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25 may

Infrastructure: money are not enough

Development of transport infrastructure demands tens of trillions of government and private investments. But it's possible to solve same tasks with less volume of financing if directions of investment will be chosen carefully.

Even despite huge assets which was spent on improvement of transport connection between regions in soviet era the transport infrastructure is still underdeveloped and demands for considerable investments. It was voted by participants of 2nd Transport-Logistic Forum of Eurasia held by “Vedomosti”. The transport system is still archaic: the layout of roads in European part of Russia repeat the layout in Russian Empire. In fact, their topology hasn't changed for the last 100 years — all them converge in Moscow, said categorically Mikhail Blinkin, the research advisor of research institute of transport and road facilities. The same sort of thing are in other modes of transportation. For example, 80% of air transportation in Russia go through Moscow which  distinguish Russia from other countries, the expert notes.

The government thought about the necessity of transport infrastructure development as early as before the crisis and in autumn 2008 approved the strategy of Russian transport sector development till 2030. According to this document it is necessary to invest 170 trn rubles in transport development for the next 20 years. Almost by 60 trn rubles from this sum had to be invested in railway and motor transport and 21 trn rubles — in airlines. With that was suggested that 60% of these sums are financed by the government and other — by private investors. But wants of the sector have raised from that time. For example, the project of high-speed railway lines arrived. They have to connect Moscow with St Petersburg, Nizhniy Novgorod, Kazan, Samara and Ekaterinburg by 2018. The cost of only one trunk between Moscow and St Petersburg is about 10 bln euros, estimates Denis Muratov, the General Director of JSC “Skorostnye Magistrali” (the subsidiary of Russian Railways which works on the project).

Without government participation infrastructure projects are unlikely could be financed and the main role here is played by state development institutes such as VEB, considers Alexander Avanesov, the partner of Strategy Partners consulting company. But government needs to attract private investors, notes the expert. Moscow began to use such approach. Recently all infrastructure of the capital was funded from the municipal budget but the current administration of the city is eager to engage private investors in subway building and in reconstruction of the Lesser Ring of Moscow Railway as a passenger line. Such investors are always exist, he gives examples.

The high-speed trunk between Moscow and Petersburg will be built with use of Private Public Partnership scheme. RR offers to use the Lifecycle model. In this case the consortium of investors should be chosen to attract long-term financing, build a trunk and operate it during 30 years gaining income: up to 70% of all sum  have to be received from the government, explains Muratov. Investors have an interest. Right now consortiums are creating in China, Germany, France and Korea. The are eager to participate in the tender of this trunk building. The transport infrastructure is invested incompletely, summarizes Nikita Mishin, the Chairman of Global Ports board. But it also means the existence of a potential for the business development. Despite long payback of infrastructure projects and high investment threshold the business see the attractiveness of this sector which provides relatively high refund on contributed capital, he notes.

Money can't buy happiness

But a man can do no more than he can and the government needs to set out the priorities, considers Helmut Mutig, the head of a department of ZF Passau GmbH. It's necessary to choose the most important projects within sums the government can afford, let it be only one or two trunks. China went this way, he points.

The problem of infrastructure development can't be solved only with big money, all the more if there are no such money and investors don't risk to invest in projects with a multi-year payback and not so high earning capacity. Many transport problems can be solved without huge inflows in the new construction. One of the most spectacular examples is implementation of Bus Rapid Transit system in cities (BRT, the rapid bus service). The case is making of special lanes for buses on city highways, building of special halting points (where passengers can pay fare; it allows to hasten mounting and dismounting) and smart system of traffic control (for example, it orders automatically guided traffic lights to turn green as fast as it possible on direction where a bus stands). The cost of such systems is much lower than building of a subway or organization of commute service, Mutig argues. Thus, for $1 bln about 7 km of underground or 15 km of surface railways can be built which will transport about 15 000 passengers per hour in one direction; or you can create 400 km of BRT infrastructure with capacity up to 38 000 passengers per hour. 

In Russia the gap in cost between BRT creation is even bigger: if the creation of 1 km of Bus Rapid Transit infrastructure can cost 1-6 mln rubles then 1 km of subway costs 50-200 mln rubles, points Oleg Pechenezhskiy, the Managing Director of Bus department of GAZ Group (lobbies the creation of BRT in Russia). Furthermore, the speed of BRT infrastructure creation is 2-3 times higher than speed of a subway building, he adds. According to GAZ Group the speed of buses after launch of a full-scale BRT system can be raised up to 45 kmh and the volume of ridership — in 6 times. According to Pechenezhskiy St Petersburg is planning to implement such system. Other big cities are also interested in it. In Moscow the creation of a full-scale BRT system is not prescribed in recently approved transport program up to 2016.

Opposition is unavoidable

But in any case investments in solving of transport problems will be essential. To find money for it the government and private investors necessarily have to either increase infrastructure use tariffs (for example, through the raising of gasoline excise tax or transport tax) or increase a price of a ticket if the case is railway transportation, experts consider. Transporter can hardly pay for a bus park if the fare is limited by 9 rubles as in Kemerovo region and it is much more possible in Moscow or St Petersburg where a ticket costs 25-28 rubles,  Pechenezhskiy considers. Maybe the government should recommend  to regions a passenger-fare level on transportation which can make it pay-your-way, he considers.

However, this way is connected with political risks. In London they was also expected but nobody was frightened, says Steve Kernes, the representative of London Transport Department. In 2003 London limited the access to the city center for private owner-drivers which became the motivation to use public transport. Traffic jams in the British capital had been decreased very fast and the speed of movement increased notably; in a pair of years after enactment of limitations these measure was supported by 70% of London citizens while in the beginning of the project — by half of them.

Source: “Vedomosti


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