The government increases spending on road construction and repairs to 15 trillion rubles under the five-year plan

The government is increasing spending on road construction and repairs: funding for the five-year road plan will increase from the current 13.2 trillion to 15 trillion rubles. There will be few new objects in the document, Kommersant’s sources explain, the increase is due to inflation and rising prices. At the same time, the government wants to almost double the length of expressways by 2030, most of which – about 7 thousand km – will be toll roads.

Details on adjusting the road plans were announced yesterday during the Avtodora industry conference by the head of the construction department of the Russian government apparatus, Maxim Stepanov. In June 2022, we recall that the government approved a road activity plan until 2027 with a list of the most important construction and repair projects for the economy on federal and regional roads with funding in the amount of 13.2 trillion rubles. At the end of 2022, the document was adjusted: financing remained the same, but some of the objects were postponed to a later date (“Kommersant” talked about this).

The draft of the newly adjusted plan was prepared by the Ministry of Transport, Rosavtodor, and Avtodor, Mr. Stepanov said yesterday, it should be approved by the end of the year. The plan will be extended until 2028, funding will increase to 15 trillion rubles, as follows from the official’s presentation. It is planned to annually bring about 30 thousand km of roads to standard condition through repairs, overhauls and reconstruction (the same as now). As for new roads, by 2028 it is planned to build 6.1 thousand km of highways (including by expanding existing ones), of which more than 1.9 thousand km are within the framework of the international transport corridor “Russia” (includes highways M -11, Central Ring Road, M-12, bypasses of Omsk, Novosibirsk, Kamsk, etc.) and more than 500 km within the North-South corridor (includes bypasses of Derbent, Makhachkala, Astrakhan, etc.).

New facilities will be added to the plan, but there will be “not many of them,” a government source explained to Kommersant: the main increase in prices will occur due to rising prices and inflation. The five-year plan will now be updated annually, with the document extended for a year, Kommersant’s interlocutor adds. A day earlier, Deputy Prime Minister Marat Khusnullin called on the regions to design new facilities in anticipation of the availability of additional funds for construction.

Maxim Stepanov also spoke about a longer term perspective. By 2030, the government plans to almost double the total length of expressways – from the current 6 thousand to 11-12 thousand km. Moreover, 7 thousand km of them will be tolled (currently 2.8 thousand km). This includes Avtodor facilities, regional projects and sections of federal roads, for the reconstruction and expansion of which extra-budgetary funding will be attracted (with a transfer to a toll mode, as was the case, in particular, with the M-1 Belarus).

The practice will continue when Rosavtodor reconstructs (or builds) a road on its own, and then transfers it to the management of Avtodor: this will happen with the Naberezhnye Chelny bypass, the new route from Krasnodar to the Krymsky Bridge, etc. A pool of such roads has already been formed and is being discussed, Avtodor head Vyacheslav Petushenko told Kommersant, without disclosing details. The point of the scheme is that the toll pays for the maintenance of the transferred road; budget money is not needed for this, Mr. Petushenko explained to Kommersant.

Increasing the length of toll roads will be “extremely difficult” in the current economic conditions, admitted Maxim Stepanov. “Rates are high, there is inflation, projects are becoming more expensive,” confirmed Konstantin Pesotsky, senior managing director of the key client lending department of Sberbank PJSC. He said that large banks are ready to provide 1–2 trillion rubles. to finance road projects, but for this the government must subsidize the lending rate. The expert suggested that due to the growth of oil and gas revenues, the volume of the National Welfare Fund will grow, which means that more can be taken from the fund for road construction.

Ivan Buranov