KEY CONCLUSIONS
Investment is flowing into the regions of the Far East
«At present, we have 30 projects on the go at a total value of RUB 250 billion. 12 of the projects are worth RUB 180 billion and are infrastructure projects aimed at investors, and the other 18 are worth RUB 66 billion and are focussed on social services,» Deputy Minister of the Russian Federation for the Development of the Far East and the Arctic Anatoliy Bobrakov.
«The Amur Region is currently experiencing a real investment boom. More than USD 20 billion is being poured into investment projects in all fields of endeavour, and the projects are being carried into effect. Of course, it is important that the infrastructure be able to keep up with such active investment development. Engineering infrastructure too, but first and foremost the social infrastructure,» Director of the Amur Region Investment Promotion Agency Pavel Puzanov.
«Up to now, we have traditionally focused on four different areas: airports, ports, toll roads, and logistics. I can say that over the past year we have added three more areas to the existing ones: waste processing, social infrastructure, and metro construction. In principle, we have significantly expanded the volume, so to speak, of our investments and the scope of their application. As for the Far East region, we presently see it as a priority region for our own investments,» Chief Executive Officer of VTB Infrastructure Holding Oleg Pankratov.
The Far Eastern Concession creates new opportunities for development
«The task of the Far Eastern Concession is to involve investors in the process and have them create infrastructure on their own, as it were. As far as I understand, however, investors’ expenditures will ultimately be reimbursed by the state anyway. Precisely therein lay the goal and the incentive behind the Far Eastern Concession», Managing Partner and Head of Infrastructure & PPP Practice in Russia and CIS, Central Asia and Caucasus at Squire Patton Boggs Alexander Dolgov.
«The Ministry for the Development of the Far East can allocate approximately RUB 25 billion a year to create infrastructure. There are many projects, more than 6,000 have been implemented to date, with RUB 2 trillion invested, and RUB 4 trillion is still to come. Projects need infrastructure. Business needs infrastructure, and so do social services,» Deputy Minister of the Russian Federation for the Development of the Far East and the Arctic Anatoliy Bobrakov.
«Of course, one of the primary and probably most important aspects of the Far Eastern Concession is compensation of up to 100% for estimated site cost in the long term,» Deputy Minister of the Russian Federation for the Development of the Far East and the Arctic Anatoliy Bobrakov.
PROBLEMS
A lack of social infrastructure is a hinderance to many projects
«Social infrastructure is of vital importance to the Far East. If people are fleeing the region, how can we motivate them to stay here? They need the right social infrastructure: health care, education, and everything in between,» Chief Executive Officer of VTB Infrastructure Holding Oleg Pankratov.
«Infrastructure in the Far East is more than large infrastructure projects: it is also socially oriented projects, projects in housing and communal services. And in this regard, it should be noted that different banks have different views on what projects to finance, and what amount makes a project interesting to them,» Managing Partner and Head of Infrastructure & PPP Practice in Russia and CIS, Central Asia and Caucasus at Squire Patton Boggs Alexander Dolgov.
«We are currently moving together with the governors on issues related to the modernization of urban heat supply systems. The question of heat supply is especially pertinent for the Far East, more pertinent than in other parts of Russia,» First Deputy General Director and Member of the Management Board at RusHydro Roman Berdnikov.
Concession timeframes and the conditions of state support do not always suit investors
«Investors are given the opportunity to finance infrastructure at the expense of the state, but the state does not act without a delay. And the investors end up paying for the delay. They have to bear the interest burden in its entirety. And there is a lot of discussion right now about what this burden will ultimately be. The timeframe for the concession is up for discussion, whether it will be ten years or thirty. Investors want it to be ten, to only have to deal with the interest for ten years, but the authorities want it to be thirty, because that way it’s easier to carry out a greater number of projects,» Deputy Chairman and Member of the Management Board of VEB.RF Yuriy Korsun.
«At present, we are dealing with mechanisms for additional support coming from the Russian Federation among others for infrastructure projects: so-called infrastructure loans, which behind the scenes people would call infrastructure mortgages. But it seems to me that the criteria are not applicable in this situation for the Far East. One of the main criteria for determining the amount of support is population. You know what population density is like in the Far East,» Chairman of the Board of Directors of National Transport Concessions (VIS Group) Dmitry Pronchatov.
SOLUTIONS
New tools to support and attract investors
«We have developed an amendment to the Regulation on the Ministry for the Development of the Russian Far East that allows the Ministry to act as a grantor for the entire spectrum of infrastructure specified in the Law on Concession Agreements. At the same time, a well-known instrument known as the ‘single subsidy’ was restructured slightly so that it would be possible to establish long-term limits with respect to the budgets of the constituent entities of the Russian Federation. This is necessary for providing funds to ensure payment of obligations under concession agreements at the regional level,» Deputy Minister of the Russian Federation for the Development of the Far East and the Arctic Anatoliy Bobrakov.
«It’s no secret that together with an investor we can generally make any medium-sized concession in literally an hour and a half with the use of a tool that we call a concession constructor. It works in relation to a specific site,» Vice President of Sberbank Mikhail Chachin.
«We have created a community called the Investment Accelerator, which is administered by the Far East Development Corporation. We have already held two meetings for the Investment Accelerator. In just two meetings it has become evident that we have a rather effective tool for finding a project initiator,» Deputy Minister of the Russian Federation for the Development of the Far East and the Arctic Anatoliy Bobrakov.
For more, see the Roscongress Foundation’s Information and Analytical System roscongress.org
