Experts discuss the effectivness of various mechanisms for developing infrastructure

4 september 2018

"The poor state of infrastructure is a key constraint on economic growth in Russia. Meanwhile, the goal of creating top quality infrastructure was set at the highest level," said the Head of the Department for Strategic Development, Public Administration and Regional Policy of the Analytical Center Anton Steshenko as he opened a roundtable titled "Mechanisms for Developing Infrastructure in the Constituent Entities of the Russian Federation".

The expert is of the opinion that the main problem in the regions is the unpredictability of the decisions that are being made. "The way I see it we've got an information vacuum, the regions don't know what mechanisms are being developed at the moment and when they will be introduced. So today we're going to talk about the new approaches to developing infrastructure, which the federal executive authorities are currently working on," Mr Steshenko said. The main innovation is Federal Law No. 222 of July 19, 2018. The law added Article 179.5 to the Budget Code to establish a development fund; the new article is set to go into effect on January 1, 2019. The expert noted that the development fund is a portion of the federal budget to be spent on budget allocations to provide financial support for state programs in accordance with the procedure established by the Government of the Russian Federation. The maximum amount of the development fund will be set annually by the federal law on the federal budget for each fiscal year and for the planning period until it reaches 3.5 trillion roubles in 2024.

Mr Steshenko also talked about the economic effect of suburban development achieved as result of improvements to suburban traffic. "When two agglomerations merge, we see a sharp increase in economic performance in both centers and in the adjacent areas. Meanwhile, the towns that are on the express way get closer in terms of travel time to both centers and get additional benefits through that," the analyst believes.

Stanislav Efimov, Deputy Head of the Department for Strategic Development, Public Administration and Regional Policy of the Analytical Center, talked about the experience of the Khanty-Mansiysk Autonomous District – Yugra in the implementation of infrastructure investment projects using public private partnership mechanisms. According to the expert, the region has been actively using private public partnerships and concession agreements. For example, a private public partnership scheme organized in accordance with Federal Law No. 224-FZ was used in the construction of the Surgut District Clinical Center for Protection of Motherhood and Childhood, while when it came to the creation of the first intercity land fill in the Nefteyuganst district, a concession agreement was entered into which significantly reduced the amount of money that the autonomous district had to spend on the project, while improving the quality of construction of the property.

Aleksey Altyntsev, Adviser to the Deputy Governor of the Arkhangelsk Region, noted that the situation with federal financing in their region is somewhat worse than on average across Russia. So they too are now promoting public private partnerships and concession agreements. "We've developed 35 projects, the vast majority of which are concessions in utilities at the municipal level," the expert said.