MOSCOW (RIA Novosti economic commentator Nina Kulikova). The second reading by the State Duma of the bill "On Concession Agreements" is scheduled for April.
This law, which both Russian and foreign investors have been anticipating for a long time, should provide a legal framework for public-private partnerships in Russia. However, specialists say that the bill has many shortcomings.
The system of public-private partnership (PPP) is widely used throughout the world. It is a mechanism for attracting private finance for the construction or modernization of state-owned facilities. In Russia, PPP could be used, first and foremost, to develop the country's manufacturing infrastructure, which is one of the most acute problems facing the Russian economy.
Both national infrastructure (power and telecommunications networks, roads and railroads) and municipal infrastructure (gas, water, power, heating and sewage) are in urgent need of investment. The state cannot meet all the costs by itself.
The most widely used form of PPP throughout the world is the concession agreement. The key features of this type of partnership agreement are as follows: a private company invests in an element of infrastructure (for example, an airport or a road) and then for a certain period of time receives money in return for the use of the facility, while the state retains ownership of the facility. Essentially, private companies are given an opportunity to make money, and the state is able to use private finance to tackle social problems.
Until the concept of "concession" is introduced into Russian law, PPP will not take off in Russia. The bill "On Concession Agreements" had its first reading in 1995, after which it was shelved. Work on the bill has recently resumed and now everyone is waiting to see how the deputies react to the amended version. Igor Konkov, Adviser to the Economic Development and Trade Minister, says the ministry expects the law "On Concession Agreements" to be adopted by the State Duma during its spring session. He also pointed out that potential foreign partners have stated that they will not participate in projects in the transport sector unless this law is passed. Almost every sector of the Russian economy now has concrete plans to use PPP. The priority PPP projects of the company "Russian Railways" include the opening of a high-speed Helsinki-St. Petersburg-Moscow line, the construction of a Berkakit-Tommot line, the construction of branch lines to new oilfields, and also the development of railroad links to ports.
Mikhail Pogosyan, the general director of the Sukhoi aircraft company, says that PPP could play a very positive role in the project to develop and construct a regional airplane and also in the establishment of a joint aircraft-manufacturing corporation.
There is very clearly a need to establish a legal framework for PPP. Vladimir Yakunin, a first vice-president of Russian Railways, says now that the depreciation of railroad fixed assets has reached 60%, it will be impossible to improve the network without a public-private partnership.
However, while it is true that the bill was abandoned for too long, it is now being pushed through too quickly. Yakunin believes that the mechanisms and institutions required for the implementation of the law are ill defined. Viktor Pleskachevsky, the chairman of the State Duma's property committee, says that even more importantly, the present version of the bill confuses the concepts "concession" and "trust management." He explains, "While trust management can transfer property, a concession agreement can only confer the right to develop resources." He believes that the best solution would be to pass two separate laws, one on concessions and one on trust management.
