Vnesheconombank Deputy Chairman Anatoly Ballo’s Interview to the Russian Information Channel Vesti

HOST: During the crisis the amount of private investments in the transport infrastructure diminished and due to currencies exchange rates fluctuations financial calculations of investments and potential profits became more complicated. Vnesheconombank Deputy Chairman Anatoly Ballot told us about this in his exclusive interview to our channel.

CORR: How can Vnesheconombank participate in developing transport infrastructure? Do you have a special program to this end?

Anatoly BALLO, Vnesheconombank Deputy Chairman: Vnesheconombank is charged with developing transport infrastructure which is one of the Bank’s main lines of activity and this is specified in our Memorandum. When financing infrastructure projects we use various instruments ranging from syndicated loans, for example, one of the projects whose completion coincided with the Forum was an opening of a new terminal Sheremetjevo-3. This is a syndicated loan that we raised together with Vneshtorgbank from a syndicate of Japanese banks. And the loan was raised, without involving any budgetary allocations, for a period of more than 13 years. Moreover, in a number of cases we act as a loan arranger, as a driving force and give the so-called signal effect. This was the role we played in financing the Pulkovo Airport modernization. It was our participation that made it possible for foreign banks to extend required credits. The main thing for us is a project’s importance for the country’s development. And I would like to stress that recently we’ve been giving increased priority to the Far East. At the moment, we’ve got plans to participate in building a new terminal in Vladivostok. We are starting financing the construction of the coal terminal in Vanino. Our interests run beyond the Urals, because it’s not a secret that the bulk of trade turnover between Europe and Asia bypasses our country. This is the case because we lack transport corridors, logistics centers – all-in-all, we lack transport infrastructure.

CORR: Yes, this is the way things are. When they bring up an issue of developing transport infrastructure they always mention the fact that investors are in short supply. You happen to be in direct contact with investors. What are they like, are there any quality investors you can cooperate and entrust funds to?

Anatoly BALLO: You know, strange as it may seem, we can see that real professionals work in the transport sector. Transport specialists can work efficiently both under socialist economy and market-oriented one. Of course, certain operational mechanisms have been changed but fortunately, we managed to retain professional personnel in this sector. Most of our projects are quintessence of our activities involving public private partnership when the state extends financing to private investors, as it was in the case of the Pulkovo Airport. I would also like to say that it was the well-timed establishment of our bank that made it possible in the very height of the crisis, in December, to start financing another important project - the project aimed at modernizing the Kolzovo Airport in Yekaterinburg. The project was completed promptly on the eve of the Shanghai Cooperation Organization summit.

As a whole, because of the crisis, the amount of private investments is of course diminishing. And the Bank has often to act as an investor as was the case with the Sheremetjevo-3 project. Nevertheless, we are sure that investments in transport infrastructure are always long-term ones and they are bound to contribute to our country’s economic development.

CORR: And now my last question. It’s quite clear that Vnesheconombank’s reserves and capabilities are not boundless. How is the transport investment program going to change next year and what sort of program is it going to be?

Anatoly BALLO: By the way, we’ve got a wide range of instruments. In particular, the state trust management company’s investment declaration is being expanded nowadays. Specifically, we’ll be able to invest funds in bonds issued by foreign financial institutions. Thus, we might be able raise funds from the European Bank for Reconstruction and Development. The bank is ready to invest funds in the Russian economy but unfortunately it does not have long-term ruble-denominated liabilities. This government’s decision allows us on the one hand to expand and diversify the base of strategic investors and on the other, the so-called infrastructure bonds are in great fashion at the moment. Unfortunately, a legal network is only being established. But we are confident that a mechanism of infrastructure bonds would make it possible to classically finance important infrastructure development projects.