VEB.RF studies $8 bln private highway project Meridian

MOSCOW, May 6 (PRIME) -- Russian state development corporation VEB.RF is interested in an U.S. $8 billion construction of a 1,982-kilometer private highway Meridian that should become an alternative to the Western Europe–Western China highway, a representative of VEB.RF told PRIME on May 4.

“Improvement of transport infrastructure meets the priorities of VEB.RF. Regarding the project, we are analyzing possibilities of its structuring and fund raising together with its initiator. Taking into account the project’s scale, we suppose that it would be reasonable to form a pool of investors and creditors and to use measures of state support. We don’t rule out a possibility of attracting financing from Chinese partners,” the person said.

Russian Holding Company of former Deputy CEO of Gazprom Alexander Ryazanov is implementing the project. The Meridian highway should be built from scratch, run through several Russian regions, and become part of the Silk Road Economic Belt that connects the E.U. countries to China through Kazakhstan and Belarus.

Borrowed funds are to cover 70% of the financing. The highway was a contender for a loan from the Asian Infrastructure Investment Bank, but the bank did not consider the company’s bid in 2017. The highway was included in Russia’s state mainline infrastructure development plan, but on condition of zero state financing.

Mikhail Blinkin, director of the Institute for Transport Economics and Transport Policy Studies at the Higher School of Economics, said that the project was artificial and far-fetched.

“I’ve participated in many discussions of this project, and its idea seems more than strange to me. I’ve tried to request at least several arguments on the transportation economics. I was at several discussions of the project and I received none of the arguments. It is possible that they were submitted to the executives of VEB.RF as they support the project,” Blinkin said.

A source from a legal firm that structures similar projects told PRIME that it would be impossible to implement such a project without state financing.

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