Browse the complete Report on Russia Infrastructure Report Q4 2010
Four themes dominated developments in Russia’s infrastructure over the previous quarter:
- Orlovsky Tunnel PPP awarded
- VINCI strengthened its presence in the Russian infrastructure sector.
- 2009 construction industry figures revealed a much worse picture that originally anticipated, with construction industry value down by 28.2% in real terms and gross fixed capital formation almost down by 10%.;
- Privatisation of several state owned assets still on the table
The government of St. Petersburg and a consortium led by VINCI signed the concession agreement for the design, financing, construction and operation of the Orlovsky Tunnel. This is the second major concession agreement for VINCI in Russia and based on recent progress on both projects, the company is on a strong course to cement its presence in the market.
Our bearish forecasts for Russia’s construction and infrastructure sector for 2009 turned out to be not bearish enough. Our expectation that higher oil prices and reduced volatility in the economic outlook would provide some support for the industry in the second half of 2009 did not play out. On the contrary, H209 losses in industry value growth were in fact greater than those recorded over H109. Overall, the industry shrank by a massive 28% in value in real terms over 2009, a decline precipitated by curtailed government spending and the contraction in residential and commercial construction. Our forecasts for 2010 onwards have been revised down. The construction industry value as a whole will not recover as robustly as the infrastructure sector, because the steep decline in residential and commercial construction will weigh on the sector for longer.
Privatisation is also a theme for 2010, as the government seeks to finance the budget deficit (forecast to be US$73bn in 2010, or 6% of GDP) by offloading of assets. Transport and energy assets have been earmarked among the 5,500 state-owned companies in which the state plans to divest stakes.
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