RDIF might get 10% of Russian wealth fund for infrastructure projects - minister
MOSCOW. Nov 29 (Interfax) - The Russian Direct Investment Fund (RDIF) might get a separate quota of 10% of the money in the National Welfare Fund (NWF) to co-finance infrastructure projects, Economic Development Minister Alexei Ulyukayev said.
He said there are two types of restrictions on investing NWF money in infrastructure projects. "More than 40% of the whole NWF cannot be invested in projects, and the share of the fund in each project also cannot be more than $40," Ulyukayev said.
"There is one other separate branch of work. These are projects that will be co-financed by the RDIF. It always works with global investors, and their share in projects is three-four times greater than RDIF's share. Investors themselves conduct quality selection, because they are risking their own money. If the RDIF supervisory board recommends such a project, the stage of preliminary assessment is already not needed. There are plans to allocate a separate quota - 10% of the NWF - for RDIF projects. This is about 300 billion rubles. Initially, it will be about 100 billion-150 billion rubles," Ulyukayev said in an interview with Rossiyskaya Gazeta published on Friday.
He recalled that a "long-list of 37 projects" has been prepared. "Two of them - the Central Ring Road (CRR) and the modernization of the Baikal-Amur Mainline (BAM) and Trans-Siberian Railway - have already been approved. Work is still ongoing on the rest, they are at various stages of advancement," Ulyukayev said.
The investment recoupment period for the CRR and railway projects, which will begin in 2014, is about 30 years, he said. "In the case of the CRR, the funds will be invested in bonds that the company will issue, with a yield equivalent to inflation plus one percent. In the BAM project, the return will be lower, about 3%," Ulyukayev said.
He said that projects seeking co-financing from the NWF will first have to undergo a strategic analysis to assess their economic, fiscal and social impact.
"After this, there is an initial screening. Then a comprehensive analysis that assesses the currency, market, operating and other risks. The financial model, business plan, financing participants are presented. And based on the comprehensive analysis the Economic Development Ministry issues a verdict on whether the project is suitable for the NWF or not. The Finance Ministry says whether there is money or not. It will be allocated on conditions of repayment, a return," Ulyukayev said, describing the general mechanism for allocating NWF money for infrastructure projects. There will be a separate mechanism for RDIF projects.
RDIF chief executive Kirill Dmitriev said at the beginning of November that the fund had already selected eleven projects for potential financing by the NWF.
President Vladimir Putin said on November 6 at a meeting on the use of NWF resources that the RDIF had prepared a "solid portfolio of infrastructure projects" in which major private investors, including foreign ones, are showing an interest. He said the projects involve energy efficiency, information technology, and construction of seaports, roads and pipelines.
The NWF held 2.845 trillion rubles as of November 1.