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Two thirds of Far East and Arctic concessions are major investment projects, one third – social

Two thirds of Far East and Arctic concession projects are focused on infrastructure development for investment projects, and one third is designated for social projects. This was reported by Alexei Chekunkov, Minister for the Development of the Russian Far East and Arctic, speaking at VTB Capital’s “RUSSIA CALLING!” investment forum.

He pointed out that the only way to accelerate launch of investment projects and to set up infrastructure in Far Eastern communities is infrastructure mortgage lending. "We called this mechanism the Far Eastern and the Arctic concessions. It enables the state to guarantee investors recovery of their investments both into industrial infrastructure assets for investment projects and into social infrastructure for those people who would work at new facilities, over 10-15 years, with funds from a state program ", - said the minister.

"Our goal is a portfolio of about RUB 500 billion. Today there 35 operational concession projects for the total amount of RUB 270 billion. The portfolio is growing rather rapidly, VTB Group (MOEX: VTBR) is actively engaged in the process – particularly in Magadan region. There is quite a broad range of projects. About two thirds by volume of funds, ca. 67%, are applied to investment project infrastructure. The Far East and the Arctic are rich in natural resources, and new large industrial clusters require infrastructure. And one third goes to social projects", - said Chekunkov.

Among other significant investment projects he mentioned a new generation of power generation assets – small nuclear power plants, which would help make economic development of Northern Yakutia profitable: "Together with Rosatom Group we are implementing a concession project for development of a nuclear power plant, enabling development of a new mining cluster with Kyuchus goldfield (Yakutia) at its core".

Moreover, the minister highlighted the development of Baimsky porphyry copper ore deposit (Chukotka): "The project is operated under an unprecedented package of state support measures. A whole cluster of floating nuclear power plants to supply power to the project is being built from scratch. A new power line is under construction. And the concession project will build a motor road to new ports, also to be constructed for the project ".

New social infrastructure facilities, mentioned by Chekunkov, included a healthcare improvement project in Magadan: "Five healthcare facilities - clinics, hospitals, child clinics – will be implemented under a concession mechanism. We hope it will be done with VTB Group involvement. In this regard there is also a new block of residential buildings under construction. This is yet one more argument in favor of new social projects, why a concession mechanism needs to be used ".

He also noted that housing construction in the Far East is picking up speed, and concession projects are being discussed with private business in order to bring housing costs down.