A few short years ago, all infrastructure finance in Russia came through the federal or regional government budgets. However, as roads, railways, airports, power and water distribution networks begin to creak under the weight of demand from an economy that has grown by an average of 7.5% over the past few years, the Russian authorities have undertaken a major overhaul of policy and legislation to bring the private sector on board.
“The infrastructure market in Russia needs $1000bn over the next 10 years – it is certainly not an opportunity that can be ignored,” says Oleg Pankratov, head of infrastructure capital at VTB Capital, the investment banking arm of Russia’s second largest commercial bank. To attract that kind of investment, the Russian government passed a federal law on concessions, drafted with advice from international law firms such as Freshfields, to create a framework for public-private partnerships (PPPs).
