As funds run low, Kremlin seeks help from big business for grand Arctic projects

The Kremlin is seeking massive investments from the private sector to fund large Arctic infrastructure projects. In this picture, President Vladimir Putin at the International Arctic Forum in Arkhangelsk, Russia, in March 2017. (Sergei Karpukhin/Reuters)
As the Russian treasury is running out of money, government appeals to the country’s biggest industrial companies for funding to new projects.

It has been called the “Belousov List”, the document elaborated by presidential adviser Andrey Belousov and presented this month to the country’s biggest industrial companies. It comes as the federal government is increasingly getting short on funds to finance its many grand initiatives.

In a meeting on the 15th September, Finance Minister Anton Siluanov assembled the top leaders of more than 20 major mining and metallurgic companies, among them Nornickel, Rusal, Alrosa, Severstal, Mechel and Sibur. In the room were also representatives of leading state companies like Rosatom, Russian Railways and Rosnano, as well as eight government ministers and top state officials.

Among the latter was also Andrey Belousov, the influential Kremlin representative.

In the meeting, it was decided to set up a new working group that is to promote “interaction on new investment projects” with the overall goal to meet the objectives outlined in Vladimir Putin’s so-called May Decrees, the main development program for his fourth term in office.

The proposed measures include a major dig into the private companies’ cashboxes. According to newspaper RBC, the Kremlin proposes to take more than 513 billion rubles (€6.6 billion) from the 2017 profits of 14 companies and allocate for its own purposes. The lion’s share of that money would be taken from Nornickel (114 billion rubles), Alrosa (67 billion rubles) and Sibur (65 billion).

Andrey Belousov, pictured here at a meeting with representatives of major Russian firms in Moscow, on August 24. (Tatyana Makeyeva/Reuters)
Large sums needed

And the private companies might have to concede far more.

According to RBC, the Belousov List includes more than 395 projects with a total cost of more than 13 trillion rubles (€168 billion). The biggest sums are by far in the fields of transportation and infrastructure.

It will be up to the new working group to determine priorities and set criteria. But the final say is likely to lie with the government members.

Ambitious – and expensive – infrastructure projects

Several sources confirm to the newspaper that Belousov and his people want money for large-scale infrastructure projects like railway and seaport construction, information technology developments and more. Several of the proposed projects are in the Arctic. Among them is 113 billion rubles (€1.46 billion) for the Northern Latitudinal Passage, the grand railway project in the Yamal-Nenets region, and more than 400 billion rubles (€5.1 billion) for the building of a new seaport in Novaya Zemlya.

The latter proposal reportedly comes as a joint bid from the Ministry of Transport and state company Rosatom. The state nuclear power company is planning the launch of the major Pavlovsky zinc and lead mine in the Arctic archipelago and will need port infrastructure for an annual out-shipment capacity of 415,000 tons.

The Pavlovskoye will be the northernmost mine in the world and have an annual output of 220 000 tons of zinc, 50 000 tons of lead and 16 tons of silver. It will be operated by First Ore Mining Company, a subsidiary of Rosatom.

Also the price for the projected seaport complex has increased dramatically. The sum of 400 billion rubles (€5.1 billion) is far higher than previous estimates and, if correct, raises a number of questions about the actual operations planned to be conducted on site.

The projected building location in the Bezymyannaya Bay is situated in the near vicinity of military shooting ranges in the area and the seaport complex could potentially serve also the Russian Armed Forces.

It remains highly unclear which of the private companies represented in the new working group would actually be interested in funding seaport development in the militarised archipelago of Novaya Zemlya.

According to RBC, the companies investing in the projects proposed in the Belousov List will get a string of tax benefits and other favourable conditions. That, however, might not be sufficient for the Novaya Zemlya seaport project.

Related stories from around the North:

Canada: Canadian military to build multi-million dollar facility in Northern city, CBC News

Faroes: Faroe Islands host Arctic Circle Forum, trumpet “infrastructure miracle”, Cryopolitics Blog

Finland: Major expansion planned for Northern Finland’s airports, YLE News

Norway: European Commission suggests extending major rail network to Northern Norway, The Independent Barents Observer

Russia: Murmansk Governor says lack of infrastructure hampering growth, The Independent Barents Observer

Sweden: Sweden’s government wants to boost “neglected” countryside, Radio Sweden

United States: Trump infrastructure plan gets mixed reviews in Alaska, Alaska Public Media

Atle Staalesen, The Independent Barents Observer

For more news from the Barents region visit The Independent Barents Observer.

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