One of the key issues for infrastructure development in Russia is improving the state support system, experts are convinced. In particular, as Deputy General Director of DOM.RF Artem Fedorko noted at the Russian PPP Week, in the current conditions it is necessary to fine-tune subsidizing measures.
Infrastructure construction projects do not always quickly find investors, since they often have long implementation and payback periods. Therefore, according to experts, financial instruments are needed to attract liquidity to the market, reduce the cost of projects, and even out the risks of developers and investors. In Russia, infrastructure bonds became such a mechanism – one of the elements of the federal project “Infrastructure Menu”.
“Our mechanism has taken place: we see interest in it from the regions, and from developers, and from end investors. It is important that it develops and scales so that the increase in issuance volume and, as a result, liquidity leads to more accessible financing. At the same time, the size of the subsidy can be flexible, especially in conditions of a high key rate,” said Artem Fedorko.
In his opinion, for stable economic development, subsidizing instruments must be countercyclical in nature. In a situation where pro-inflationary risks are growing, interest rates are rising and the availability of loans is decreasing, government support through the mechanism of infrastructure bonds is logical, as it will provide stability to large long-term projects and maintain investor interest. At the same time, the amount of support required to continue the implementation of the DOM.RF infrastructure bond mechanism should be determined by the Ministry of Finance.
Earlier, Russian President Vladimir Putin, following a meeting on the development of the construction industry, ordered, by October 1, 2023, to provide budgetary allocations to finance the costs of specialized project finance companies to pay interest (coupon) income in the amount necessary to increase the limit on infrastructure bonds to 300 billion rubles
As the operator of the infrastructure bond program, DOM.RF issues securities on market conditions, the buyers of which are banks, insurance companies, non-state pension funds and private investors. Six bond issues have already been placed for a total amount of RUB 90 billion. The funds received are used for the construction of infrastructure for housing and urban development for a period of up to 30 years at a rate subsidized from the budget by the key rate. Financing has already been approved for 45 projects in 23 regions, the total amount of loans for them exceeds 145 billion rubles.
One example of the use of the DOM.RF infrastructure bond mechanism is the construction of a new tram depot as part of the Slavyanka line project in St. Petersburg. The future tram line, 21 km long, will run from Balkan Square through the village of Shushary to the Slavyanka microdistrict. This is a complex project that involves not only the construction of tracks and a modern automated tram depot, but also the construction of three bridges, four overpasses, stopping pavilions and final stopping points. DOM.RF will allocate more than 17 billion rubles for its implementation.
The project in St. Petersburg is the first in the infrastructure portfolio of DOM.RF, within which, through a preferential loan, not only the corresponding infrastructure will be created, but also 22 modern trams will be purchased.
Construction of the tram network has already begun, employing more than 1,500 people; companies from several related industries and the IT sector will be provided with orders. The work is planned to be completed in 2025.
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