Igor Shuvalov: ‘We Are Open for Joint PPP Projects, Investment in Schools, Hospitals, Public Transport and Clean Water’
Prospects for public-private partnership (PPP) projects were discussed today by participants in Russian PPP Week 2020, an infrastructure congress organised with support from VEB.RF. As emphasised by VEB.RF Chairman Igor Shuvalov, working in partnership is always more difficult, but VEB.RF does not strive to offer more attractive lending rates than commercial banks. “Instead, we enter into partnerships with them: we launched the Project Financing Factory programme, arrange loan syndications. We took up the modernisation of 100 Russian cities. We keep the door open for cooperation with everybody that wants to implement PPP projects and invest in schools, hospitals, public transport and clean water. We believe such big partnerships will help to convert the country’s economic potential into urban quality of life,” Igor Shuvalov said.
VEB.RF proposes to form partnerships to channel about 10 trillion roubles into economic development. A project was successfully completed to modernise urban public transit in Tver; work is well under way on building partnerships with Prosveshcheniye and Rosvodokanal. Promising areas are green financing and Smart City and Urban Tech solutions designed to improve quality of life and make cities sustainable.
Public involvement helps businesses to invest in projects critical to the country’s economy. According to Russian Deputy Prime Minister Marat Khusnullin, the goals for the next two years include attracting funding of about 500 billion roubles for the development of large infrastructure areas and about 500 billion roubles for road construction. “I’m very hopeful of cooperation with VEB.RF; I discussed the matter with Igor Shuvalov, and we agreed that the development institution should coordinate not only individual projects but also city development as a whole,” Marat Khusnullin said.
According to VEB.RF Deputy Chairperson Svetlana Yachevskaya, market participants discuss not only legislation during Russian PPP Week, but also its application and some practical experience of PPPs. “VEB.RF provides a platform for the interaction between federal, regional and municipal authorities and banks and investors. We at VEB.RF believe that infrastructure investment will become a driver of economic growth and higher quality of life. It’s very important to bear in mind not only financial but also social and environmental outcomes of PPP projects,” Svetlana Yachevskaya said.
From a regional perspective, PPP projects are an effective instrument for promoting investment in development, increasing tax revenue and enhancing quality of life. “We view PPPs as an opportunity to carry out infrastructural projects in the economy. This is about not only money, but also competencies. Udmurtia is ready for lots of PPP projects. Apart from injecting money into a project, the investor helps us by either taking on project management or participating in joint work,” Udmurtia’s Head Alexander Brechalov said.
The regions are interested in new mechanisms to encourage investment and implement significant projects. “The Monotowns Development Fund has successful experience. We partnered up with the Monotowns Development Fund to invest in infrastructure to create new jobs and new businesses. It’s a real-life example of how public investment increases tax revenue. If included in national projects, PPPs will be given substantial impetus,” Alexander Brechalov said. Samara Region Governor Dmitry Azarov is of the same opinion. He noted “the enormous potential of including PPPs in national projects”, adding that PPPs can be extensively used to build social infrastructure facilities: schools, sports venues and childcare centres.
First Tranches Paid by VEB.RF to Finance Construction of Ten LNG Carriers at Zvezda
VEB.RF has begun financing the construction of ten LNG carriers under the Arctic LNG 2 project. The VEB.RF Group had previously entered into shipbuilding contracts with the Zvezda shipyard and leasing agreements with SMART LNG (a joint venture between Sovcomflot and NOVATEK). The ten gas tankers are the final batch of 15 ships financed with the approval of VEB.RF’s Supervisory Board.
“VEB.RF paid the first tranches to finance the construction of ten new ships. We had previously signed contracts and made prepayments for five more gas tankers. It’s intended that the construction of the first tanker in this batch will start as early as this year, while the delivery is scheduled for 2023–2025. We signed documents and began to provide financing for all the 21 ships approved by VEB.RF’s Supervisory Board. Three of them are already under construction. The shipyard’s larger business portfolio brings added impetus to plans to develop the economy in the Far East as a whole,” VEB.RF’s First Deputy Chairman and Member of the Board Nikolay Tsekhomsky commented.
The gas tanker (ice class Arc7) is designed to transport LNG on a year-round basis in the ice-bound conditions of the Arctic. They have the ice-breaking capability to navigate in ice with a thickness of more than 2 metres. Fuelled by liquefied natural gas (LNG), the ships feature improved environmental performance. Zvezda’s new contracts will provide the basis for implementing the presidential decree aiming to create a cluster of shipbuilders in the Russian Far East, increase the local content of Russian-made products, build medium- and large-sized vessels, and manufacture marine equipment.
The Far East Development Fund (part of VEB.RF) finances the construction of residential houses for Zvezda employees in the town of Bolshoy Kamen.
As early as now, Zvezda is one of the largest employers in the Primorie Territory. The shipyard currently employs over 3,800 people. On reaching its design capacity (scheduled for 2024), the company is to have a workforce of 7,500.