The demand is increasing for upgrading the road infrastructure with simultaneously exhausting traditional sources of financing in the Russian regions, and along with it the interest of regional and local administrations to attract private investment for construction of new roads and structures also increases. Regional and municipal authorities are increasingly adopting the federal experience in development of the road sector based on the PPP principles.
In conditions of budget deficit, PPP is an effective tool for development of the regional and municipal transport infrastructure
Sustainable development of the transport network is a guarantee of economic development, national security and improvement of the quality of population life
Increase of investment attractiveness of the transport industry requires development of a regulatory framework
Длина региональных дорог и количество автомобилей
The most common forms of PPP by source of income are as follows
Direct toll collection
Direct toll collection assumes that all revenues from automobile traffic go in favor of the investor. The main risk that the investor bears in this case is the risk of traffic itself, which may turn out to be lower than the predicted one. This type of concession is used in the projects (or road sections) with high traffic volumes. In such projects, the share of private financing is 40-50%, and the potential internal rate of return may reach 15-20%.
Life cycle contract
The private investor receives a fixed payment, which includes the return on investment (equity or borrowed funds), road maintenance fee (maintenance charge) and fixed interest on invested capital, which, as a rule, is the inflation rate plus 4-8%, i.e. the total yield may be on average 11.0-14.0% per annum, which is quite an attractive level on the horizon of 25-30 years. This type of concession is used on the road sections with less heavy traffic and a longer payback period.