THE Kremlin has announced the first four projects ear-marked for its new multibillion-pound public private partnership (PPP) initiative to rebuild Russia’s infrastructure.
The big winner so far is Russian Aluminium, which looks set to win £800 million in state money to help to build a £2 billion hydropower plant and aluminium smelter in Siberia.
Russian Aluminium is owned by Oleg Deripaska, a metals tycoon with a personal wealth of about £5 billion. He helped to secure the support of the Kremlin for the project at a meeting with President Putin.
The 200-metre-high hydro-electric dam will cross the Angara River in central Siberia and provide 3,000MW to a nearby smelter, yet to be built. Both the power station and the smelter will be jointly owned by Russian Aluminium and UES, the state-owned electricity monopoly. The smelter will produce 600,000 tonnes of aluminium a year, making estimated revenues of £600 million a year. Russian Aluminium will put about £1.5 billion in private financing into the project, via a loan package arranged by ABN Amro and Calyon.
It is a landmark deal for Russian industry. Konstantin Simonov, general director of the Centre for Current Politics in Moscow, said: “The idea is to repeat the economic development of Soviet times, focusing on really big industrial projects. This is probably the biggest new industrial project in post-Soviet Russia.”
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However, the PPP structure — untried in Russia — raises concern. “In Soviet times, the beneficiary of these huge industrial projects was the state. Now, it’s a private company belonging to one of the richest men in Russia. It’s a strange use of public funds,” Mr Simonov said.