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. Last Updated: 07/27/2016

Investors Sought for Highway to St. Pete

VedomostiConstruction on the $7.5 billion toll highway is planned to begin in 2007.
The government plans to spend as much as $7.5 billion on a toll highway linking Moscow and St. Petersburg to smooth travel and goods transportation between the country's two largest cities.

Authorities plan to raise 30 percent of the financing from private investors, who will be given contracts for building roadside services such as restaurants, gas stations and motels, Oleg Shakhov, head of the Transportation Ministry's investment department, said Wednesday at a news conference.

Moscow and St. Petersburg lie about 700 kilometers apart, linked by a railway and a road that passes through towns that hamper traffic. Russia now has two toll highways, in the regions of Voronezh and Tatarstan, Shakhov said.

"We've been talking about toll roads for a long time," Shakhov said. "Today's state financing is not enough to reach our goals in developing transport infrastructure. State-private partnership is one of the ways" to complete projects.

Russia plans to hold a tender to choose an investor for the highway next year, with the bulk of construction starting in 2007, according to Shakhov. The final cost of construction may reach as much as 207 billion rubles ($7.5 billion), depending on the route chosen. Shakhov outlined an initial cost target of 180 billion rubles and as much as a 15 percent increase.

The figure is higher than an estimate from a 200.7 billion ruble projection by the Federal Road Agency.

Construction of some parts of the highway may start at the end of this year and in 2006, Shakhov said. The terms of investor participation will be defined in the law on concessions, planned to be passed by the government and the State Duma in the second quarter this year, he said.

The ministry last week named Ernst & Young as financial consultant for the toll road project, Freshfields Bruckhaus Deringer as the legal adviser and Russian design institute GiproDorNII as the technical manager. The advisers have until December to conduct a feasibility study outlining the costs, time frame and construction priorities.

The current road linking Moscow with St. Petersburg starts as a six-lane highway near each of the cities, with limited-access intersections, and becomes narrower in the midway stretch, where it has simple junctions with other roads and cuts through towns such as Vyshni Volochek, where it becomes a main street.

The new highway will be about 70 kilometers shorter than the existing one, and will be designed with 10 lanes nearest the two cities, according to Shakhov.

Authorities plan a separate upgrade of the highway between Moscow's downtown and the city's Domodedovo Airport, making it a toll road by 2007. Other toll highway projects include a ring road around Moscow and the road between St. Petersburg's port and the highway to Moscow.

"We can introduce toll highways only when there are alternative transportation routes," Shakhov said at today's conference. "The main goal of toll roads is to cut the burden on the budget."

The government has received proposals from Italian, French, Spanish and Japanese companies for joint investment projects in the transportation sector, Shakhov said, without identifying the companies.

"The situation with investment in roads is the worst at the moment, which is why we are raising this issue today," he said.

Russia's investment in the transportation industry is planned at 4.6 trillion rubles for the period between 2002 and 2010, the ministry said on its web site. That includes 857.7 billion rubles out of the federal budget to spend on developing roads, according to the ministry.