Russia Approves a Private $10 Billion Europe-China Highway
Would add a trucking option to the New Silk Road
Prime Minister Dmitry Medvedev has approved the construction of a new tolled motorway across Russia designed to significantly shorten cargo routes, local media reported. The project is expected to cost around $9.5 billion.
The massive infrastructure project, the Meridian highway, has won the support of the Russian government, Vedomosti business daily said, citing government officials. The highway is set to stretch over 2,000km from the Belarus border to the frontier with Kazakhstan, and it is expected to become part of the fastest trucking route between China and Europe.
While the construction will fully rely on investors’ funds without taking money from the Russian budget, the government has pledged to assist with attracting new investment for the project, including from China. However, investors want the government to ensure their minimal revenue of around $550 million, covering not commercial but political risks such as the closure of state borders.
Given that tolls will be charged for trucks and cars, as well as the large capacity of the highway, the project is expected to break even in 12 years.
The Meridian highway falls under China’s ambitious transcontinental trade and infrastructure project called One Belt, One Road, which Russia supports. In April, Russian President Vladimir Putin visited China and took part in the second Belt and Road Forum for International Cooperation. Back then, he said that the Chinese initiative will strengthen “the constructive cooperation” of the Eurasian states and will ensure sustainable economic development and economic growth in the region.
The Russian government has approved construction plans for a toll highway that will dramatically cut cargo shipping times between Europe and China, the Vedomosti business daily reported.
Russia is pursuing an ambitious infrastructure plan in President Vladimir Putin’s current presidential term, including developing its portion of the strategic China-Western Europe transport corridor. Russia has reportedly began construction of the first section of the corridor this year: a toll road linking China’s western neighbor Kazakhstan with Belarus called the Meridian highway.
Prime Minister Dmitry Medvedev approved the Meridian toll highway last month, Vedomosti reported on Sunday.
Medvedev has reportedly ordered cabinet officials to consult the project’s initiator on attracting investment for the project, including from China, and giving it the necessary support.
The initiator, the former deputy chairman of gas giant Gazprom Alexander Ryazanov, has estimated the project’s initial cost at 594 billion rubles ($9.3 billion), with a timeline of 12-14 years to break even. He said his company, called Russian Holding, already owns roughly 80 percent of the land the road would run through.
The Meridian would span 2,000 kilometers from the Russia-Kazakh border to a junction of an existing highway that connects Minsk, Belarus, with Moscow. It would shorten trucking routes between cargo hubs in western China and central Europe and may offer a faster, if more expensive, alternative to three existing rail corridors.
The highway is economically justified and can create more jobs and new transit revenue sources for Russia, Sergei Sanakoyev, the head of the Russian-Chinese Analytical Center, told The Moscow Times.
“The question is whether or not Ryazanov has enough financial and administrative resources and the right people,” he said. “I don’t see it now.”
The Meridian is among at least three competing motorways that have been proposed for Russia’s contribution to China’s Belt and Road initiative, Vedomosti cited a federal official as saying.
Source: The Moscow Times
this should have been done 20 years ago. Slow, very slow indeed.
Funny thing, I first read about this project in mid 90s in a French comic called Gypsy. https://en.wikipedia.org/wiki/Gipsy_(comics)
Due to the discriminatory nature of fees associated with the costs of public goods, like roads, railways, and schools when they are privatized, I am opposed to toll roads in principle, unless they are returned to state ownership after some reasonable period of time, such as the time to break-even doubled. Assuming this is privatization in perpetuity, I think it is short-term thinking and a long-term tax on those who can least afford it.
why they will build a Highway instead of the railways? It would be far more effective tu build a railway in the long term.
Will there be a project bonds issued?