PRESS: Russian Railways suggests concession for Sakhalin bridge

MOSCOW, Aug 21 (PRIME) -- Russian Railways has suggested the government introduce a concession agreement for construction of a 585-kilometer 540.3 billion ruble railroad and a 6-kilometer bridge from mainland Russia to the Sakhalin Island, Kommersant business daily reported on Tuesday quoting a presentation of the state railway monopoly.

Russian Railways’ investment program includes spending of 290.3 billion rubles on the bridge, including 100 billion rubles of budget funds, 90 billion rubles coming from the Far East Development Fund, and 60 billion rubles coming from the corporation for development of the Sakhalin Region, Kommersant reported.

The bridge and the railroad are to be built in 2018–2023.

The company suggested three options for the concession agreement: a 252.8 billion ruble contract only for construction of the bridge, a 540.3 billion ruble deal for construction of the bridge and the railroad, and a 570.3 billion ruble deal for construction of all facilities including ports.

Russian Railways only calculated a 1.12 trillion ruble commercial efficiency for construction of the Selikhin–Nysh railroad together with upgrades of the Baikal–Amur Mainline and the Trans-Siberian Railway. The net present value amounts to 298.7 billion rubles, the internal rate to 8.4%, and the discounted payback period to 26 years. The Selikhin–Nysh railroad’s discounted payback period is 11 years, and its budget efficiency is 547.2 billion rubles, taking into account 250 billion rubles of state support, the business daily reported.

A source familiar with the matter told Kommersant that the state takes more risks than a concessioner under the existing concession contracts, but commercial efficiency of the projects usually compensates that. It is difficult to pinpoint an interested party for the concession agreements suggested by Russian Railways, as the railway monopoly cannot be the core owner of a project company, the source said.

Another source told Kommersant that construction under a direct state order could be cheaper than a concession deal. The Transport, Finance, and Economic Development ministries said the authorities were yet to receive the presentation, while Russian Railways declined to comment.

(67.1807 rubles – U.S. $1)

End