Expensive roads and their role in public-private partnership projects

Favorable conditions are gradually created for the projects of public-private partnership (PPP) in Russia. Concessional legislation is becoming more flexible each year and begins to adapt to many fields, qualification courses and whole education programs for future specialists are carried out for several years, positive experience of the projects is gained at different levels and in different fields. And though in Russia PPP is in its initial state, in comparison with other countries, it already stopped being a frightening abbreviation.

The basis for the development of PPP mechanisms are the demands of the government in a high-quality infrastructure — transport, communal, power and social. In the majority of the regions it either became out of date or is insufficient and doesn’t meet the demands of the population. Small investment volume in the transport branch for the duration of the last 20 years put Russia at 93-rd place in the world by the index of infrastructure quality according to the Report concerning the global competitiveness (World Economic Forum). The only competitive type of infrastructure in the Russian Federation, according to the opinion of the international community, is the rail-road system: by this index the country is at 31-st place in the world rating. It's no surprise, taking into account the territory of the country: the Russian Federation holds the first place in the world by the length of electrified rail-roads (43 000 km).

The main implementator of the projects with participation of private capital in the road-transport infrastructure is the government corporation “Avtodor”. Among the projects, prepared by the middle of summer in 2014, is the construction of auto-transport road parts ”Don”, new passby M-7 “Volga”, reconstruction of track part M-3 “Ukraine” and other projects.

National Association of Investors and Operators of the Road-transport Industry was founded by the initiative of “Avtodor” and with the support of Ministry of Transport of the RF in April of the current year. The main goal of the association — unification of the key professional players on the road infrastructure market, including both Russian and foreign participants of the market.

But, of course, there are projects in the road-transport infrastructure on the federal and regional level (not taking into account municipal one), in which GC “Avtodor” does not participate. Thus, earlier the company refused from participation in the project of the Eastern exit road from Ufa, with the help of which Bashkortostan Republic was planning to connect the federal tracks M5 and M7 through the city. But in summer of 2014 “Vnesheconombank” decided to participate in the project. The model of PPP, the participation in which they plan to become interesting for the business, should be prepared by “Vnesheconombank” by autumn. The Eastern exit road is planned to be carried out wholly at the expense of investors within the contract conditions for 35 years. The total volume of investments in the road is estimated as 25 billion rubles. The source of repayment will be, first of all, the road taxes (octroi), secondly, town hall will refund about 10 billions to the investor, by selling for construction purposes of 1,5–2 ha of land in Zaufimye, thirdly, the monetary means of the Transport Fund of the Republic should provide up to 2,5 billion rubles.

Concerning the large-scale projects in the field of rail-road infrastructure: e.g. at the beginning of 2015 the Administration of Saint-Petersburg is planning to announce tenders for the construction of three lines of light rail transport (LRT) on the basis of PPP within the concessional agreements for 20 years. The construction of the line Pulkovo — Kupchino is estimated as 16,5 billion rubles, Kirov plant — “Baltic pearl” and Rybatskoe — Kolpino — approximately as 9,5 billion rubles. According to the announced scheme of project implementation the city is obliged to provide land areas for the works and to carry out payment to private partner in order to ensure his minimal income. The concessionary is obliged to buy railway vehicles, to construct the line, to use and maintain it self-sustained or with the help of an operator company. By the expiration of the agreement the object’s property rights pass to the city. The construction of the line Pulkovo — Kupchino is planned to be finished by the World Soccer Championship in 2018.

The transport infrastructure is considered by the market players as the most promising for the implementation of PPP projects. According to the government programs these projects in the field of transport infrastructure will be mostly sponsored by the government in the upcoming years, due to the fact that already built federal projects provided a powerful progress pulse for the regions, and due to the fact that in this field the issue of risk distribution and investment repayment is the most profoundly elaborated.