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. Last Updated: 07/27/2016

Itera to Spend Billions Building Minsk-City

It may be better known as the capital city of Europe's last dictatorship but Minsk is looking to turn itself into an international financial and business hub.

Now, oil and gas giant Itera looks set to invest tens of billions of dollars in a massive new business and residential center in the heart of the city.

Conceived along the same lines as the ambitious Moskva-City project, the 300-hectare Minsk-City would eventually dwarf even its Russian counterpart.

On Tuesday, representatives from Itera's construction arm, Interainvest Holding, held a meeting with Belarussian President Alexander Lukashenko in Minsk to discuss the project.

"During the meeting, Itera's interest in broadening its cooperation with Belarus was underlined," the company said in a news release. "As part of this we discussed Itera's involvement in constructing the Minsk-City residential and administrative business center."

The Minsk-City proposal put forward by Itera envisions living space for up to 38,000 inhabitants, high-rise administrative-business complexes and a central 80-story skyscraper. The project would be built in the Aeroport district of the city, Itera said in a statement.

The project could cost around $30 billion, Russian media reports said.

Work is slated to start on the project in 2009, the official Belarus press agency reported.

The Minsk-City project was first mooted in May when Lukashenko set Minsk's City Hall a timetable to come up with plans for the development, a statement from Lukashenko's office said.

Since being elected president of Belarus in 1994, Lukashenko has faced a barrage of international criticism over his perceived authoritarian rule, a clampdown on opposition parties and rigged elections.

In 2004, the United States introduced a series of targeted economic sanctions against Lukashenko's government for undermining the country's democratic processes and for human rights abuses.

Asked how viable the Minsk-City project is, Mihails Morozovs, managing partner of Colliers International in the Baltic states and Belarus, said many people had doubts about the feasibility of the Moskva-City project to begin with.

"It is a question of how long-term your horizons are," Morozovs said.

If Lukashenko is personally behind the project, this could help speed the drive toward development, Morozovs said, citing Mayor Yury Luzhkov's personal backing for projects in Moscow.

"If Minsk wishes to be recognized not only on the political but also on the business map of the future, then it has to have certain infrastructure. Minsk-City is one of the key points in this strategy," Morozovs said.

At present there are only around 70,000 square meters of Class A and Class B office space in Minsk, a very low figure for a city of 2 million people, Morozovs said.

Morozovs said there were both negative and positive aspects of working in Minsk, citing "serious administrative control" over the market. He said developers in Minsk faced greater difficulties than in Moscow.

Any major architectural development would have to go hand in hand with massive investment into basic infrastructure, such as road and rail, Morozovs said.

He said other major companies like Itera would be brought on board as billions of dollars need to be invested in the city's development over the next few decades.

Founded in 1994, Itera is the third-largest gas wholesaler in Russia. The company's profits reached 960 million rubles ($37.5 million) in the first half of 2006, with overall revenues up to 12.6 billion rubles.