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- They will come for revenue: part of the 4.5 trillion for modernization of the housing and utilities sector is to be found through foreign investment
They will come for revenue: part of the 4.5 trillion for modernization of the housing and utilities sector is to be found through foreign investment
The Ministry of Construction plans to find part of the missing RUB 4.5 trillion to modernize the infrastructure of the housing and utilities sector through foreign investment. Almost half of water supply and sewerage networks in the Russian Federation need to be replaced. Preparation and signing of agreements with partners are scheduled for the end of 2025, according to the plan of measures to increase labor productivity in the construction industry. However, experts doubt that the authorities will be able to attract such an amount from foreign companies.
What needs to be repaired in the housing and utilities sector
The Ministry of Construction has prepared an action plan that will help increase labor productivity in the construction industry. Among other things, it includes a number of directions for the development of international cooperation. The document says that the agency counts on foreign investment, which will be let to repair the communal infrastructure in the Russian Federation, the signing of specific agreements is scheduled for the end of 2025. "Izvestia" familiarized with the plan of the Ministry of Construction.
The ministry does not specify which countries are in focus, it is only known that officials are ready to participate in cross-national exhibitions and forums of BRICS and UN-Habitat participants (including France, Slovakia, Ecuador and others).
- Attracting investment for infrastructure projects will increase labor productivity by introducing advanced technologies used by international partners. Now this issue is at the stage of elaboration, it will last until the end of 2025, - emphasized "Izvestia" in the Ministry of Construction.
They also said that the modernization of communal infrastructure is one of the priorities. The plan is to build and reconstruct more than 2 thousand water supply and water treatment facilities by 2030, as well as to improve the quality of public services for 20 million people. The regions will annually renew 2.5% of engineering networks and communications, which will require RUB 4.5 trillion from various sources.
According to the data of the Russian Association of Water Supply and Drainage (RAVV) for 2023, almost half of the 578 thousand kilometers of water supply networks need to be replaced, i.e. 43.2%. Last year it was possible to replace only 0.96% of their total length. From the positive dynamics - the number of accidents per 100 km of networks is regularly decreasing, the number of breakthroughs has halved in five years, from 10 in 2018 to five in 2023. At the same time, 46% of 202 thousand kilometers of sewerage networks need to be replaced, the RAWB added. In 2023, only 0.36% of them could be replaced, the number of breakdowns per 100 kilometers of networks is also falling, from 12 in 2018 to three in 2023.
- As a result, now in the water supply and sanitation industry each cubic meter of potable water supplied to the network brings a loss of minus 1.6 rubles to the vodokanal, by the end of 2023, 14.3 billion of losses have been accumulated, and the average profitability of vodokanals for 10 years was minus 5%, - added the association. - With such an economy it is impossible to fulfill any investment program, it is impossible to borrow from banks, to repay infrastructure budget loans, to attract business. Enterprises are financially paralyzed, and only direct subsidies - federal or regional - help to build new facilities, change networks and so on.
In his address to the Federal Assembly on February 29, 2024, President Vladimir Putin said that more than 4.5 trillion rubles, including private funds, will be allocated for the modernization of the housing and utilities sector by 2030.
Who can give funds for repairs
Utility infrastructure today is boiler houses, water channels, sewage plants, pipes and so on, recalled Svetlana Razvorotneva, deputy chairman of the State Duma Committee on Construction and Housing and Utilities. The problems with them did not arise by chance, basically the system was put into operation during the Soviet times with a limited service life, but repair work was not carried out afterwards, so now the actions of the authorities solve not the cause, but the effect - there is a fight against accidents, the expert said.
The named amount of funding of more than Br4 trillion was calculated on the basis of prices in 2022, "we do not know the real needs, because the regions do not keep technical records in this area, the amount of costs is based on accounting calculations," she added.
- The authorities expect that one third of the national project will be financed from the federal budget, while the remaining part will be financed from borrowed funds. Now local authorities are deprived of the opportunity to take credit funds into account, as the key rate does not allow them to count on them. For comparison, the budget for the next three years provides only 150 billion rubles for repair work with communications. Also, the authorities are actively writing off the credit obligations of the regions in order for them to be able to invest in the repair of communications. To date, Br1.2 trillion has been "forgiven" to the regions," said Svetlana Razvorotneva.
Proposals to attract foreign investment are somewhat unrealistic, she believes.
- Today the housing and utilities sector is a rather opaque industry with unpredictable tariffs and constantly changing rules of the game, all this scares away Russian investors and is unlikely to attract foreign investors," she said.
Svetlana Razvorotneva believes thata more viable option would be to attract funds from the population, for example, by issuing specialized long-term bonds that Dom.RF can put into circulation.
Using foreign investments is a revolutionary initiative of the Ministry of Construction: for a long time it was believed that the system of life support, related to the safety of citizens, does not involve the participation of international capital, shareholders, said "Izvestia" independent expert in the field of housing and utilities Pavel Sklyanchuk. In practice, this approach created risks: if something goes wrong, the responsible parties may not be found later, but now the position of the authorities, as we see, is changing, he added.
- For foreign investors this industry in Russia will be interesting, because people will always use light, water, gas, they can give up some consumer goods, but you can't give up such resources without significant damage to the quality of life. Therefore, the industry will arouse interest all over the world," the expert suggests. - In our country the approach to attract private investors is realized in the form of concessions, public-private interaction. But, apparently, now there is a paradoxical situation: Russian investors, most likely, do not justify their trust. The country is conducting an audit of the concluded agreements, and the Audit Chamber assesses the results of certain projects unsatisfactorily, so the authorities are interested in foreigners.
It has not been possible to close the issue of repairing the infrastructure of the housing andutilitiessector for a long time, "in the next 10 years we will be struggling to catch up with the wear and tear, the reason is that there is no objective data on the quality of utility infrastructure, pipes, communal facilities," said Pavel Sklyanchuk.
In the current situation, theoretically, one can count on the support of China, which specializes in investing in foreign utility infrastructure, but this investor usually takes ownership of modernized facilities, a market source told Izvestia. Whereas in Russia, it is prohibited to transfer infrastructure ownership to other countries, he added.
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