“State has plenty of support measures” Oleg Pankratov CEO, VTB Infrastructure Holding — “Goals and Means” Program

How are infrastructure projects implemented in Russia? How could investments in the segments be increased? What are prospects in the area in the near-term? These questions were discussed by Oleg Bogdanov, “Kommersant FM” economic observer, with Oleg Pankratov CEO of VTB Infrastructure Holding at “RUSSIA CALLING!” Forum.

— Your holding is a major private investment holding, implementing infrastructure projects. How did the pandemic change your strategy and approaches to what’s happening on the market?

— By all means, the pandemic has affected the overall infrastructure investment market. Moreover, it affected passenger traffic, it was especially obvious in the aviation industry and it continues to have a significant effect, especially on international traffic. At the same time the domestic traffic has largely recovered and even had some growth. Speaking of toll roads, in this segment we saw a plunge down to 60% during lockdowns. Nevertheless, if we look at our flagship Northern High-Speed Diameter in Saint-Petersburg, then there has been a recovery, and today we see traffic growth versus the pre-pandemic year of 2019.

Furthermore, in 2021 we see more action at the infrastructure investment market. The state has massive plans to invest in Russian infrastructure, this is why it has a positive effect, driving the market. Today we are investing into 14 major projects. We have added waste processing, underground construction and social infrastructure to our four traditional industries: airports, seaports, toll roads and logistics. The number of sectors and projects for our investments has grown.

— Which support measures by the state, development institutes could help increase infrastructure investments?

— Indeed, the state has many different support measures, like private and public partnership. If we look at toll roads, then, as a rule, the state issued the so-called capital grants, i.e. it financed some road construction volumes. This was what happened at our major projects — at the abovementioned Northern High-Speed Diameter and M11 highway (Moscow—Saint-Petersburg). The state allocated rather large amounts to subsidize construction of such highways.

There is a very interesting trend shaping up in the Far East, where we have the so-called Far Eastern concession mechanism in operation, VTB Infrastructure Holding has signed a first concession of the kind with Magadan region. This has happened just recently, at the Eastern Economic Forum, and now the project is being implemented. Moreover, now “DOM.RF” is actively involved in infrastructure, related to housing construction, meaning primarily social infrastructure, it can issue subordinated loans. A rather well-established tool has been in use, this is VEB.RF project financing factory.

“RUSSIA CALLING!” forum featured an infrastructure session. What was discussed and what are the pressing issues of today? What does the market expect in the near future?

— Yes, indeed, there was a very interesting discussion. It featured state officials, businessmen, ministers and foreign investors. We discussed issues of development in the Far East, the Far Eastern concession, state plans, support mechanisms. International investors shared their international and Russian performance experience. This session shows that international investors are interested in properly structured investments, in good private and public partnership projects in Russia.

— Despite geopolitical risks, they are still looking your way.

— Absolutely, it was stated loud and clear.

— My last question is about the statement of your strategic partnership with VEB.RF. What’s it about?

— One of the aspects that we discussed at the session, a very important one, — it is ESG, meaning green financing, social responsibility of business, project governance economy. VTB Infrastructure Holding always held these issues in focus. Indeed, we signed an agreement with VEB.RF on further certification of our projects. VEB.RF initiated the IRIIS mechanism — it is a Russian mechanism, for certification of projects under ESG standard. We are very proud that our “Ufa Eastern Exit” project was one of the first to get certified, to receive a very high gold certification level. This shows appreciation of our efforts towards the issue. We will keep certifying other projects too. Generally speaking, this agreement is about these issues, about sustainable development goals.