30 November 2011
Financing of PPP projects in Russia: recent trends

Russia’s competitiveness is dependent on quality of its infrastructure. Prime Minister Vladimir Putin noted that demand for new infrastructure amounts to USD 1 trillion. This being said, it is impossible to satisfy such demand without creation of investor friendly PPP climate. Besides, Russian financial system does not have such financial resources and they should be attracted from international financial institutions and key banks located outside Russia.

We have two options when it comes to infrastructure financing. First, use of state public procurement (goszakupki) with all their disadvantages (corruption, no transparency, use of rudimentary old technologies etc.). Second, use of Private Public Partnerships where private sector acts as co-investor in new infrastructure. In the second case private sector invests in new projects by means of equity contribution in shares of Project Companies (concessionaires); monies received from bank loans; and infrastructure bonds placed among key pension funds.