A single list of investment projects is required for reliable forecast

2 november 2018

A single list of investment projects is required for the reliable forecast of the country's economic development. That's the conclusion drawn by the participants of a round table "Considering regional investment projects for assessment of demand for electricity". Analytical Center experts have compiled a database of 3607 significant investment projects in 85 regions (costing at least 100 million rubles), which can potentially have an impact on the economy.

A single list of investment projects is required for the reliable forecast of the country's economic development. That's the conclusion drawn by the participants of a round table "Considering regional investment projects for assessment of demand for electricity". Analytical Center experts have compiled a database of 3607 significant investment projects in 85 regions (costing at least 100 million rubles), which can potentially have an impact on the economy.

According to Victoria Gimadi, Head of the Department for Fuel and Energy Sector of the Analytical Center, this kind of monitoring is needed to determine the current situation, identify the most probable directions in which investments are moving in the medium and long term and to assess development potential.

"We wanted to see how the projects that are already being implemented or are to be implemented will impact on the structure of the gross regional product and job creation in the region as well as to analyze the demand for electricity in terms of both macroeconomic parameters and the ability to supply electricity for new investment projects," Ms. Gimadi noted.

The authors of the study concluded that in terms of industries, the newest investment projects target the extractive sectors, processing industries and transport. There is also noticeable variability in which regions draw more investment projects: the Far Eastern Federal District is the leader in amount of investments in absolute terms. Most significant investments gravitate towards highly developed regions while less developed regions are mostly left by the wayside. However, that middle income industrial and agrarian territories have opportunities to change specialization and boost their economic development. These regions include Tver Region, Kaliningrad Region, Primorsky Territory, Khabarovsk Territory, and the Republic of Karelia.

The information included in the database shows that an investment project takes 6-10 years to be implemented depending on the industry and type of region. The average amount of investment varies from 6 to 100 billion rubles. Some investment projects run up against the problem of the lack of requisite infrastructure to get connected to the grid.

In order to gather information, the Analytical Center surveyed regional executive authorities about the projects being implemented or planned for implementation in their regions in the next 2 years. However, as Nikolai Belyaev, Chief Specialist of the Department for the Development of the Electric Power Industry of the Ministry of Energy of Russia, noted, regional officials are often unable to supply adequate and exhaustive information about investment projects.

"When we were gathering such information, we developed a big table that included both the energy parameters of investment projects and economic metrics," Mr. Belyaev said. "We sent this form to different regions with time intervals using different headings: "To supply data about investment projects" and "To supply data for a general plan for the siting of electric power facilities". As a result, we got two completely different sets of replies. It turned out that different units drafted replies to our letters and they never compared their data with each other. The problem related to little coordination between different units. Sometimes they are actually sitting in offices right next to each other but they never get together to decide on a single development policy for the region. In this context, our job is to try and join forces to compile a single list of investment projects and come up with a way to rank them and figure out actual projects to be really implemented."

Capital investments are a key tool to increase the competitiveness of the national economy and reduce inequality in the socio-economic development from region to region, the experts are convinced. An exhaustive list of investment projects would allow experts not only to forecast the demand for electricity but also to allocate capital investments to the right regions, noted Fedor Veselov, Deputy Head of the Energy Research Institute of the Russian Academy of Sciences.

"When forecasting the demand, the main goal is not to assess specific investment projects but to correctly anticipate the development of the entire economy and determine where and how the current trends will develop. This means we need to come up with a detailed economic development forecast to the level of federal districts and subjects of the federation, and only after that should we decide where to put each specific investment projects. The result of the analysis should be a clear idea about what the economy will get from each specific project," Mr. Veselov summed up.