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. Last Updated: 07/27/2016

$2.5Bln State Fund Opens for Bidding

The new state investment fund, which has about $2.5 billion to distribute this year, is now open for bidders, the Economic Development and Trade Ministry said Monday.

The deadline for the first round of bidding for the fund, which contains windfall oil revenues and cash saved through early debt repayment, has been set for May 20, the ministry said.

"This is a test run," ministry spokeswoman Tatyana Goryachikh said by telephone. After that, "it will be a permanent process."

With just two months until the May deadline, the ministry has yet to define the exact criteria for assessing the economic impact of winning bids, Goryachikh said.

Winning projects will have to create and develop infrastructure, as well as foster innovation and help boost the economy, Deputy Economic Development and Trade Minister Kirill Androsov told potential bidders at a presentation Friday.

Funding major infrastructure was given as a key objective of the fund when work began on it last fall. For 2006, the state has earmarked a total of 69.7 billion rubles ($2.47 billion), with allocations rising to around 72.9 billion rubles for 2007 and 73.2 billion rubles for 2008.

Goryachikh said the Finance Ministry was due to approve exact guidelines within the next two weeks on how the government would assess projects.

The Finance Ministry declined to comment Monday.

Interfax reported Monday that the ministry's favorites so far included the development of a port in the Leningrad region town of Ust-Luga.

Also high on the list were a new highway connecting Moscow and St. Petersburg and an oil refining and petrochemical plant complex in Nizhnekamsk, Interfax said.

Goryachikh denied the report, saying no applications had been received so far. The first winners will be announced at the St. Petersburg economic forum June 13-15, she said.

To help assess contenders, the Economic Development and Trade Ministry plans to bring in three investment banks as consultants, Goryachikh said, adding that their names would be announced on April 6.

A total of 14 foreign investment banks, including ABN Amro and BNP Paribas, qualify as potential consultants. No domestic bank has made the cut.

To pass muster, banks must have had success in managing at least $10 billion in funds over the past five years. They must also have been active in the Russian market for five years.

Consultancies hired on the bidding side are required to have managed more than $5 billion over the past seven years.

When the investment fund was unveiled last year, the government said it would offer investors assistance in three forms: direct financing, provided the investor comes up with 25 percent of a project's cost; state guarantees for loans that cover up to 60 percent of a project; and disbursements for the charter capital of new companies established up to realize a project.