Investments with an Eastern accent – Kommersant

The Eurasian Development Bank (EDB) at a meeting of the Association of Asian and Pacific Development Institutions held in Almaty invited Asian investors to join major projects implemented in the region, primarily the development of transport corridors, support for green energy and water balance. Their total need for investment over the next five years is estimated at $20 billion. The bank is counting on an influx of new funding from countries that have not previously been interested in the region: traditional methods of investing in infrastructure, like PPPs, have proven to be insufficiently effective for large cross-border projects.

The Eurasian Development Bank is counting on the involvement of Asian development institutions in large regional projects that cannot be implemented by individual national investors, the EDB proposal was made at an investment forum timed to coincide with the annual meeting of representatives of member countries of the Association of Development Institutions of Asia and the Pacific (Association of Development). Financial Institutions of Asia and Pacific). In total, it includes 91 financial institutions from 40 countries in Asia and Oceania, including such large ones as the Asian Development Bank and the Asian Infrastructure Investment Bank. The EDB became a member of the organization’s board of directors in June 2022. Recall that at the end of last year, the board of the Eurasian Development Bank approved a decrease in the share of the Russian Federation in the capital from 66% to 44.8% – now none of the countries has a controlling stake.

It is proposed to attract investments primarily in the construction of transport infrastructure (the key obstacle for it remains the lack of access to the sea and low connectivity of the countries of the region), in the modernization of the water and energy complex, as well as in the creation of infrastructure to ensure food security (in the region, an increase in the collection of agricultural crops is forecasted). one and a half to two times). At the same time, the total amount of necessary financing in the next five years is estimated at $20 billion, of which the EDB itself plans to allocate about $3 billion, said Nikolai Podguzov, head of the bank. So far, 90% of mutual trade between the countries of the region requires increased automation, including when performing customs operations and certification.

Separately, the bank plans to develop a green agenda, including solar and wind energy, as well as energy efficiency projects. The level of CO2 emissions per capita in the EDB countries of presence is almost twice the world average, more than 40% of emissions come from the energy sector, 16% from industry, and 12% from transport. Interest in such financing is also supported by competition in export markets – additional costs from the introduction of a carbon tax in the EU for Russian companies are estimated at $14.7 billion, for Kazakhstani companies – at $250 million, significant risks are associated with a reduction in available water resources. So far, the region is underfunded in terms of green investments – it accounts for only 4% of such investments by international development institutions.

The forum participants noted the lack of projects that meet the typical criteria of development banks – this is due both to the assessment of country risks and to compliance with the new agenda of international organizations (including in the field of green finance). The region’s infrastructure often lacks connectivity — home networks can be developed, but cross-border networks can’t, but cross-border projects are capital-intensive and harder to finance, said Sergei Storchak, senior banker at VEB.RF. According to him, problems arise when structuring transactions and choosing the ratio of different sources of funds. The participation of international organizations can improve the quality of projects and their credibility in an environment where the use of the public-private partnership mechanism is often limited due to the complex structure of financing and guarantees – such projects are more often implemented at the national level, Mr. Storchak concluded.

Tatyana Edovina, Almaty