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. Last Updated: 07/27/2016

VSM to Go Ahead With Rail Project




Governor Yakovlev said the city will go ahead with plans to build a modern railway terminal.


ST. PETERSBURG -- Supporters of the embattled high-speed rail link between Moscow and St. Petersburg received a boost from Governor Vladimir Yakovlev, who affirmed his support for the rail terminal being built as part of the project.


After President Boris Yeltsin invalidated earlier decrees creating RAO Vysoko Skorostniye Magistraly, or VSM, and charging it with building the controversial link, the project's detractors were quick to claim that the high-speed rail and a related project to build a modern railway terminal for the link in St. Petersburg were close to dead.


But VSM representatives said the mass media have misinterpreted the meaning of Yeltsin's new decree.


"The president's decrees are simply a normal correction, adapting to changes in legislation," VSM spokesman Yevgeny Popov said Monday.


Popov said VSM's foreign partners were surprised by the media's reaction, because "everybody that has seen the actual documents knows what the real situation is."


He added that Yeltsin's decrees haven't changed anything -- meaning construction on the terminal, the rail link and the manufacturing of new railway cars will continue.


Governor Yakovlev backed the terminal part of the equation to the hilt Friday, saying the city will go ahead with plans to build a modern railway terminal and business center on Ligovsky Prospekt, adjacent to the existing Moscow Station, despite Yeltsin's cancellation of the decrees.


"The city built, is building and will continue to build the new modern complex, because it is needed by the northern capital," Yakovlev said in remarks reported by Interfax.


The VSM terminal -- which will house a business center, a 368-room three-star hotel and a six-story underground parking facility in addition to the new railway station -- is the epicenter of a loud and long-standing political conflict in St. Petersburg.


City Hall has agreed to co-guarantee with the federal government a $200 million loan being taken out by VSM from two British banks to help finance the project.


But approval for City Hall's half of the guarantee is being held up by the Legislative Assembly -- whose approval is necessary for such guarantees.


But the local Audit Chamber raised doubts about VSM's capacity to cover its costs and pay back the loan.


When approval of the loan guarantee came before the Legislative Assembly, Igor Artyemev, the chairman of Yakovlev's Finance Committee, launched into a scathing critique of the project, saying it could result in the financial ruin of the city and that the governor had made a mistake by supporting it.


VSM attracted further criticism over the weekend from Mikhail Skibar, vice governor of Novgorod region -- through which the proposed high-speed rail must pass.


While Skibar said he supports the project in principle, he voiced doubts about potential ecological damage and about the project's economic feasibility given Russia's current financial crisis.


The head of the State Duma's ecology committee has also expressed concern about the ecological dangers of the planned high-speed railway.