Portfolio of frozen PPP projects exceeds completed ones by 300 bln rubles - Russian Far East and Arctic development minister

BLAGOVESHCHENSK. Sept 2 (Interfax) - The investment portfolio of public-private partnership (PPP) projects suspended due to the high key rate significantly exceeds the number of already implemented ones, Far East and Arctic Development Minister Alexei Chekunkov said.

"Currently, the portfolio of PPP projects on hold is several times larger than the completed ones - by approximately 300 billion rubles. Taking a bank loan at 23%-25% per annum and then spending ten years paying it off from the budget is irrational. In fact, this will lead to projects becoming two to three times more expensive," Chekunkov said when answering questions from the Expert magazine regarding PPP projects in the Far East and the Arctic.

The list of frozen projects includes almost all projects for construction, urban redevelopment, creating public centers, embankments, museums and sports facilities, Chekunkov said.

"For a number of them, we were forced to switch to direct budget financing, for example when creating an innovation and technology center in Vladivostok. For the three-year period, we have allocated 6.7 billion rubles for this project and will add about 18 billion rubles more," he said.

The resumption of investor interest in PPP-based projects in the mentioned areas is possible if the difference between the key rate and inflation does not exceed 10%, he said.

In June, the Central Bank of Russia proposed reducing risk weights when calculating capital adequacy ratios by banks for PPP projects where direct concession agreements have been concluded, allowing the transfer of loan default risks to the state or a Russian constituent entity.

Gazprombank has proposed discussing the possibility of banks obtaining long-term funding from the Central Bank at a preferential rate by including infrastructure projects implemented on PPP principles in a specialized refinancing mechanism.