Russian Government to accept the transportation infrastructure development plan

Today’s Russian daily Gazeta reports that the Russian Government plans to invest as much as 7.3 trillion rubles (USD 234 billion) into the country’s transport infrastructure in the period 2013-2020. If the Government accepts the investment program prepared by the Ministry of Transportation, most of the allocated sum will be used for the construction and repair of the road infrastructure. The amount allocated by the Government represents a larger part of the total planned investment of 12.5 trillion rubles (USD 401 billion), with the balance of funding coming from the Federal Road Fund and non-budgetary sources. Although the article talks about the program covering the period up to 2020, it should be noted that the program available on the website of the Ministry of Transportation covers the period to 2030 and lists different figures.

According to Gazeta.ru, the Government will gradually increase transportation infrastructure financing in the mentioned period, starting from 661 billion rubles (USD 21 billion) in 2013 and ending with 1.4 trillion rubles (USD 45 billion) in 2020. In the mentioned period, the Ministry of Transportation plans to spend 4.7 trillion rubles (USD 150 billion) on capital investments, with another 2.6 trillion rubles (USD 83 billion) allocated for maintenance and 1.5 trillion rubles (USD 48 billion) going to research and development. The Program takes into consideration the necessity to develop transportation infrastructure related to the Youth Olympics in Kazan in 2014 and the Winter Olympic Games in Sochi in 2014, but does not include projects related to the 2018 FIFA World Cup that is to take place in Russia, as these have not been finished yet, nor any projects related to the planned relocation of Government offices from the center of Moscow.

The Program pays special attention to road construction and maintenance, for which it plans to allocate 1.96 trillion rubles (USD 63 billion), of which 137 billion rubles (USD 4.4 billion) will be spent on the development of highways on the basis of public-private partnership. As a consequence, the length of federal routes should increase by 7.5 thousand kilometers, with another 2.8 thousand kilometers of regional roads. The largest gap between the financing needs and actual commitments will be felt in the railway sector, for which the Government plans to spend 293 billion rubles (USD 9.4 billion), while the Russian Railways’ Institute for Transport Development estimated that the construction of a widespread high-speed railway network requires 4.4 trillion rubles (USD 141 billion) by 2030. However, there is a chance that this gap will be overcome after 2020, as the Program recognizes this need and proposes to fund some of the necessary planning. In the meanwhile, Russian Railways will rely on own financing for the planned construction of the high-speed railroad between Moscow and Tver regions (180 kilometers, estimated cost – 185.6 billion rubles, or USD 6 billion). The Ministry of Transportation estimates that by 2020 each Russian citizen will travel an average of 1.2 thousand kilometers by railroad every year, which will represent a 20 percent increase compared to 2012. Civil aviation infrastructure will receive 145 billion rubles (USD 4.7 billion) from the budget, primarily to support the development of international hubs (Sheremetyevo, Vnukovo and Domodedovo in Moscow and Pulkovo in St. Petersburg). The program calls for the reconstruction of 96 airstrips by 2020 and projects that the number of passengers on regional flights will double to 9.65 million in the same period. The Government plans to provide subsidies for the procurement of new aircrafts to Russian airline operators, which should enable them to purchase up to 470 new aircrafts.

Other news:

Russian news agency Interfax quotes a report by Emerging Portfolio Fund Research agency stating that the outflow of capital from investment funds active in Russia increased to USD 101 million in the period from November 15-21, more than doubling from USD 48 million in the previous week. Thus the outflow continues for the seventh consequtive week.

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