RBC Daily: “The Tight-Fisted Investment Fund”
By Lyudmila Novikova, Tatyana Frolovskaya
Receipt of requests suspended
The government will review the approved projects requesting allocations from the Investment Fund and suspend the receipt of new requests. It will consider only the projects aimed at supporting crisis-affected sectors, notably engineering, metals production, and the production of construction materials. However, these requests will be considered "especially carefully."
The Investment Fund was set up in 2006 to finance infrastructure projects. It received deductions from oil revenues and money gained from early repayment of foreign debts. Since 2006, the Fund has accumulated 400 billion roubles.
Initially, only federal projects worth at least 5 billion roubles could expect to receive assistance from the Fund, but this year, regions have been allowed to use its reserves on the condition that 50 percent of investment comes from private companies.
The Government meeting yesterday assessed the work of the Investment Fund and approved its working regime for the duration of the crisis.
Prime Minister Vladimir Putin said he was dissatisfied with the results of three years of the Fund's operation. "Only 11 projects out of the 19 that were to receive allocations from the Fund this year have received financing," he said.
According to Deputy Prime Minister Dmitry Kozak, the Investment Fund was to allocate 96 billion roubles this year, but has transferred only 70 percent of the sum, and irregularly at that. In some cases, private investors invest money while the government does not honour its obligations, but it is mostly vice versa.
"We should synchronise the process," Mr Putin said. "This is extremely important in conditions of financial instability. The state must be sure that the investor will make good on his word."
The crisis has forced the state to review its possibilities. Finance Minister Alexei Kudrin said the projects on which agreements had been signed would continue to receive allocations from the Fund. Other projects will be inspected for importance, quality, effectiveness, and deadlines.
According to the Finance Ministry, agreements have been signed for 436 billion roubles worth of projects totaling 877 billion roubles.
At present, the Investment Fund is supporting 21 federal projects worth a total of 1.265 trillion, 363 billion roubles of which will be provided from the budget. The Regional Development Ministry said financing was provided to the Western High-Speed Diameter project in St Petersburg and the Minsk-Moscow highway project, the oil refineries in Nizhnekamsk, and the comprehensive development of the Lower Angara region.
The government plans to review the approved requests for the construction of the M4 Don toll road, the Krasnodar-Abinsk-Kabardinka motor road, the toll part of the Moscow-St Petersburg road (between the 58th and 684th km), the development projects Ural Industrial-Ural Polar and South Yakutia, and the projects to build a central ring road in the Moscow Region and the Southern Transregional Waterway.
The government will also review plans to build an industrial centre in Novomoskovsk, organise high-speed transportation between St Petersburg and Helsinki, and develop a water supply system in Rostov-on-Don.
Officials intend to consider new projects "especially carefully", cutting the range of projects to industries. Finance Minister Kudrin said priority would be given to projects aimed at supporting the industries hit severely by the falling demand and production.
According to the Institute for Economy in Transition, in November, the falling demand especially negatively impacted the metallurgical sector, engineering, the production of construction materials, and the light industry.
"We should invest these considerable [budgetary] resources where the need is the greatest," Mr Vladimir Putin said.
"Public-private partnership should be directed above all at infrastructure projects," Valery Mironov, a leading analyst at the Development Centre, said. "Enterprises will take care of production, but we should tell them along which roads to deliver their output and to which ports."
Infrastructure projects should be implemented in cities with a population exceeding 1 million people, notably in Moscow and St Petersburg, in southern Russia and in the Urals, where they will have maximum effect, Mr Mironov said.
"We need breakthrough points, especially given the conditions of the global crisis, when spreading allocations would be suicidal," he said.
