Head of EDB: To be fulfilled, large infrastructure projects need new legislation and risk sharing mechanisms
Almaty, 21 October 2013. The lack of investment in infrastructure, in particular interstate and interregional projects, is a very serios problem in the post-Soviet space, which affects the development of interregional cooperation and trans-border and sectoral projects. Igor Finogenov, Chairman of the Management Board at Eurasian Development Bank (EDB), said this at the World Economic Forum Moscow meeting Russia’s Regions: Drivers of Growth on Sunday.
According to Mr Finogenov, the lack of investment results in an acute shortage of electricity, which hampers the development of small and medium-sized businesses; carriers’ operating expenses that exceed all economically justified rates; and significant losses incurred by agricultural producers because of the lack of an up-to-date road network.
Igor Finogenov said that EDB fulfilled its mission to promote regional economic integration by investing, in the first place, in large infrastructure projects, including interstate ones. The Bank is taking part in a number of successful projects to upgrade generating and grid facilities in Kazakhstan and Russia. In addition, it has a positive experience of taking part in major PPP projects in the area of infrastructure. These include the modernisation of Pulkovo Airport and the construction of the Western High-Speed Diameter toll road.
«What all successful projects have in common is that they have been carefully worked on and have a correct financing scheme and a team of professional who have the necessary expertise and can arrange syndicated project financing taking into account the capability of each partner to take risks,» said the head of EDB. «There is no financial instrument, which would, as a wand, reduce financing risks in each infrastructure project to a level acceptable to all its participants.» Mr Finogenov believes that the only solution is diligent work to develop an effective specialised legislation, to select and work on infrastructure projects that are expected to produce a «systemic effect» on developing economies, and to form diversified syndicates to effectively distribute risks between all interested parties and a wider market.
Additional Information
Eurasian Development Bank is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth and the expansion of mutual trade and other economic ties in its member states. EDB’s charter capital exceeds US $1.5 billion. The member states of the Bank are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan. Read more at https://www.eabr.org.