Russian-Chinese JV prepares private concession initiative to create Meridian-Avtodor highway

KAZAN. Oct 13 (Interfax) - The Russian-Chinese project company Meridian-CC7, founded by Russian Holding Company (JSC RHC) and China National Chemical Engineering and Construction Company N7 (CC7, a subsidiary of China National Chemical Engineering Group Corporation Ltd., CNCEC), is preparing a private concession initiative for the construction of the Meridian high-speed toll road, Avtodor's deputy CEO for investment policy Igor Koval told reporters on the sidelines of the Doroga 2022 industry fair.

OOO Meridian - CC7, with an authorized capital of one million rubles, was registered in Moscow on September 21. The RHC, which started building the road several years ago, owns a 51% stake, and the remaining 49% is owned by CC7. The JV's stated objective is to build roads and highways.

The company was formed specifically to build the Meridian, Koval said. "Initially, the project was planned for implementation under a concessionary agreement. The aim of the established company is to prepare a private concession initiative (PCI) to realize the Meridian project. They will submit the PCI in accordance with the law. A Russian government-authorized body will duly consider the PCI, if submitted," Koval said.

He did not say the expected cost of building the Meridian. At the same time, its public and private funding could be 50% each, "if the economy will be flying, based on the traffic that will get going," he said. "The technical economic justification, which will forecast the model for traffic, optimal tracking and so on, will be ready this year," Koval said.

Asked about the plans announced by Avtodor to use a government loan mechanism to fund the road construction, he said: "I have information that there has, in fact, been such a discussion, between the Transport Ministry and their counterparts from the transport ministries of Belarus, Kazakhstan and China. What its status is, I will not say, this is a question for colleagues at the Transport Ministry."

The Meridian, whose construction was initiated by the JSC RHC owned by a former Gazprom top manager, Alexander Ryazanov, was initially planned as a 2,000km toll road from China to Europe, via Russia, Belarus and Kazakhstan. The road was to cross eight Russian regions: Orenburg, Samara, Saratov, Tambov, Lipetsk, Oryal, Bryansk and Smolensk.

As for the Meridian's profitability in the presence of a potential competitor, the M12 motorway now being built between Moscow and Kazan, Ryazanov had said that, "a road which passes in-transit through eight agricultural, underdeveloped regions would produce a greater socioeconomic effect than the Moscow-Kazan road."

Vyacheslav Petushenko, the chief executive of the state company Avtodor, told Vedomosti in July that his company could consider the Meridian in combination with the 1,600-kilometer southwestern chord (Ufa-Togliatti-Saratov-Volgograd-Krasnodar) as one promising project, while noting an "absence of expediency to lead the Meridian to the border with Belarus right now."