A group of presenters that included top officials of the Russian Railways company and its subsidiary High Speed Rail Lines, as well as representatives of VEGAS LEX and InfraOne as part of the so called Advisers’ Group*, spoke about the project’s organizational, legal and financial structure and explained its technological and construction aspects to potential investors.
The organizers planned to optimize the project parameters after the pre-roadshow, to work out the requisite legal framework and draft competition documents for the first concession under the project.
The first day program included a general project awareness meeting and focus group discussions of its key parameters. The High Speed Rail Lines management, its auditors, investment and legal consultants delivered a general presentation of the project. Separate meetings were held for investors and potential concession applicants, in one focus group, and designers, builders and rolling stock suppliers in the other.
On the second and third days of the pre-roadshow, the presenters met one-on-one with potential entrants in the concession tenders and their financial institutions. These meetings helped identify the most likely participants and find out the lenders, builders and technical companies’ requirements with regard to the project’s structure and government co-financing possibilities.
The first day speakers included Alexander Misharin, first vice president at Russian Railways and general director of High Speed Rail Lines, and Albert Eganyan, VEGAS LEX partner and chairman of the board of directors of InfaONE. The experts made a special note of how thoroughly this project has been developed.
«The Moscow-Kazan HSR is the first major infrastructure project in Russia’s railway industry implemented as a public-private partnership», Mr. Misharin said. «It is also the first time we are using the concession mechanism in railway construction to ensure highly effective cooperation among all project participants».
«The project opens up impressive opportunities for large investment companies as well as for general construction companies, rolling stock suppliers, carriers, HSR facilities management companies, transport security companies and design companies», Mr. Eganyan said.
The technical discussion group focused on the project parameters and characteristics, the volumes of contracts, materials and resources, the possibilities for local manufacturing of equipment and components, construction technology, various approaches to the railway’s design, and qualification requirements for design and construction companies to participate in the project.
The investment and legal aspects discussion covered the concession mechanism and the legal framework for the project, the concession tender, ways to ensure investment and credit recovery, the potential conditions of financing and the opportunities for financiers. These issues were discussed by Albert Eganyan, Evgenia Zusman , head of VEGAS LEX’s PPP and Infrastructure Practice, PWC partner Dmitry Kovalyov, and EY partner Ilya Sedov.
The Moscow-Kazan high speed line will run 770 km across seven constituent regions of the Russian Federation. Trains will reach their destinations in less than 3 hours and 30 minutes going at a maximum speed of 400 kmh.
The project financing is structured by section, with the Moscow-Vladimir section to be developed by Russian Railways, while the other sections – Vladimir-Nizhny Novgorod, Nizhny Novgorod-Cheboksary and Cheboksary-Kazan – to be built under separate concession agreements. This financing arrangement includes only minimum contribution from the government. According to estimates, the first rail section’s construction will cost 334 billion rubles, while the other projects will require 684 billion rubles each.
The pre-roadshow was attended by 328 people from 178 companies, including Russian and international investors, design and construction companies, high-speed technology suppliers as well as major Russian and international financial institutions.
The HSR project arose much interest among businesses.
«The project will undoubtedly open up good opportunities for Russian-German cooperation as part of this new important technological partnership», said Joerg Liebscher, head of Siemens’s Division Cluster Lead Rail Systems in Russia. «The development of high-speed rail services in Russia stimulates local rolling stock manufacturing and joint training of qualified personnel».
«The Alstom company is certainly giving a lot of attention to this project, which is going to break the ice for building a high-speed rail network in Russia,” said Jan Harder, vice president of ALSTOM Transport Ltd. Russia. “The HSR-2 project is highly important and should produce a tangible social and economic effect on a national scale. Alstom and its Russian-French partners are happy to offer our cumulative experience and support to establish an innovative railway service at 400 kmh».
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President Vladimir Putin announced the decision to build the Moscow-Kazan section of the panned Moscow-Kazan-Yekaterinburg High Speed Rail Line in 2014-2018 on May 27, 2013, at a meeting on the development of high-speed rail transport in Sochi.
The project will create about 537,000 jobs, increase the volume of contracts on the Russian market, improve transport services in Russia's regions and promote their economic growth.
The investment consultant for the project and its legal advisor were selected on a competitive basis on October 2, 2013. Their job is to work out the investment framework for Russia’s first high-speed rail line, Moscow-Kazan HSR. The InfraONE First Infrastructure Company was appointed the investment consultant, and VEGAS LEX, the legal advisor. Together they form the Advisors’ Group for the project. The two companies have been working on the project’s investment framework and structure since then, covering its financing, legal and organizational aspects.
