Money? Great, but we need PPPs!

Moscow has placed first in the rating of Russian regions in terms of public-private partnerships (PPPs) for the fourth time. This rating is put together jointly by the Russian Ministry of Economic Development and the National PPP Center every year.

The area across from the Sberbank office on Ivano Franko street is closed off with a metal fence. Two stands with the image of Moscow’s coat of arms explain that the territory will be used for buildings of city authorities. The inscription on one of them reads “Kutuzov Avenue relief road.” The inscription on the other stand reads “Attracting private financing saves budget funds.”

The Kutuzov Avenue relief road is an important, but not sole infrastructure project in Moscow that the capital’s authorities have built with the help of private investments. These projects include transport, healthcare, and social facilities, as well as children’s summer camps and much more. All of this was discussed during the 6th Infrastructure Congress “Russian PPP Week,” which took place in the Russian capital. During one session, Head of the Moscow City Department of Investment and Industrial Policy Alexander Prokhorov talked about effective ways to attract investment and localize high-performance industries in the capital.

According to him, Moscow actively engages business in solving citywide problems through PPPs. The city has implemented a strategy for the thorough development of the legal and economic conditions for long-term projects. Since 2013, the volume of contracts concluded by Moscow for PPP projects has amounted to over 850 billion rubles.

This may seem unnecessary, since there is enough money in the Russian capital. “Yes, there is a lot of money in Moscow, but it’s still important to develop PPPs. Because then the city doesn’t spend its own funds, and has a chance to redirect them to other important spheres” – this was the leitmotif of the speakers at the congress session, where they shared their thoughts on PPP development in Moscow.

A partnership like this, when the authorities partner with private business, increases the efficiency of city property use, develops competition and improves the quality of services in public sectors – in public transport, medicine, and education, for example. Moscow uses various forms of public-private partnerships, depending on the specific project. “This policy helps to integrate private capital into the economy on the most favorable terms, stimulating the development of the metropolis and complementing budget investments. In Moscow, for example, a corporate form of PPP is being implemented. During the construction of transport hubs, the investor creates and transfers the technological part to the city, while profitability is achieved through the creation and use of commercial facilities,” Alexander Prokhorov said.

Aside from Russian investors, foreign investors also take part in public-private partnerships. For example, the Chinese, Italians, and Turks are interested in road infrastructure. Foreign investors were the initiators behind the construction of a the cableway between the Skhodnenskaya and Rechnoy Vokzal stations, which is expected to begin this year and is scheduled to be completed within two years. Thus, the first public transport cable car will appear in Moscow in 2023. The length of the cable car will be 2.3 kilometers. It will run 50 cabins, each of which is designed for 10 people. Up to 19 thousand passengers are planned to be transported per day.

Investor funds will be used to finance the construction of the cableway. A German company and Austrian manufacturer of cable cars will invest around four billion rubles into the project. The city will not be participating financially in the construction of the project, or in the operational process.