Public-private partnership projects to grow 30% by 2025

Moscow recently hosted a conference for leaders of the Russian infrastructure market, InfraSummit 2022. The event was attended by investors, concessionaires and private partners involved in infrastructure projects, representatives of executive and legislative government bodies, regulatory and oversight bodies, and the scientific community.

Participants in the 4th InfraSummit recapped the past year, shared their plans for the future and outlined market development trends. Many agreed that 2022 was a challenging year still opening up good opportunities for further development.

“Despite the difficulties, the infrastructure market demonstrates that its participants are not losing faith in themselves,” noted Artur Shcheglov, President of the Infrastructure Club National Association of Investors and Infrastructure Project Operators and Managing Partner of the Giperion Strategic Group. “I am certain that this faith, coupled with the state policy and further improvement of regulation will drive the infrastructure development forward.

According to experts, the number of public-private partnerships will increase significantly in the nearest future. When speaking at a session, Alexander Kirevnin, director of the Department of Financial and Banking Activity and Investment Development at the Ministry of Economic Development, noted the positive market development dynamics.

“Within the next three years, we are expecting a 30% growth both in terms of number and price of contracts,” Alexander Kirevnin said. “Investors are seeing stability in the mechanism of concession agreements which even in the current environment allows for making decisions and enter long-term projects. As for us, we are facing the task to create a transparent mechanism for both investors and the public party.”

The year 2022 has become a year of tram renaissance in Russia. The program of comprehensive development of the city electric public transit is in the active stage of implementation. Before the end of the year, concession projects will be launched in the first ten cities. The expected investment in infrastructure projects is RUR 231 bln. But the cities’ demand in contemporary public transit is much higher, so the program needs to be expanded.

There are also projects that are actively developing outside the program. One of the examples is the Pulkovo-Shushary-Kupchino tram line in St. Petersburg. According to Dmitry Pankratov, CEO of BaltNedvizhServis, the contractor company, this year’s changes in the country’s economy have not affected the project much.

“From the very beginning, we counted on Russian producers so that the sanctions that came into force this year have not affected our plans,” Dmitry Pankratov says. “Moreover, we are considering the possibility of building a tram line to the campus which will be built for the students of St Peterbsurg State University in the Pushkinsky District of St Petersburg, and Pulkovo Airport. As of now, 35% of those arriving in Pulkovo use public transit. I believe that the number will grow to 50% when there will be a fast and comfortable tram.”

State support happens to be timely. Thus, investment in Moscow’s economy exceeded RUR 1.9 tln in the first half of 2022 alone. According to MoscowCommissioner for Entrepreneurs’ Rights Tatyana Mineyeva, the government agencies adopted a proactive approach. In October, the Moscow Government approved the Targeted Investment Program for 2023-2025. It included, among others, plans related to the construction of transport infrastructure and social facilities, namely, 38.9 km of railway tracks and 18 metro stations, 216 km automobile roads, 62 kindergartens and schools, 30 parks, cultural facilities, and 27 sports facilities.

Moscow might become the first Russian region that adopts the concept of ensuring the accessibility of information about the private-public partnership projects. The standard for information transparency for socially important infrastructure projects is being developed by the Infrastructure Club.

“We are monitoring the implementation of public-private partnership projects in Moscow, but, unfortunately, we can praise only the Northern bypass route of Kutuzovsky Prospekt in terms to the optimal level of information accessibility,” Tatyana Mineyeva said. “The progress in all other projects has not yet been opened to public. I consider it practical to develop a list of minimal requirements to information accessibility both for government agencies and private investors.”

Obviously, this experience will be useful to the regions and areas where the state plays a smaller part in infrastructure development.

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