Irina Olkhovskaya: “It is significant to take due care of private investments”

In her interview with IAA PortNews, Irina Olkhovskaya, Director for Port and Railway Projects, UMMC OJSC, tells about application of public private partnership principle for implementation of the largest investment port project – Phase 3 of the dedicated coal transshipment facility.

- Ms Olkhovskaya, how was it possible to align related but different industries, stevedoring and railway ones, when executing an ambitious investment project. What were the tasks and how were they solved?

- Synchronization of private and state interests is a challenging task, but experience has shown it is realistic. The decision to invest in the development of Vostochny Port’s facilities was made in late 2012, immediately after the government’s decision on modernization of the BAM and Transsib railways. So, the business was given a bright signal to invest in construction of ports in the Far East.

As a result, Phase 3 of the dedicated coal transshipment facility put into operation in September 2019 will double the volume transshipped by Vostochny Port JSC to 50-55 million tonnes per year. It is the largest port investment project in the Far East implemented through public private partnership and exceeding RUB 40 billion.

Thus, stevedoring and railway projects have been initially synchronized. Actually, the BAM-Transsib state project allows for delivery of cargo from coal mining areas in the central part of the country eastwards while the business provides this project with a required cargo base and created hi-tech port facilities for transshipment of export cargo at the far end of the railway line.

When implementing the project on construction of Phase 3 of the coal terminal we obtained specifications from Russian Railways JSC. Together with Russian Railways we developed and approved the project on construction of public railway infrastructure facilities, the last, so called ‘green mile’.

As of today, Vostochny Port JSC fulfilled its obligations having built five railway tracks (the ‘Novy’ yard) thus increasing the number of tracks at the Nakhodka-Vostochnaya station from 7 to 12. Now, all railway tracks there are incorporated into the technological process of the station being used by more than six stevedoring companies. They handle different types of cargo (oil, containers, coal, etc.). So, railway tracks the construction of which was financed by Vostochny Port JSC is currently being used by Russian Railways to service the cargo flows of the entire Nakhodka-Vostochny hub.

That is our contribution to the common cause covering both the port and railway infrastructure. We have also built a 2,070-meter connecting line to link public and non-public railway infrastructure.

- Turning to you your experience, can you say it is possible to enhance investors’ interest to infrastructure projects?

- Obviously, it is crucial to retain investment rates for the economic development. Besides, the key vector of the state is not just towards attraction of investments but towards the maximum involvement of the private capital.

A new trend is being formed in the investment space of Russia. Earlier, between 2010-2017, it was generally one investor to make injections into the project and to manage it. Projects featuring a complex structure started appearing from 2018. Their implementation involve several high-profile, so called impeccable investors with a successful experience in infrastructure development. This approach expands the opportunities of investing in related industries in case of ambitious and complex projects.

Therefore, it is of high significance to take due care of private investments, facilitate the return from implemented private projects. Private investments is a replacement of accumulated income. If investor is sure its activities are treated with due care from the state and partners, it will continue investing and reinvesting in the economy of Russia.

Consistent, long-term and secure approach is crucial for a private investor.

- Do you think it is possible today to retain momentum of Russian Railways development programme involving stevedoring an coalmining companies? How will the reduction of investments in the eastern region affect the business?

- Evidently, rescheduling of Russian Railways development programme till 2025 in the part of BAM and Transsib modernization will have a negative impact everywhere. Meanwhile, Russian Railways assure of sufficient throughput capacity of railway lines guaranteed by special arrangements.

Nevertheless, reduction of investments in the development of the eastern railways is an alarm signal for the entire Far East, its territorial integrity and industrial development.

Railway infrastructure surplus is the nearest future priority. It is necessary to shape an infrastructure framework that will ensure the development of other sectors such as agriculture, iron & steel, extractive sector etc. Investments in infrastructure heat up the economy and production.

Interviewed by Tatyana Vilde.