"This is an attempt to create a perfect model for imperfect administrative system"
Ministry of Economic Development and Trade has started today a contest to select projects to be financed from the investment fund. Deputy Minister of Economic Development and Trade, KIRILL ANDROSOV, told in his interview to Alexey Shapovalov from Commersant, what ideology the commission responsible for funds allocation would be guided by.
- Could you describe in greater detail how the selection process of projects to be financed from the investment fund would be held?
- Selection process starts today and its first stage - application acceptance - ends on the 20th of May. We set the deadline for the first stage on purpose. It would give us an opportunity to access efficiency of the project selection technology on the basis of the pilot procedure. We intend to announce contest results at St. Petersburg Economic Forum on the 13-15 of June where we hold an Investment Commission, and that would allow us to conclude first investment agreements by the end of summer. In future we plan to make the selection process continuous. It would be possible to come to our Ministry at any time with any prepared project and submit it for an expertise. The only thing that we have restricted is the number of Investment Commission meetings: not less than once in a quarter.
- What type of applications do you anticipate?
- By the 20th of May I anticipate at least six applications for thoroughly prepared investment projects. I've named them more than once. I can list all major projects, but it depends not on our priorities or preferences but on how well the project is prepared. The most thoroughly prepared projects are "Western speedway diameter" in St. Petersburg, new industrial zone developing in Nizhnee Priangarje, in Krasnoyarsk region, new petrochemical complex construction in Tataria in Nizhnekamsk. There are three more anticipated projects, but I'd rather not disclose them so far, as I'm not sure they would be properly prepared.
- If project selection were your priority right, which projects would you prefer?
- Infrastructure. I believe that the state should develop infrastructure.
- And which projects would you launch first?
- I'd rather not talk about particular projects.
- In your opinion, what infrastructure does Russia need most of all?
- Future electric facilities, electric power lines, because a lot of enterprises have already incurred deficit of electric power. And that is not a problem of generating required energy, but of network capacity. We can't construct plants not being able to provide them with megawatts of electric power. It's railway. There exist projects of plants and factories construction, but without railway, cost of construction materials delivery and later of finished products shipping makes those projects unprofitable. Then motorways connected to ports' infrastructure. Such projects exist in the Far East region, on the Black Sea seaside and on Baltic Sea. My personal priorities lie in these spheres.
- When projects to be financed from the investment fund are mentioned, it is always said that they are long-term projects. Could the state guarantee that rules of the game stay unchanged for the whole duration of those projects and even after the year 2008?
- I don't think that the year 2008 differs that much from the year 2009.
- I don't think investors would agree with you. I'm almost sure they wouldn't.
- May be. But there are laws in force today, and they would be in force in 2008 and in 2015. Your question is rather about what the chances are that after 2008 the laws start to change?
- No, it's more interesting to know if you could guarantee that during twenty years of project realization rules of the game for investors would stay the same.
- Could you guarantee that our plane wouldn't crash while landing?
- I couldn't.
- Neither could I.
- Ministry of Economic Development and Trade claims that one of the main state targets of Public Private Partnership (PPP), which are put to practice by investment fund projects, is minimization of administrative and bureaucratic barriers. But it would apply only to large companies chosen to be partners of the state. And what about others? Why are preferences granted for particular companies instead of elaborating clear rules of the game for the economy as a whole?
- Ideally, you are right. In perfect systems, in perfect economies, in perfect socio-political regime there are no administrative and bureaucratic barriers for business. All are in equal conditions of perfect competition and then business doesn't notice the power of the state or any limitations at all. From my experience, I can't name any perfect economic system in the world. Unfortunately, Russia is also not a good example of a country with minimal bureaucratic barriers. However, we need to develop infrastructure and PPP instrument - is a step, small in substance, but large in sum towards solving those problems.
- Is it a perfect model for imperfect economy?
- It's an attempt to create a perfect model for imperfect administrative system.
- Why doesn't government try to test this model on smaller projects but aims straight at mega-projects?
- Well, I wouldn't call PPP projects mega-projects, all of them are transparent and measurable.
- But if to judge by the sum of required investments, they are not that small at all...
- They are large in terms of money, but they are transparent, they are measurable. When an airport is constructed, you could see it. When a ferry terminal appears, you could feel it. When a motorway is constructed, it makes your life easier... Why don't we test it on small projects? I draw a parallel with our investment fund, where we have limited project cost to 5 bln rubles. It was made to prevent this resource from being scattered on many small sub-programmes. Small programmes - it's measures on small business support. And we are doing a lot in this sphere. Small business today needs bureaucracy minimization rather than money. While infrastructure projects require money.
