PPP-Debates «New Russian Law on PPP: Possibilities and Limitations in Transport Sector»

Research Conference “Public-Private Partnership in Transport Sector: models and Experience”

 

Organizers: Center for Public-Private Partnership Studies of Graduate School of Management, St. Petersburg State University

Date of the event: May 20, 2016

Place: St. Petersburg, Volkhovsky per., 3

  

Moderators:

  • Svetlana Maslova (Head of the Center for PPP Studies GSOM SPbU, Associate Professor, Department of Public Administration, GSOM SPbU)
  • Dmitry Pronchatov (Deputy Head of Federal Road Agency)

 

The II Annual Research Conference “Public-Private Partnership in Transport Sector: models and experience” was held on May 20, 2016 in Graduate School of Management. Traditionally, the Conference put together the representatives of public authorities, business, academic society and young researchers of PPP in order to discuss relevant problems and new possibilities of public-private partnership. As in the last year the Conference caused great interest in professional societies and united more than 100 participants, among which are the representatives of public authorities – Ministry of Transport of the Russian Federation, Federal Road Agency, Committee on Development of Transportation Infrastructure, Committee of Transport, Committee of Investment of St. Petersburg, Committee of Housing and Utilities and Transport of Leningrad Region, ANO “Directorate on Development of Transport Infrastructure of St. Petersburg and Leningrad Region”; financial organizations – Gazprombank, VTB Capital; consulting firms – “Capital Legal Services”, “Kachkin and Partners”, “Maxima Legal”, “Musin, Ibragimov and Partners”, “Project Management Agency”, “Smart Processing” and so on.

 

The right to open the conference was granted to the First Deputy Director of Graduate School of Management SPbU, K. Krotov. Konstantin Krotov noted that in spite the fact, that the conference brought together the representatives of public authorities, financial organizations and companies developing PPP projects, its main participants as before are students, postgraduates and young researchers, in a word – future specialists and experts of PPP, who will have to solve the problems of PPP development in a short time. Konstantin also noticed that there are all conditions for it in Graduate School of Management.  For many years, educational, expert and research activities in the field of PPP have been carrying out here at a high professional level, one of good example of which is the PPP Best Practice Guide for Road Sector developed by the Center for PPP Studies GSOM SPbU in close cooperation with UNECE International PPP Centre of Excellence.

 

Welcoming speech was given to Dmitry Pronchatov, Deputy Head of Federal Road Agency; Konstantin Pashkov, Director of Administrative Department of the Russian Ministry of Transport and Dmitry Shakhanov, Vice-president of Human Resources and Social Issues in JSC “RZHD”.

 

Dmitry Pronchatov marked the importance of PPP in today’s development of infrastructure and told about main modern trends of PPP in the road sector. One of them is introduction of private concession initiative, in this connection Federal Road Agency even now can notice the increase of interest from the part of private partner to participate in implementation of PPP projects in the road sector and expects its further growth. The second tendency – co-financing of regional PPP projects in the road sector from revenues of the system “Platon” (up to 50 billion rubles/year), which, in spite of difficult implementation, will facilitate PPP development in Russia. Some of the potential pretenders for such co-financing are the projects of construction of the highway “Bypass of Khabarovsk”, the bridges over the rivers Kama, Kambarka and Bui in Izhevsk, as well as the bypassing road around the city Chusovoy in Perm Krai. Dmitry also noted the importance of the Conference for sharing of knowledge, especially scientific knowledge, which is gained through the research activities of the Center for PPP Studies GSOM SPbU. According to the opinion of D. Pronchatov, analysis of international experience and identification of international trends are very important for the work of PPP practicians on successful implementation of projects.

 

K. Pashkov conveyed greetings from the Minister of Transport of the Russian Federation, Head of Department of Public Management of GSOM SPbU, M. Sokolov, who is the main ideologist of the conference. He also noticed that transport sector has the biggest success in PPP development in Russia in comparison with other spheres, but, in spite of it, it has still felt the need in theoretical and methodological support. Solution of this problem, in his opinion, is the organization of the Conference with involvement of the representatives of academic society, transportation universities, specializing not only in road sector, but also in the field of civil aviation, river and sea transport, railways – spheres having great potential for PPP development. Finally, Konstantin Pashkov expressed the hope for expansion of scale of the conference and participation of large number of students.

 

D. Shakhanov in his welcoming speech said that the participation of JSC “RZHD” in the Conference “PPP in Road Sector: Models and Experience” is not accidental due to the fact, that PPP is a new and very perspective way of the company’s development. Thus, Dmitry highlighted the projects of construction of the railroad “Moscow – Kazan” and “Northern Latitudinal”, the most preferable way of realization of which is PPP. On behalf of the company, Dmitry Shakhanov wished good luck and success to all participants of the Conference.

 

The First plenary session of the Conference consisted of the presentations of the representatives of the Center for PPP Studies GSOM SPbU, S. Maslova and R. Mingazova; Deputy Head of the Department of Infrastructure Finance, VTB Capital, A. Kiselev; and Executive Director of the Department of Project and Structure Finance, JSC “Gasprombank”, A. Shevchenko.

