Press room


5 April 2012

The Russian Highways Held its First Road-Show in Paris

Road-Show (Vedomosti Newspaper, 02.04.2012)

The Russian Highways has offered 11 projects for foreign investors to take part in. Foreigners are interested in developing highway projects in Russia and not in participating in the ready tenders.

The Russian Highways, a State company, has held its first road-show in Paris. Last week, the Russian Highways submitted to potential investors a portfolio of highway projects for total value of 160 mln Euro to 3.7 bln Euro for a period up to 30 years; the share of borrowings in the projects will make from 20 to 50% (as per the Russian Highways’ presentation): total 11 tenders for construction or operation of sections of the new Moscow – St. Petersburg Highway, М-4 Don and М-1 Belarus Highways, the Central Ring Highway (CRHW), as well as Balashikha and Noginsk pass-by.

The nearest tenders should be held in the years 2012-2013: the Russian Highways is preparing to find out concessioners for two sections of the Moscow – St. Petersburg Highway, as well as operators for М-4 Don Highway.

The presentation was attended by representatives of about 30 foreign companies - concessioners, says Sergei Kalbach, CEO of the Russian Highways. The format of the event did not supposed achievement of specific agreements, he continues, but the Russian Highway’s managers have held a number of bilateral meetings with potential investors among which there are French Vinci, German Hochtief and Austrian Strabag. Visiting road-shows and conferences is a part of the company’s day-to-day operations and there is no point to draw any conclusions, - the Hochtief’s representative deliberates. The representatives of Vinci and Strabag have left the Vedomosti’s request to comment on the road-show results unanswered.

Foreign companies were most interested in the “preliminary contracts” (companies develop projects for participation in the tender themselves; the unsuccessful tenderers are compensated for the works. - Vedomosti), tells Kelbach, because a company is able to determine the project technical parameters and develop a financial model and hold consultations with the banks already in the early stage. For the moment, the Russian Highways has only one such a project from five existing ones (see the insert): the investment agreement for development of the project for Losevo – Pavlovsk bypass on М-4 Don Highway has been signed with JSC Institute “DorAeroProject’.

This was the first outside Russia event visited by the main participants of the international infrastructural market, says Olga Revzina, a partner to Herbert Smith (the road-show’s organizer): ‘The participants’ opinions were very positive’. According to Kelbach, the investors have obtained a confirmation from Igor Levitin, Minister of Transport, that the government will secure the Russian Highways’ obligations by government guaranties.

It is not difficult to attract funds necessary for the infrastructure under government guarantees, suffice it to look at the demand for the Russian Eurobonds, notes Mikhail Blinkin, Director of the Institute of Transport Economics attached to the Higher School of Economics: “However, nobody will venture to come at its own risk”. There are legislative problems, as well. Investors are interested in the replicability of projects, says Alexander Dolgov, Partner to Gide Loyrette Nouel; this requires a guarantee of investment payback and changes to the Budget Code, which will enable the government to undertake long-term financial obligations. Investors also wish to have their investments protected, he adds, and the current legislation legislates against referring disputes to the international arbitration.

Margarita Liutova