China has demanded guarantees on the loan for the Railways for 400 billion roubles

Who is responsible for the Railways

Chinese China Development Bank (CDB) will provide a loan for the construction of high speed railway (HSR) from Moscow to Kazan, if he will be provided with state guarantees of the government, tells a source familiar with the details of the project, and the officer of the government.

The same information contained in the report and the presentation of the Russian Railways in the transport Ministry and the Ministry of economic development with the parameters of the financial model of the project (has). The report stresses that if the borrower defaults it is Russia that will be responsible for the repayment of the remaining debt and unpaid interest, this reduces the risk to lenders and reduce the cost of debt financing.

In the Railways, CDB and the Russian Ministry of Finance on the request is not answered. The representative of Deputy Prime Minister Arkady Dvorkovich (supervisor of the project in the government) the phone calls have not yet responded.

China has agreed to invest in building high-speed rail last year. In may in Moscow in the presence of President Vladimir Putin and Chinese President XI Jinping heads the Russian Railways, Ministry of transport, the Corporation “Chinese Railways” and the Chairman of the state Committee of China development and reform Commission signed a Memorandum of understanding and funding model of the CSM.

A source familiar with the details of the project, said that state guarantees may be required on the loan not only CDB, but also commercial banks. They have plans to involve the construction of HSR 200 billion rubles According to the source , this approach is an alternative to direct project funding high-speed rail line from the budget: “the Logic is very simple: the more the Russian Federation is ready to give assurances, the more credit the financing can be. Conversely, no gosgarantii higher risk, less creditor”.

Risks for VEB

RZD estimates the total cost of the construction of the VSM at 1.2 trillion rubles More 643 billion rubles monopoly requests in the form of subsidies from 2020 to the year 2031 to guarantee project investors. We are talking about the shareholders of “Special project company” (SPC), which will be the concessionaire of the project. As planned by Russian Railways, in the capital of the SPC will include the monopoly (41%), Chinese investment Fund “silk road” (38%), “daughter” RZD “Speed lines” (15%) and transportation companies (6%).The financial model was constructed based on yields of 15% for shareholders of the concessionaire and 10% to financial investors.

RZD plans to implement the project mostly on borrowed money. In addition to loans of the China Development Bank and other banks 600 billion rubles, the SEC will have to issue infrastructure bonds for 140 billion rubles, to attract 100 billion rubles from the national welfare Fund and 90 billion rubles from non-state pension funds (how the Railways does not specify). Another 100 billion rubles will receive the SEC in the Charter capital of Russian Railways, the 103 billion roubles — from the “silk road”, 40 billion rubles from “highways”, 17 billion rubles from companies.

An important participant in the project can be on the web. From the presentation of the Railways mean that the Bank will be the formal borrower of foreign currency loan from China Development Bank. Further, EBV converts the loan into rubles and give the SEC the construction of the main. Therefore, the VEB will pay interest to the Chinese Bank and bear foreign exchange risks. First Vice President Alexander Misharin said last year that the loan may be issued in dollars, yuan or rubles.

The press service of the banks confirmed that the Bank is considering participation in the project.

Transport Minister Maxim Sokolov called the future railway “the largest infrastructure project of Russia”. According to a source familiar with the details of the project, and Federal officials, a final decision on the construction of the HSR is not accepted. Negotiations about who could join the consortium of investors of the highway. One of the interviewees admits that, when a consortium of investors will be formed and will submit the necessary application to the Ministry of Finance refuses to give the state guarantees and money for direct funding of HSR in the budget is not there. Then “all will sigh and forget about this project five years”, he concluded.