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EBRD to invest significantly in Russia’s road building

The European Bank for Reconstruction and Development (EBRD) and Avtodor, the Russian state company responsible for the development of the country’s motorway network, Thursday pledged to work on ways of making it easier to attract international financing and private sector involvement to such projects.

In addition, this MoU commits the EBRD and Avtodor to explore co-financing opportunities and identify suitable financing instruments, which could be used to support road projects.

A Memorandum of Understanding (MoU) signed Thursday commits the two parties to focus on how to ensure that Avtodor-managed motorway projects in Russia meet international best practices, particularly concerning environmental and social issues, at various stages, including planning, route selection, construction and operation.

The MoU was signed by EBRD Managing Director for Infrastructure, Thomas Maier and Sergey Kelbah, acting Chairman of Avtodor. Mr. Maier called the MoU a cornerstone, making it possible for the EBRD and Avtodor to build a long-term partnership with the task of modernizing Russia’s road system.

Adopting an approach which includes a major outreach to key stakeholders whose interests could be affected by future motorway projects is the only way forward, Mr Maier added, explaining that the broad consensus which can thus be achieved makes it possible to avoid long delays in the building of such costly infrastructure projects.

An open dialogue with all stakeholders is particularly important when a route is being assessed; when the environmental and social impact is being evaluated; as well as when environmental and social mitigation measures are being devised, he said.

Further, matching international best practices, in addition to complying with all relevant local regulations, is crucial to attract the support of international financial institutions. The same applies to major non-Russian commercial banks which have signed up to the Equator Principles on managing environmental and social risk in project finance transactions, stated Mr. Maier.

One of the tasks the Russian state has handed Avtodor is to attract investments through public-private partnerships (PPPs). The Russian government is planning to invest 1.3 trillion roubles (equivalent to €31.5 billion) on the country’s road system up to 2019. The federal budget will provide 75 per cent of this funding while the remaining 307 billion roubles (equivalent to nearly €8 billion) are to be raised from private investors.

The main road projects Avtodor is currently managing include the reconstruction of three motorways leading to southern Russia, Belarus and Ukraine, respectively known as M4, M1 and M3, as well as the building of a new toll highway linking Moscow and St Petersburg.

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