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Life in Arctic to benefit from public-private partnership education projects, expert says

Such projects are equally reasonable for the government and for businesses, Deputy Director General of the Arctic Development Project Office Alexander Vorotnikov noted

YAKUTSK, February 24. /TASS/. Implementation of public-private partnership (PPP) projects in education will improve the life quality in the Russian Arctic Zone, Deputy Director General of the Arctic Development Project Office (PORA) Alexander Vorotnikov said at a meeting of the Yakut governor’s council on well-being and sustainable development.

In October, 2020, Russia’s President Vladimir Putin inked the Arctic Development Strategy to 2035. Among its priorities are the tasks to improve the living conditions and life support. In terms of the key social and economic criteria, the quality of live, all the Arctic territories’ development must be brought to at least the average levels across the country.

"Without cooperation between the government and businesses, without the implementation of public-private partnership it is practically impossible to solve this task," the expert told a meeting in Yakutia on well-being and sustainable development. "PPP projects in education are equally reasonable for the government and for businesses. The government receives investments in education, and businesses - trained specialists for sustainable development of projects in far-away Arctic districts."

Public-private partnership projects

According to the expert, private investments in the Arctic Zone’s social infrastructures are insignificant, in 2020 they made only 7.9 billion rubles ($90 million), or 2.1% of the total investments (in Russia, private investments in the sphere are more than 250 billion rubles ($2.8 billion), or 11.7% of the total investments).

"The experience of PPP social projects exists in the Arctic Zone’s only four regions, and most of them are in the Yamalo-Nenets Region (three projects) and in Yakutia’s Arctic municipalities (four projects)," he continued. "All the seven projects are targeted at development of the education system."

Another two PPP projects in the Arctic are in the spheres of culture, leisure and tourism, and one - in sports, he added.

A promising form to finance PPP projects is the Tax Increment Financing (TIF) mechanism. "The essence of the tax increment financing mechanism is to ensure reimbursement of investor's expenses via special funds, replenished by tax revenues from incomes as well as from created and commissioned infrastructure facilities. Jointly with the Russian Federation’s executive authorities, it is necessary to work out a financing mechanism at the expense of future taxes," the economist said.

He can see a certain interest in energy service contracts. Such a contract is a form of contract aimed at saving operating costs by higher energy efficiency. "For educational institutions, especially taking into account President Vladimir Putin’s address regarding carbon neutrality by 2060, it is necessary to have them use alternative energy with a minimal use of carbon-containing energy sources. This is what energy service contracts can do," he said.

The specific feature of an energy service contract is that the investor's expenses are reimbursed due to the savings from energy-saving technologies. "Thus, there is no need for initial investments or lending. The investments, necessary for implementation of the entire project, will be attracted by the energy service company," the expert said.

Yakutia’s council

The Yakut governor’s council on well-being and sustainable development was organized in July, 2021. The council is an expert advisory body for local authorities and organizations. The council drafts suggestions on improvement of life in the Far North and Arctic and conducts research and development projects in sustainable development of Yakutia as well as regions in the Far East and Arctic.