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Budget funds found for Crimean bridge

July 31, 2014, 20:30 UTC+3 MOSCOW
Under the federal program for Crimea development, the state will allocate 416.5 billion rubles ($11.7 billion) for transport infrastructure
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© ITAR-TASS/Mikhail Pochuyev

MOSCOW, July 31. /ITAR-TASS/. Russia will construct the bridge across the Kerch Strait to connect Crimea and Russia’s mainland on its own account without foreign investments and National Wealth Fund (NWF) resources but possibly with foreign labor force. There is no more time left for technical and economic discussions, said Russian Deputy Prime Minister Dmitry Kozak.

 

From private to state hands

Russia will be the only investor in the bridge estimated at 247 billion rubles ($6.9 billion), said Kozak. State company Avtodor specializing in public private partnership highway projects previously prepared the project but as the government decided to finance the bridge solely from the federal budget, it was passed to the federal highway agency Rosavtodor, a source familiar with the project details told ITAR-TASS.

Rosavtodor will accept documents by end of autumn once Avtodor completes the project’s feasibility study, said another source close to the Ministry of Transport adding the bridge should be ready no later than November 2018.

The state company said it had no official information about the government decisions but Avtodor made engineering survey on the government’s instruction and proposed a car and railway bridge through the Tuzla Spit and a preliminary financial study.

No immediate commentary was provided in the ministry; Rosavtodor said it would be available for comment “tomorrow”.

No toll, no investments

Transport ministry and Avtodor earlier negotiated the project with potential infrastructure investors. In early June, Deputy Minister Oleg Belozerov said Avtodor signed a memo with China Communications Construction Company. “Our Chinese partners expressed interest in technology, engineering and investments,” he said.

The sanctioned Russian companies also showed keen interest in financing the bridge. In May, Gennady Timchenko who controls the construction holding Stroytransgaz and holds 25% stakes in construction companies MOST and ARKS announced plans to participate. NWF was also considered as a source.

“But the bridge will be toll-free, which means there are no sources for return on private investments. Even the railway tariff on the bridge railway section will not provide an attractive return on investment,” a source told ITAR-TASS.

Kozak confirmed the estimates.

“The first estimates show that even a toll for freight transport will not provide a necessary return on NWF investment but we agreed that we’ll continue calculations,” he said but did not rule out the project could be carried out in a public private partnership with the use of the NWF.

“We need to make the decision, we cannot discuss the project forever,” Kozak said. “We cannot make decisions whose benefits are not obvious. Therefore, our sole decision now is state budget financing.”

 

Made by Italy

Under the federal program for Crimea development, the state will allocate 416.5 billion rubles ($11.7 billion) for transport infrastructure, with almost 247 billion rubles ($6.9 billion) channeled into the bridge, said Minister of Crimean Affairs Oleg Savelyev.

Foreign companies could act as contractors, Kozak said, but could not yet estimate whether the issue is prone to sanctions as an unnamed Italian company is among candidates. This is so far the only European bidder involved in the talks about the project.

“Sanctions are not yet formulated, and it is now hard to estimate what decisions can be formulated and how the bidding European construction companies will behave,” Kozak said.

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