Russian Firms Moving Toward Infrastructure Projects

Russian Firms Moving Toward Infrastructure ProjectsRussian Firms Moving Toward Infrastructure Projects

Western sanctions imposed on Russia have had some negative impact, like the withdrawal of the European Bank for Reconstruction and Development (EBRD) and some other Western banks from Russian infrastructure projects, but have also encouraged the country’s domestic investors to fund these projects, Oleg Pankratov, VTB Capital’s Infrastructure Capital and Project Finance chief, told RIA Novosti Monday.

At the moment, Russian investment company VTB Capital has two major public-private partnership infrastructure projects in Russia, the first project concerning a Moscow-St. Petersburg highway, the second relating to a garbage recycling plant near St. Petersburg.

“The first project is worth 80 billion rubles ($2 billion) in investment, of which 25 billion rubles come from private investors,” Pankratov said at the Russia Calling forum.

He also noted that although the market feels a certain negative impact of the EBRD pulling out of infrastructure projects, the effect of other foreign banks’ withdrawal is significantly less noticeable.

However, he added that this situation has its upside, as more pension funds are contributing to the projects and that their involvement is becoming more apparent. Pankratov expressed confidence that the pension funds’ investments would be able to replace those of the foreign partners that had left.

Pankratov added that investments from Asia would be sought as well, though this would not happen immediately. He confirmed that Asian investors had expressed an interest in cooperating with Russia.

The investments from European and US partners have been hurt by the sanctions that Western countries had imposed on Russia as part of sanctions on its financial sector, hindering cooperation with certain Russian banks and companies.

 Germany Affected

Germany understands that sanctions against Russia, introduced by the 28-member bloc after long discussions, are causing harm to Berlin, the coordinator for ties with Russia told Kommersant on Monday.

“We do not want them: we know that we are bringing harm to ourselves, and I have listened to enough businessmen who are telling me this every day. The sooner we are out of sanctions, the better,” said Gernot Erler , Coordinator for Intersocietal Cooperation with Russia, Central Asia and the Eastern Partnership.

Erler said however, the representatives of German industries have acknowledged the politics should prevail over economic interests. “This issue is so serious that economic interests should be put on the back burner,” he said.

Lifting sanctions will primarily depend on the political decisions taken in Moscow, the diplomat stressed.

“If Russia is in fact step by step actively seeking to comply with the agreements it signed, there will be no new sanctions,” he said, adding that “there are all the grounds to change the situation.”

“Now real steps should be taken. In this case, I am sure the sanctions can be suspended and lifted,” Erler told the newspaper.