Gazprom, BTS-Most seek concession for expansion of Russia's eastern railways - paper
MOSCOW. June 1 (Interfax) - Gazprombank (GPB) and BTS-Most, a construction company controlled by Ruslan Baisarov, have asked President Vladimir Putin to give them a concession on Russia's largest infrastructure project, the expansion of the Baikal-Amur Mainline (BAM) and Trans-Siberian Railway (Transsib), national daily Kommersant said on Wednesday.
GPB and BTS-Most (Bamtonnelstroy-Most) have proposed to take out a concession on the expansion of the eastern railways, the bank said on May 31.
"The urgency of the project is due to the reorientation of Russian exports and the need to establish a new center of global development in the Asia-Pacific region," the bank said.
"The project would give a push to the development of the Far East and Siberia, and facilitate the development of huge resources and the growth of the economic potential of the regions," GPB said, remarking that it is a leader in financing infrastructure projects on the principles of public-private partnerships, while BTS-Most is the largest construction company in Russia and has, among other things, built all ten tunnels on the BAM.
GPB CEO Andrei Akimov and BTS-Most chairman Baisarov sent Putin a letter proposing the concession on March 29, the paper said.
With the "reconstruction of the railways and expansion of bottlenecks (including the construction of second Severomuisky and Kuznetsovsky tunnels) the throughput capacity of the railways will grow to 260 million-280 million tonnes" by 2035, the letter said.
In the letter, Akimov and Baisarov asked Putin to support the initiative and "jointly work out the conditions for the turn-key implementation of the eastern railways [project] based on the model of a concession agreement signed with the concession holder created by the consortium of Gazprombank and BTS-Most."
On April 6, Putin instructed Prime Minister Mikhail Mishustin, Transport Minister Vitaly Savelyev and Russian Railways (RZD) CEO Oleg Belozerov to "consider and report." The paper said this issue was discussed on May 31 at a meeting of the commission for projects to develop railway infrastructure in Siberia and the Far East, chaired by Deputy Prime Minister Marat Khusnullin.
The scale of the project the consortium is seeking to implement is vast. The paper said the proposal includes the construction or reconstruction of the Severomuisky, Kodarsky and Kuznetsovsky tunnels, as well as a bridge across the Amur River.
The budget estimate for the project is not known at this point. However, RZD previously estimated that 2.55 trillion rubles would need to be invested in order to expand the throughput capacity of these railways to 240 million tonnes. And this figure did not include a second Severomuisky tunnel, the cost of which was estimated at 200 billion rubles.
The potential concession holder estimated the multiplier effect of the project would result in exports to the Asia-Pacific region increasing by 8.3 trillion rubles, mining of mineral resources growing by 220 million tonnes by 2025, boosting the mining industry's revenues by 550 billion rubles, the export potential of cargo handling at ports in the Far East growing by 180 billion rubles and so on, the paper said.
RZD and the Transport Ministry declined to comment. BTS-Most and Khusnullin's office did not respond to questions. A source familiar with the course of the commission meeting told the paper that Baisarov said more than 230,000 workers would be needed for full-scale construction on the BAM and Transsib. It was also said at the meeting that the potential concession holder is prepared to invest up to 1.5 trillion rubles in the project.
The Transport Ministry signed an order to form a working group on this issue and explore all options over the next two months, the paper's source said. RZD said that it had not received sufficiently detailed estimates from GPB and BTS-Most to give an assessment of the project, the source said. Khusnullin ordered the Transport Ministry, RZD, GPB and BTS-Most to work out all measures, timeframes and conditions for recoupment of investment within the context of the working group.
Another high-profile concession proposal, for the construction of a bridge to Sakhalin Island, tabled by MGR LLC, was also considered at this meeting. This company, which is controlled by Mikhail Skigin and his partners, is now building the Poronaisk port on Sakhalin.
The potential concession holder is prepared to invest 300 billion rubles in the project, the tentative cost estimate for which is 676 billion rubles in 2021 prices.
These two potential concessions stand in opposition to one another, as one of MGR's arguments is that building a bridge would be a third cheaper than modernizing the eastern sections of the BAM and Transsib (Komsomolsk-Vanino and Volochayevka-Primorye ports), which would cost an estimated 1.03 trillion rubles, the paper said.
Ultimately, the commission proposed to estimate the freight base for a bridge to Sakhalin and continue developing the Poronaisk port as a base for the Northern Sea Route, the paper reported its source as saying. The fate of the project will depend on what decisions are made in July on the format for the third phase of the modernization of the BAM and Transsib.
