billion. A total of 283 projects with private funds of RUB 166.3 billion are already at the tender stage. More than a thousand potential projects that could use PPP mechanisms are at the initiation stage. In monetary terms, these projects are worth more than RUB 3 trillion combined.

The 6th Russian PPP Week Infrastructure Congress is taking place in Moscow from 23–26 April. The event is being organized by the PPP Development Center and the Roscongress Foundation with the participation of the relevant federal ministries and the support of the Russian Government’s Analytical Centre, the Chamber of Commerce, Business Russia, and the Agency for Strategic Initiatives. Sberbank is a General Partner.

To view the detailed forum program please visit

Venue: Digital Business Space, Moscow, 47 Ulitsa Pokrovka

Contact Information:

Tel.: +7 (495) 988 7713

Email: [email protected]

Telegram: ROSINFRA