Concessionals in their business – Newspaper Kommersant No. 164 (7365) dated 09/07/2022

Gazprombank and Ruslan Baysarov’s Bamtonnelstroy-Most offered the government to conclude a concession to expand the Eastern test site without a tender. We are talking about the creation of facilities in parallel with the ongoing work of Russian Railways. The construction, according to the consortium, will not affect the existing infrastructure and will not require a traffic stop. The cost of the first stage of the concession in the consortium is estimated at about 550 billion rubles. But Russian Railways is cautious about the ideas of the consortium, considering it less risky to connect it to the next, third stage of the project and not along the main route, but along the branches.

The consortium of Gazprombank and Bamtonnelstroy-Most (BTS-Most) Ruslan Baisarov has submitted a concession initiative to participate in the expansion of the Eastern Polygon, said Pavel Brusser, First Vice President, Head of the Bank’s Infrastructure Projects and Public-Private Partnership Department, during the session “BAM and Transsib: how to build faster” of the Eastern Economic Forum. He urged the government to instruct the Ministry of Finance, together with the consortium, to work out and approve the sources and financing scheme.

The presence of private initiative, by law, enables the government to conclude a concession without a competition.

“Certainly, we are not afraid of competition,” Pavel Brusser assured. “According to our working group, the time that can be spent on competition can be from a year or more. According to various estimates, the country loses about 2 trillion rubles a year from the non-expansion of the Eastern test site.”

On the readiness of the consortium of Gazprombank and BTS-Most to take the expansion of the Eastern test site into concession “Kommersant” wrote on June 1. Then it was reported that the construction would allow reaching a carrying capacity of 260-280 million tons by 2035, and the potential concessionaire was ready to invest 1.5 trillion rubles. Now, Nikita Satyukov, deputy chairman of the board of directors of BTS-Most, clarified to Kommersant, the initiative has been filed only with respect to the most complex infrastructure facilities with the longest construction periods: “These are the so-called bottlenecks that urgently need to start expanding.”

Russian Railways is cautious about the use of the concession on railways and believes that it can only be applied to new facilities.

“A concession on the existing infrastructure is extremely difficult from an organizational point of view, because this is a line that is already on our balance sheet, this is a public line that involves the movement of freight and passenger trains, it is, by definition, more expensive, that is, less payable in terms of their financial parameters,” Andrey Makarov, Deputy General Director of Russian Railways, explained. As positive examples of the application of the concession, he cited the non-public Elga-Chumikan line and the planned Dzhalinda-Mohe railway border crossing.

“We worked in a working group with representatives of Ruslan Sulimovich (Baysarov.— “b”), there are proposals for the construction of new facilities that would not be included in the second stage of the BAM reconstruction, but rather in the third, that is, to achieve a carrying capacity of 240 million tons or more—now we are working on the second and third stages, these are 210 million tons in the perspective of 2028, maximum,” says Mr. Makarov. “Concession schemes can be used here, but this is the construction of new lines, branches from the existing infrastructure, which could be started in parallel.”

Nikita Satyukov emphasizes that within the framework of the consortium’s concession initiative, we are talking only about new facilities that do not imply a traffic stop. They do not intersect with the objects of the second stage of the BAM and the Trans-Siberian Railway, where Russian Railways operates, members of the consortium say.

The payback period of the concession depends on the final structure and terms of financing, which will be discussed at the negotiations of its participants in the near future, said Nikita Satyukov.

The payback scheme is not disclosed. Gazprombank’s presentation mentions “an acceptable diversifiable tariff that ensures return on investment and operation.”

Pavel Brusser told Kommersant that several options are being considered, they imply payback during the entire concession period. “The payback of this project should ultimately come from transportation,” he said. “How it will be, we have just started discussing it.” The volume of investments at the first stage of the initiative is about 550 billion rubles, Mr. Brousser said; the final grade will be determined by the results of the Glavgosexpertiza.

The Ministry of Transport believes that cross-border projects can also be included in the concession perimeter. “At the third stage, you need to look not only at BAM and the Trans-Siberian Railway – you need to look at cross-border projects, which are now also partially affected, so new railway lines with China, somewhere through Mongolia, are where concession initiatives take place, among other things. ”, says Deputy Minister of Transport Valentin Ivanov.

The head of Infoline-Analytics, Mikhail Burmistrov, believes that attracting private capital to the advanced construction of objects of the third stage of the BAM and the Trans-Siberian Railway is a positive story, in contrast to the transfer of objects of the second stage to concession, where construction is already underway for state funds and there are risks of delaying the commissioning of objects. But it will be very difficult to implement this design, the expert warns.

In his opinion, it is important to single out facilities that will provide economic efficiency so that their construction does not limit the capacity of the Eastern test site at the moment, does not create competition with Russian Railways for the labor and material resources of contractors, and synchronizes the commissioning of monopoly and concessionaire facilities. As a possible example, Mr. Burmistrov cites the construction of the Severomuysky Tunnel-2, which Russian Railways refused: if it was implemented, the consignor would have a choice whether to use the existing infrastructure or for a fee along the second alignment of the tunnel, built at the expense of private capital.

Natalia Skorlygina, Vladivostok