Development of Public-Private Partnership

Annual Report 2013
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# Development of Public-Private Partnership

Implementation of major infrastructure projects and programs of territorial development has clearly proved the effectiveness of applying the mechanism of public-private partnership (PPP) that could best serve the interests of both the state and business.

Vnesheconombank is actively involved in fostering PPPs in Russia. Alongside financial support for PPP projects, the Bank performs the functions of a financial consultant to the Government of the Russian Federation and Russian constituent entities on procuring and financing such projects.

Pursuant to Directive of the Russian Federation Government No. 134 dated 1 March 2008, “On Setting Rules for Arranging and Using Budgetary Allocations from the Russian Federation Investment Fund”, Vnesheconombank monitors investor allocations in projects that obtained state support out of the Investment Fund resources. In 2013, Vnesheconombank conducted the required monitoring of investor obligations under 16 investment projects. The Bank’s reports prepared on a quarterly basis were submitted to the Ministry of Regional Development of the Russian Federation.

## Investment consulting in procurement of PPP investment projects to respond to the state needs of constituent entities of the Russian Federation

Vnesheconombank is a sole provider of investment consulting services in procurement of PPP investment projects for the state needs of the Russian Federation constituent entities.

In the reporting year, the Bank completed obligations under public contracts for rendering investment consulting services for Astrakhan Region (construction of kindergartens), Yaroslavl Region (water and sanitation facilities), Irkutsk and Nizhny Novgorod Regions (airport infrastructure in Irkutsk and a crossover bridge across Volga in Nizhny Novgorod Region). Vnesheconombank’s experts prepared procedural, institutional and financial models of projects, as well as sets of contractual and tender documentation.

The Bank concluded public contracts for investment consulting services to respond to the state needs of Perm Territory, Omsk, Orenburg and Rostov Regions, Republic of Bashkortostan.

The projects provided with Vnesheconombank’s investment consulting services include those in social and transport infrastructure.

1. Project Name | 2. Project Value (preliminary)
Construction of watersports recreational complexes in Rostov Region applying PPP solutions | RUB 4.8 bn
Construction of a theatrical centre for children and youth in Orenburg | RUB 5 bn
Construction and operation of Omsk-Fyodorovka airport | RUB 16.9 bn
Construction of a new on-ramp from Ufa to the Ural M-5 federal highway (Eastern on-ramp) | RUB 25.2 bn
Construction of a regional Sterlitamak-Kaga-Magnitogorsk highway in Republic of Bashkortostan | RUB 20.0 bn
Reconstruction of Perm-Berezniki highway, section – the bridge across Chusovaya river km 22 + 157 – km 25 + 780 | RUB 10.0 bn

## Program of Financial Assistance to Regional and Municipal Project Development

Vnesheconombank’s Program of Financial Assistance to Regional and Municipal Project Development (FARMPD) primarily focuses on financial and non-financial support for the respective investment projects financed drawing on extra-budget funds.

The financial assistance measures included targeted loans and equity investments in project companies established by project initiators to facilitate the procurement stage, as well as financing at the pre-procurement stage of consulting and project companies against assignment of claims to public or municipal customers.

Non-financial assistance stipulates investment consulting services in procuring development projects, including preparation of legal documentation, feasibility study, tender documentation for selecting private investors and organization of project financing.

FARMPD Program operator is OJSC Federal Centre for Project Finance (FCPF) – Vnesheconombank’s subsidiary company.

Under the FARMPD Program, Vnesheconombank provided capitalization support to FCPF totaling RUB 4.9 bn, including RUB 2.0 bn earmarked by the Bank to increase the authorized capital of the subsidiary in the reporting year.

In 2013, 70 project applications from Russian constituent entities were received. FCPF’s governing bodies approved financing of 4 new investment projects for the total amount of RUB 460 mn (in 2012, under the FARMPD Program, FCPF approved allocation of RUB 997.5 mn to finance the procurement of 4 investment projects).

The projects financed under the FARMPD Program in 2013 include:

1. Project Name | 2. Financing under the FARMPD Program
Construction of engineering and transport infrastructure of Evrograd multi-purpose complex (integrated development of south-western part of Bugrovskoe rural settlement, Vsevolozhsk municipal district, Leningrad Region) | up to RUB 350.5 mn (allocated RUB 146.7 mn)
Preparation of a feasibility study and tender documentation for an open competitive tender to be granted the right of concluding an investment agreement on integrated development of a section of Don M-4 highway from Moscow through Voronezh, Rostov-on-Don, Krasnodar to Novorossiysk (715-1319 km section) (integrated development of Don M-4 highway to meet the standards established for highways of 1st category) | up to RUB 230.0 mn (allocated RUB 69.4 mn)
Integrated development of Ust-Luga commercial seaport and the adjacent territory (territories of Kuzemkinskoe, Ust-Luzhskoe, Vistinskoe rural settlements, Kingisepp municipal district, Leningrad Region) | up to RUB 395.0 mn (allocated RUB 19.0 mn)
Solid waste recycling and management in the left bank territory of Saratov Region (on the basis of a concession agreement) (environmental improvement in the region through the construction of a complex for solid waste recycling and management (disposal) on the basis of introducing innovative technologies for waste management) | up to RUB 100.0 mn (allocated RUB 42.2 mn)

## Developing PPP Legal and Regulatory Framework in Russia

Vnesheconombank, having an extensive knowledge and expertise in PPP project implementation, is actively involved in forming and upgrading the PPP legal and regulatory framework both at the federal and regional level.

In 2013, Vnesheconombank participated in developing draft federal laws «On Amendments to Federal Law “On Concession Agreements” and Certain Legislative Acts of the Russian Federation» and “On PPP Basics in the Russian Federation”, draft regulatory legal acts to subsidize an interest rate for debt financing raised for PPP projects in the area of social services and healthcare.

In the reporting year, Vnesheconombank continued its efforts in developing the legislation of Russian constituent entities governing the entities’ participation in PPPs. Vnesheconombank’s specialists offered their opinions and recommendations as to draft laws on participation in PPPs in Orenburg, Moscow, Leningrad, Volgograd, Irkutsk, Kostroma Regions, as well as recommendations on harmonization of the respective law of Krasnoyarsk Territory.

Alongside that, the Bank consulted public and municipal authorities of the Russian Federation constituent entities on upgrading the PPP regulatory framework.

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