Budget resources are leaving the ports
It appears, further development of Russian port infrastructure will get no significant budget allocations. Amid the budget deficit, investors are proposed to look for funding sources other than the public purse. Several schemes are suggested: from concessions and “anchor zones” to investment duty.
When speaking at the 11th International Forum and Exhibition “Transport Week” in Moscow, Andrey Lavrishchev, Director General of FSUE Rosmorport told about 10 projects implemented through private-public partnership that increased annual capacity of Russian ports by 40 mln t. Implementation of 9 more PPP projects with total investments of RUB 17 bln is underway. They will let increase the capacity of Russian ports by about 70 mln t per year. Among those projects is the development of a passenger ferry terminal in Baltijsk and construction of a container terminal of 300,000 TEUs in capacity; construction of a coal terminal at Otkryty; construction of a coal terminal in Sukhodol Bay; reconstruction of port infrastructure facilities in the 2nd cargo district of Murmansk Commercial seaport; reconstruction of the access canal to Berths No31-35 at port Vostochny (SK Maly Port, LLC), reconstruction of facilities of Murmansk Commercial seaport’s 3rd cargo district; reconstruction of a grain terminal at the port of Novorossiysk; reconstruction and modernization of infrastructure facilities at the ports of Novorossiysk and Murmansk.
Besides, a concession mechanism is to be applied for implementation of projects on creation of dry cargo district at port Taman and terminal Lavna in Murmansk as well as reconstruction of Sollers terminal in Kaliningrad.
New instrument to inject in port projects is an investment duty planned for 14 ports of Russia. According to Andrey Lavrishchev, the list includes Big Port St. Petersburg, Primorsk, Ust-Luga, Vysotsk, Murmansk, Novorossiysk, Tuapse, Taman, Vostochny, Nakhodka, Vladivostok, Prigorodnoye, Vanino and De-Kastri. The funds will be used for investment projects aimed at the development of port infrastructure, there list to be determined.
According to Nadezhda Zhikhareva, deputy head of Rosmorrechflot, those resources should be used for the most urgent projects of high priority.
Port infrastructure development in the Arctic zone will be based on so called ‘anchor zones’ that will probably get financial support from a special fund. As specified by a draft law, anchor project is valued at RUB 100 bln minimum. As Marina Kovtun, Murmansk Region Governor, said at the Forum “Arctic: Today and the Future”, the draft law on anchor zones is not perfect when it comes to Arctic regions. The project on comprehensive development of Murmansk Transport Hub cannot be defined as an anchor project because it is implemented by several investors injecting less than RUB bln each, though total investments into the project exceed that amount. The project on construction of Kola Yard cannot be defined as an anchor project either. However, those projects are of high priority for the region development. Marina Kovtun believes that anchor project definition should be based on project significance rather than on the scope of investments.
Meanwhile, Russia has resources to invest in transport infrastructure though there few investment projects on the horizon. According to Yury Molchanov, Senior Vice President of VTB, potential investments in transport infrastructure of Russia is estimated at RUB 300 bln while VTB is ready to invest up to RUB 150 bln. Yury Molchanov says the number of potential investors exceeds the number of elaborated projects.
Anatoly Gavrilenko, head of Managing Company Leader, said in his turn, that a half-year horizon shows almost no projects for investments. Implementation of the existing projects has been postponed.
We would add that investment problems are associated not with money absence but with the lack of well elaborated and economically feasible projects. Besides, there is a trend of the state steering gradually away from direct financing of projects excluding the top priorities. Initiators of projects will be proposed to find non-budget resources. Therefore, investors will have to pay more attention to design quality and to feasibility studies, as well as to optimization of costs.