 

The report of S. Maslova and R. Mingazova was devoted to the presentation of “PPP Best Practice Guide for Road Sector”, which was already presented in April by Svetlana Maslova to international PPP experts and became the object of discussion at the International UNECE PPP Forum Implementing the United Nations 2030 Agenda through effective, people-first Public-Private Partnerships (Geneva, Switzerland). “PPP Best Practice Guide for Road Sector” was prepared by the team of the Center for PPP Studies GSOM SPbU in cooperation with UNECE experts on the basis of analysis of realization of more than 20 PPP projects in 16 countries. It is the information and analytical guide for public authorities and private business with the aim of preparation and implementation of successful PPP projects in the road sector. The reporters noticed that there are no ready universal solutions for success of a PPP project. However, Svetlana Maslova and Ruzaliya Mingazova presented main factors and consistent patterns, which lead to success or failure of a PPP project. In their speech they highlighted the main PPP models in the road sector, its benefits and losses, gave general recommendation referring to PPP models in the road sector and depending on the road’s type (toll or free). It was discovery for many participants to know about international PPP trends presented by reporters, especially gradual transfer from negative to positive incentives for private partner and introduction of performance indicators for him. Financial aspects of projects implementation were analyzed from the point of the main parameters – budget, sources of funding and used payment mechanisms, herewith speakers told about the tendencies in change of total funding and payment mechanisms depending on the type of roads and PPP models. There also was paid attention to technical aspects of roads’ operation, specifically to toll collection systems, tariff setting, traffic forecast. Finally, Svetlana Maslova and Ruzaliya Mingazova told participants about the process of risk management, identified the risks characteristic to all PPP projects and specific risks related only to the road sector, and revealed strategies of risk mitigation in the road sector.

 

A. Kiselev told participants about the key elements of successful PPP projects. Andrey Kiselev emphasized attention on two important elements of PPP projects implementation – financial and legal structuring. The speaker not only highlighted in details theoretical aspects of these issues, but also demonstrated its application in practice. Andrey used famous PPP projects of reconstruction of the airport “Pulkovo”, construction of toll bridges in Udmurtia Republic and  Highway M11 “Moscow – St. Petersburg” (543-684 km) as examples.

 

The final report of the First plenary session was presented by A. Shevchenko. In his report “PPP and Signs of Regional Heritage. Case Study: “Syktyvkar - Naryan-Mar” Aleksey paid main attention to consideration of political risks and possible instruments of its minimization. The theme of political risks in road PPP projects according to the international experience is very relevant. Aleksey Shevchenko highlighted this importance on the example of Russian PPP projects got under the impact of this risk – Orlovsky Tunnel,  Highway M11 “Moscow – St. Petersburg” (15-58 km), system of toll collection “Platon”. It is also was interesting for participants to take primary information about new project of construction and reconstruction of the highway “Syktyvkar - Naryan-Mar”, financial organization in which is the bank “Gazprombank”.

 

The next part of the conference was held in the form of PPP-debates on the topic “New Russian Law on PPP: Possibilities and Limitations in Transport Sector”. The feature of PPP-debates was the participation of bachelor and master students of “Public Administration” department having the best academic results of PPP studying in 2015-2016. S. Maslova, moderator of PPP-debates, offered questions for discussion related to PPP regulation at Federal and Regional level, necessity  and sufficiency of the method of effectiveness assessment of PPP projects and its comparative advantage, establishment of closed list of PPP objects, expediency of the “constructor of elements” of PPP forms, validity of requirements to private partner. Experts also discussed possibilities and limitations of mechanisms of private concession initiative established in the law, its application for joint PPP projects, sufficiency of financial mechanisms, government support measures and measures on management of main commercial and financial risks in PPP projects. Summarizing the results of all discussion, experts were offered to discuss, whose possibilities – of private or public partner, the new law expands or limits to a large extent. Brilliant legal position on many issues discussed was presented by A. Chichkanov, Head of PPP Center of JSC “Gazprombank”. In his opinion, it is expedient to regulate PPP at the federal and regional level, taking into account PPP projects have already been implementing. Herewith, the expert noticed that the optimal variant would be the adoption of a framework federal law providing more flexibility in lawmaking activities in the field of PPP for regions. The interesting opinion in relation to the method of effectiveness assessment of PPP projects and its comparative advantage was expressed by Bachuki Tsanava, the 1st course student of program “Master of Public Administration”. Bachuki offered to improve the existing method through the use of special social discount rate, which takes into account socio-economic aspects of project realization for calculation of budget investments, both in the case of implementation of PPP project, and in public sector comparator. Reasoned opinion in relation to many issues was expressed by K. Popov, Deputy Chairman of the Board of Legal Issues of State Company “Avtodor”, who has extensive experience of preparation and implementation of PPP projects both at the federal level, and regional level. More information about PPP-debates is available here.

 

The final event of the Conference “PPP in Road Sector: Models and Experience” was the Second Plenary Session devoted to presentations of representatives of academic society – professor, postgraduates and students of universities. Results of their research in relation to public-private partnership in road sector were presented by participants from Rostov State Transport University: Evgeny Szewczyk, Irina Tischenko, Dmitry Kravchenko; Petersburg State Transport University: Yulia Panova, Svetlana Sigaeva, Andrei Shipitsyn; Siberian State Academy of Water Transport – Akshin Babaev; Admiral Makarov State University of Maritime and Inland Shipping – Ekaterina Pakhomovskaya; and students of Graduate School of Management: Sofia Gromova, Emil Iliasov, Yulia Ikhonkina, Anna Lozhkina, Anastasia Trofimova, Bachuki Tsanava; and Faculty of Economics of SPbU – Aleksandr Batyarkin. At the end of the Second plenary session the moderator of the event, Chief Researcher of the Center for PPP Studies GSOM SPbU, Andrey Ivanov thanked everyone for participation and invited to the Conference next year.