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Recent Study: Russia Infrastructure Report Q3 2013.

[USPRwire, Tue Jul 16 2013] Infrastructure sector growth in Russia will be underpinned by the government's drive to develop its vast natural resources, especially in Siberia and the Far Eastern provinces; the flagship being the multibillion dollar Eastern Gas Programme, which will cement Russia's economic pivot towards Asia. In light of the developments planned, especially in the oil and gas sector, we see this remaining the case to the end of the decade. Freight railways, pipelines, ports and power generation projects will therefore see high levels of growth in the coming years. We forecast total infrastructure industry value to growth by nearly 5% on average per year between 2013 and 2022, compared to 3.5% for residential and non-residential construction. The 2018 World Cup preparations will bolster the latter and drive a spike in overall construction growth in 2017 and 2018, but as this will dissipate post-World Cup, then the industry will fall back on to the resources sector to drive growth. We maintain our forecast for construction industry value growth of 4.9% for 2013.

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The themes that currently shape Russia's infrastructure sector are:

* The Russian government's decision to create a US$10bn investment fund to share the risks inherent in investing in Russia's private sector. The government will use this investment fund as seed money for private investment, reportedly spending US$50-90bn over the next few years to finance up to 20% of privately procured development projects. * * Infrastructure associated with the export of commodities (pipelines, ports and transport infrastructure - to support oil and gas output east and west of the Urals) has a high growth potential - as development is predicated on growth in the natural resources sector. These projects have been prioritised by the government. * * The infrastructure projects surrounding the 2014 winter Olympics and the 2018 FIFA World Cup continue to buffer wider sector growth. * * The world's largest public-private partnership project in the toll road construction sector finally seems to be off the ground after years of delays. The first phase of the symbolic US$6.5bn Western High Speed Diameter (WHSD) toll road secured a US$1.8bn loan on June 26 2012, backed by a consortium of five banks comprising: Vnesheconombank, VTB Capital, Gazprombank, the European Bank for Reconstruction and Development, and the Eurasian Development Bank. The remaining US$1.2bn required for the first section will be supplied by the Russian government and state sponsors. * * The privatisation wave within the domestic construction sector we were expecting in 2011 did not ultimately gain momentum (with the exception being the energy and utilities sector, which saw considerable foreign participation). * *

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Geographic Code:4EXRU
Date:Jul 16, 2013
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