OREANDA-NEWS. June 20, 2011. The EBRD and “Russian Highways” (“AvtoDor"), the state company responsible for the development of the motorway network in the European part of Russia, today pledged to work on ways of making it easier for such projects to attract international financing and private sector involvement.

A Memorandum of Understanding (MoU) signed today commits the two parties to focus on how ensure that AvtoDor-managed motorway projects in Russia meet international best practises, particularly over environmental and social issues, at their various stages, including planning, route selection, construction and operation.

The MoU was signed on the sidelines of the St. Petersburg Economic Forum by the EBRD’s Managing Director for Infrastructure Thomas Maier and Mr Sergey Kelbakh, First deputy Chairman of AvtoDor. Mr. Maier called the MoU a cornerstone which makes it possible for the EBRD and AvtoDor to build a long-term partnership with the task of modernising Russia’s road system.

Adopting an approach which includes a major outreach to key stakeholders whose interests could be affected by future motorway projects is the only way forward, Mr. Maier added. He explained that the broad consensus which can thus be achieved makes it possible to avoid long delays in the building of such costly infrastructure projects.

An open dialogue with all stakeholders is particularly important when a route is being selected, when the environmental and social impact is being assessed, as well as when environmental and social mitigation measures are being devised.

Furthermore, matching international best practises, in addition to complying with all relevant local regulations, is crucial to attracting the support of international financial institutions (IFIs). The same applies for major non-Russian commercial banks which have signed up to the Equator principles on managing environmental and social risk in project finance transactions.

In addition, this cooperation MoU commits the EBRD and AvtoDor to explore co-financing opportunities and identify suitable financing instruments, which could be used to support road projects.

One of the tasks the Russian state has handed AvtoDor is to attract investments through Public Private Partnerships (PPPs). The Russian government is planning to invest 1.3 trillion roubles (equivalent to €31.5 billion) on country’s road system up to 2019. The federal budget will provide 75 % of this funding, while the remaining 307 billion roubles (equivalent to nearly €8 billion) are to be raised from private investors.

The main road projects AvtoDor is currently managing include the reconstruction of three motorways leading to southern Russia, Belarus and Ukraine, respectively known as M4, M1 and M3, as well as building of a new toll highway linking Moscow and St. Petersburg.