Russian PPP market in 2020: six years retrospective
Six years’ timeframe, a period which coincides with a presidential term, may be a retrospective prism to analyse the PPP market in the road sector in Russia through the developments of its significant projects. Where they were in 2014 and where are they now in 2020.
In 2014 important beginnings for major federal level highways were sowed: (1) completion of the tender procedures for the M-11 project, a new toll road connecting Moscow and St. Petersburg with total CAPEX exceeding USD 8.6 bln; and (2) the launch of another significant project in the Moscow region – the Central Ring Road, a new 400 kilometre highway circle around Moscow with total CAPEX exceeding USD 5 bln.
It now feels like an appropriate time to circle back and reap the rewards of those beginnings. At the end of November 2019, the Russian president Mr. Vladimir Putin formally opened the M-11 road, remarking that “there’s never been anything like this in the history of road construction in Russia”. Around the same time, the final facility of the Central Ring Road project reached financial closing, meaning that the project cycle has legally and financially closed.
In light of these project accomplishments, we are motivated to look back at where we were in 2014, deconstruct the PPP mechanism and revise the key market trends and try to ascertain the future of highway and road PPPs in Russia.
Click here to read the full article which explores the issues listed below.
Investors: debt dominates capital
Risk allocation: pressure on equity investors
Legal structure defines investment strategy
Legal developments: 2014 – 2020
Future Outlook and Projects Pipeline
This article was first published in InfraPPP September, 2020.
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© Herbert Smith Freehills 2021