Public-private partnership in Russia – the hurdles along the way

The issue of public-private partnership is one of the popular trends of modern life in Russia. Interest in the issue is constantly fuelled by the economic situation in the country.

Projects, particularly in the social and infrastructure spheres, need to be implemented but the means available in the federal budget are not sufficient to cover all the costs. Investments are required and public-private partnership is one of the solutions for this problem. But although this initiative sounds very appropriate, one soon realizes that it is rather difficult to put it into practice.

At present there are enough major players on the Russian market that are ready to engage in the realization of PPP projects. Our company is one such player and the issue of PPP is of interest to us as a possible direction of our development.

We at RWM Capital Asset Management manage approximately $ 1bn in fund assets. Among our shareholders is “Blagosostoyanie”, the second largest Russian non-governmental pension fund. Thus, I believe, our company as a serious investor is entitled to some attention from regional authorities.

Within the framework of the development of this direction we have started forming relationships with various regions of the Russian Federation this summer. As a result, the possibility of developing public-private partnership from scratch was tested in practice in several areas of our country.

Our first problem was encountered at the very start. In most cases it was rather difficult to determine one particular official responsible for dealing with investors in any particular region, and it was even more difficult to try and get the required information using the universal phone number of ministries and agencies.
We decided to use the established official way, assuming it would be more comprehensible for a regional official.

We sent letters containing offers of cooperation and possibility of RWM Capital Asset Management’s participation as an investor in public-private partnership projects in 20 regions with positive investment appeal indices. We made sure that these letters had not been lost along the way and were delivered to the intended recipients.

The result of our attempts was shocking. Depending on the position taken on the issue of interaction with potential investors all regions may be divided into four very different groups, based on their eagerness to cooperate with third party investors in PPP-projects.

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