PRESS: China to lend on Moscow–Kazan without sovereign guarantee

MOSCOW, May 25 (PRIME) -- China has agreed to issue a 400 billion ruble loan on construction of the Moscow–Kazan high-speed railway without state guarantees from Russia, business daily Kommersant reported Wednesday citing sources.

Previously, China demanded that the Russian government provided banking guarantees, but the Russian Finance Ministry rejected the demand and the Transport and Economic Development ministries supported the decision.

A representative of the Economic Development Ministry told Kommersant that an agreement on no guarantees from Russia has been reached.

A representative of Russian Railways told the business daily that guarantees of repayment and return on investment will be provided in accordance with Russia’s concession legislation, without sovereign guarantees.

Sources told Kommersant that the high-speed railway financial mode guarantees a return on investment of a concessioner in a form of compensation of a difference between the railway planned and actual income. So, if the railway’s passenger traffic is significantly lower than the planned 10 million people per year, China’s liabilities will be reimbursed and its yield will be ensured.

An intergovernmental agreement, under which China Development Bank is to provide the 400 billion ruble loan, is expected to be signed in June during President Vladimir Putin’s visit to Beijing, the business daily said.

The 1.068 trillion ruble 770-kilometer Moscow–Kazan railway, part of a planned 7,000-kilometer railroad between Beijing and Moscow, is supposed to reduce the travel time between Moscow and Kazan to 3.5 hours from 11.5 hours by regular railway.

(67.0493 rubles – U.S. $1)

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