The construction of high-speed railways in Russia is stimulated not only by the mobility need, but also by the positive economic effects. As Moscow-Kazan high-speed railway is part of these projects, its (cumulative) economic effects include the increase of GDP (in 2019-2030) to RUB 7.2 Trillion (USD 202 Billion), the additional operation tax revenues will generate RUB 2.3 Trillion (EUR 46 Billion) and will generate 373 thousand jobs. Moreover, the railway will connect several areas of Russia whose population represents 20% of that of the country. Each locality where a station will be built (a total of 14 stations) will be transformed by developing mobility, the business environment, by generating jobs (for infrastructure-related services) and by integrating different business areas. “We support the project and we are aware of its contribution not only to organising transport connections and improving accessibility, but also to the development of the country’s economy”, declared Deputy Minister of Transport Alexei Tsydenov.
The entire project of the high-speed railway includes the construction of the railway that connects Moscow to Yekaterinburg. The first phase consists in the construction of Moscow-Kazan railway (770 km) that would cross several regions in Russia: Moscow and its region, Vladimir and Nizhny Novgorod, Tatarstan and Udmurtia. In March, through the decree signed by Prime Minister Dmitry Medvedev, Moscow-Vladimir-Nizhny Novgorod-Kazan railway was included in Russia’s land planning scheme. Under the document, changes occurred in the land planning scheme in the transport segment (railway, air, maritime and naval), as approved by the government in March 2013, including Moscow-Kazan railway, which will be 770km long. The scheme includes the construction and reconstruction of railway stations and the separation of railway development points, including for three stations: Kursk (from Moscow), Moscow Station (from Nizhny Novgorod) and terminal 2 (from Kazan). Another 9 stations, three passageways and 17 dispatch centres will also be built. According to plans, the railway, requiring investments estimated at RUB 1 Trillion (USD 27.5 Billion), could be commissioned in 2018. “We are interested in building Moscow-Kazan railway and to complete the project before the launch of the 2018 FIFA World Cup. It will become an important component of the transport service, especially since it will provide connection between three World Cup host-cities: Moscow, Nizhny Novgorod and Kazan”, declared Rustam Minnikhanov, President of the Republic of Tatarstan.
Foreign investors
Foreign investors could be concessionaires during project implementation. This is the first largest railway infrastructure project in Russia to be developed through PPP, using the concession mechanism that will help build an efficient interaction between all participants. So far, the project has passed several stages of evaluation regarding the benefits of its implementation from the state’s point of view.
According to initial estimates, the project would have required RUB 928 Billion (USD 25.5 Billion). However, recent estimates have been adjusted to RUB 1 Trillion (USD 27.5 Billion). As part of the financing scheme, over RUB 300 Billion (approx. USD 8.5 Billion) or 30% of the total amount will be directly allocated by the state, 31% will be ensured by RZD, the Pension Fund and the National Welfare Fund. Also, the private companies interested to participate will have to ensure a quarter of the total financing using own funds or loans, while 14% could come from the loans of private companies issued in conformity with government guarantees.
The railway construction project is divided in four sections built simultaneously. RZD will build the first section of 197 km (Moscow-Vladimir), while the other three sections will be built by consortia or private companies part of concession agreements.
“In such projects, foreign companies prefer participating as part of consortia which also include Russian companies. Potential investors interested in this project could include a French consortium (Alstom and Bouygues Construction) and a German consortium (Siemens and Strabag). Moreover, potential investors have their own agreements, including with banks, among which VTB, Sberbank and Gazprombank. Chinese companies have also expressed interest, their implication being considered as well”, declared Alexander Misharin, Vice President RZD, at the beginning of the year.
In March, RZD presented the Moscow-Kazan railway project to companies. Companies such as DB International, Siemens, Alstom, Hyundai, Mitsubishi Electric, Vinci, Bombardier, Vossloh, Systra, Italferr, Bouygue, Salini-Impregilo, Finmeccanica and Thales attended the seminar. They were joined by financial institutions such as EBRD, UBS, Deutsche Bank, FitchRatings, Sberbank, Asian Development Bank, the Russian Direct Investment Fund, VTB, Gazprombank and others.
According to the declarations of RZD Vice President Alexander Misharin (February 2014), several German companies are interested to participate in the deve-lopment of Moscow-Kazan high-speed line. German companies such as Siemens, Deutsche Bahn, Deutsche Bank have joined forces and formed “the German Initiative”, “the main objective being to promote the high-speed railway project using German technologies, including financing technologies”, said Misharin.
10 consortia have been created and are now ready to continue negotiating on the implementation of the project.
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