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. Last Updated: 07/27/2016

UBS, ING Vie for Consultant Role

Only two Western investment banks out of the 14 that have been deemed eligible have submitted bids to advise the government on how to spend billions of oil dollars on infrastructure projects, a government official said Tuesday.

UBS and ING Bank have expressed interest in assessing the projects that are competing for financing from the state investment fund, said Kristina Serpokrylenko, the official at the Economic Development and Trade Ministry who is in charge of monitoring the bids.

The government is looking to hire three consultants and has set April 6 as the deadline for banks to submit their applications.

Serpokrylenko said the ministry had not yet picked the winners.

For 2006, the state has earmarked to spend a total of 69.7 billion rubles ($2.47 billion) on major infrastructure projects from the investment fund, which contains windfall oil revenues and cash saved through early debt repayment.

Analysts suggested that the lack of interest from the elite of the Western investment banking community reflected skepticism about the transparency of the selection process of the projects.

Investment banks "don't want to risk their reputation," said Sergei Ulatov, a Moscow-based economist with the World Bank.

The distribution of money will largely depend on the lobbying skills of the bidders, not on market needs, said Ulatov.

"There will be battles on all fronts," said Peter Westin, chief economist at MDM Bank.

Last year, the government said 14 Western banks were eligible to compete for the contracts.

To pass muster, banks must have had success in managing at least $10 billion in funds over the past five years and must have been active in the Russian market for five years. No domestic bank has made the cut.

ING and UBS declined to comment Tuesday.

Falling short of securing the three investment consultants, the government will now have to consider a bid from International Construction Institute, a domestic consultancy, which doesn't meet the ministry's initial requirements, Serpokrylenko said.

A range of companies are vying to use the fund's money on major projects such as building highways, developing ports and building industrial plants.

The first winners are expected to be announced in mid-June.