MINISTRY OF TRANSPORT OF THE RUSSIAN FEDERATION

1
MINISTRY OF TRANSPORT OF THE RUSSIAN FEDERATION

• Modernisation of the Russian transport
  infrastructure by the means of
• Concessions, B-O-Ts, P-P-Ps
• Current challenges and developments

2
Results of the Russian transport industry in 2004

• The volume of freight has grown 1,8 y-o-y and
  exceeded 1,17 billion tons, including growth
  (y-o-y)
• - on internal waters by 8,2 ,
• - on air by 5,6 ,
• - on automobile and railway by 5,2 .
• Volumes of cargo handling in the seaports
  increased by 23,4 and amounted 355,9 million
  tons.
• The overall passenger turnover has increased by
  3,9 . The most significant gain of passenger
  turnover has been reached (y-o-y)
• on air transport by 16,6.
• on railway transportation by 4,1
• on bus transportations by 1,6.

3
Transport infrastructure needs for financing

• The minimal volume capital investments to
  maintain the current technical infrastructure is
  20 billion EURO. (about 4 of GNP)
• According to the financial plan of the Strategy
  for development of transport of Russia up to
  2010 , volumes of participation of the federal
  budget will not exceed 1 of gross national
  product, that completely corresponds to a world
  practice.
• How to offset to 14 billion EURO of the deficit
  every year???

4
Selected highly effective Projects

• Construction of a high-speed highway
  St.-Petersburg-Moscow with continuation up to
  Helsinki, West Speed Diameter in St. Petersburg,
  the Central Ring highway in Moscow
• Bridges transitions through r. Volga in
  Volgograd, r. Kama in Tatarstan, r. Angara in
  Irkutsk
• Sheremetyevo and Domodedovo airport hubs -gt
  large inter- and intra-modal transport complexes
• From the list fof 150 projects, that are bind
  for federal financial support.

5
Mechanisms of interaction with an Investor

• 1. Proportional (joint) financing of significant
  projects (direct financing and issue of warrants,
  participation in equity capital of the operating
  company
• 2. Project bonds, covered by sovereign guarantee
  or Credit Linked Notes
• Granting of the right of rent of the ground areas
  adjacent to objects of a transport infrastructure
  to the investor
• Tailored risk management for a specific investor
  by warranting service of a duty for the period of
  construction of object or subsidizing of the
  interest rate (especially for socially
  significant projects with low returns -gt can be
  compensated to the investor after erection of
  object in 100 volume)
• investments of resources of the Pension system in
  transport infrastructural objects
• co-financing a transport infrastructure by
  consignors or end-users of transport services
• 7. off-budget guarantees, i.e. granting of the
  right of increase in the tariff or prolongation
  of term of the agreement in case of absence of
  sufficient investments for a reflexivity of cash
  flows.

6
Pre-Conditions for introduction of P-P-Ps and
concessions within the Russian transport
infrastructure

• Completion of legal environment and effective
  enforcement of law
• Introduction of perspective 3 years plans for the
  Capital Investments Part of the Federal Budget
• The decision on allocation of land for
  infrastructure projects
• Development of a estimation procedure of social
  and economic (public) efficiency and
  Cost-Benefit analysis of the infrastructural
  investment projects considering multiplicate
  effect
• Investor Support through Foreign Investment
  Advisory Council and other public institutions
• participation of a bank(s) targeted to National
  Development (as partners Ministry of Transport
  considers such Russian credit organizations as
  VNESHTORGBANK, Sberbank, Mezhprombank)

7
Creation of legal base

• Adoption of new federals laws
• On Concession agreements,
• On paid highways,
• On the international (second) register of
  vessels
• On highways
• Development and Adoption of a federal law on
  reservation of land for construction and
  reconstruction of road-, water-, railway-, air-
  other types of transport infrastructure in the
  Russian Federation
• Creation of statutory acts on introduction of
  taxation and tax regulation modes during
  realisation of Public-Private Partnerships in
  transport infrastructure
• Creation of statutory acts on customs
  registration and the border controlls
• New statutory acts on financing construction and
  maintenance of national and regional grids of
  highways

8
Toll Roads and Toll Bridges

• It is possible to allocate three basic groups of
  objects of state-private partnership
• 1. Main highway with high intensity of movement
• 2. "Roads of development " - highways which are
  under construction for revival of economy of
  regions or with a view of development nowadays
  inaccessible deposits of natural resources
• 3. Curing of "narrow" places by automatisation
  systems and proper policies and procedures

9
Motivation Factors for the parties of the
agreement

• Limited resources of regional budgets
• The organization of non-budget financing under
  condition of the servicing debt (attracted loans)
  within construction by the means of regional
  budgets
• Key Success factors for the financing party
• Involvement of the state (additional guarantees
  to creditors)
• Realistic estimation of transport streams and
  tariffs
• The control of costs during construction (through
  participation by the Bank and the state in the
  equity capital of the company-operator)
• solvency of created system-gt 1) operation of
  object on a paid basis, 2) Possibility to achieve
  additional income from rental of objects of a
  roadside infrastructure and the sale of rental
  rights)

10
The Project Completion of the bridge cross the
Volga river in Volgograd

• Construction of the first phase of the Project
  the bridge road within the city of Volgograd -
  7,1 km.
• The Completion ratio of the bridge and the
  Estacada of road - more than 40
• Nessesary for Completion - 7,5 billion RUR.
• VNESHTORGBANK is considered as a private party to
  the Concession and arranger of financing of the
  Project

11
Strategic location on crossing of corridors
"North-South", "Ukraine-Kazakhstan" " Volga-Don
channel
12
The Project completion of the bridge cross the
Volga river in Volgograd

• Financing
• 
  
• Total financing is done as required by the
  General Contractor in Million RUR
• 2000 (in 2005) 4300 (in 2006) 700 (in 2007)
• Financing of Capital Needs by the Federal State
  is done under condition of a parity (Equal)
  financing from the region.
• The Bridge will be used on a Toll basis. Terms of
  realization
• the beginning of construction
  (completion) 2005
• the launch of operation 2008

The federal budget
The regional budget
LOANS
13
Capital Investments Budget of the Project

• Residual costs of the Project on 01.01.2005 - 6
  636,1 million RUR, coming from
• The federal budget - gt up to 3,400 million RUR
• The regional budget -gt up to 3,400 million RUR,
  of which
• up to 3,500 million RUR attracted by the Regional
  Administration from banks and up to is 790
  million RUR is included in the Regional Budget as
  the service of interest expenses until the date
  of the Project Launch.
• Total costs including cost of external financing
  - MAXIMUM-gt 8,300 million RUR
• Calculations done in the view of interest rate
  of 16

14
Organisational structure of the Project
Trustee
15
Financial Feasibility of the Project

• Simple time of payback period of the project 6
  year and 1 months (from the moment of the
  beginning of operation)
• Net present value (NPV) 7974,7 billions RUR
• Profitability index (PI) 3,5
• Income base 1 bln RUR year, the toll income
  income from the sale of rental rights
• Prognosis intensity of movement 20500 cars a
  day
• Low maintenance expenses due to automatic systems
  of toll collection
• Retun of investments remain positive even at
  traffic of 15000 cars a day and 50 RUR per car of
  toll fee

16
Aggregated financial model of the Project
17
MINISTRY OF TRANSPORT OF THE RUSSIAN FEDERATION

• Julia V. Zvorykina
• Councilor to the deputy Minister
• 1/1, Rozhdestvenka str.,
• Moscow, 109012, Russia
• Phone[phone]
• Fax [phone]
• Zjulia_at_isr.ru