RUSSIA'S TRANSPORTATION MINISTRY CALLS ON PARLIAMENT TO PASS CONCESSION LAW

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MOSCOW, April 6 (RIA Novosti) - Russian Transportation Minister Igor Levitin pointed out the need for legislation on concession agreements as he addressed parliament's lower house, the State Duma, on Wednesday.

"We should realize that concession is a universally accepted world practice, laying down comprehensible and transparent ''rules of the game' for most potential investors," Mr Levitin said to the MPs. With no formalized "rules of the game" in place, Russia's infrastructure fails to get billions of dollars in much-needed direct investment, he noted.

According to Mr Levitin, one of the most significant bills drafted by the Transportation Ministry to date is the one on toll highways. This draft law paves the way for the development of concession relations in the motorway sector. The minister pointed out that Russia needed much more new highways, ten times the number actually built. "In line with the World Bank's methodology, with the annual GDP growth rate standing at 7 percent, some 17,000 kilometers of new highways should be commissioned in Russia yearly-almost ten times as many as the amount built now," Mr Levitin said.

The main reason for insufficient road construction is a sharp decrease in funding, from 2.9 percent of the GDP down to 1.3 percent, Mr Levitin said. Ministry experts put the funding threshold at 2.5 percent of gross domestic product, saying it needs to be raised to 3.5-4 percent within a decade's time.

The road & highway sector should attract funds primarily by creating favorable conditions for extra-budgetary investment, Mr Levitin pointed out. "In our estimation, the share of private capital in the road works funding structure could in the long term come up to 18-20 percent and the potential amount of invested funds, to $2-3 billion a year," he said.

The minister also spoke for the privatization of the buildings and logistical facilities of airports, as the government cannot maintain them on its own.

Airports' government-owned property (such as runways and flight control facilities) banned from being sold into private hands could be offered to operators on concession terms, Mr Levitin said. He also proposed transferring all Russian terminals under the control of the Federal Passenger Company, 100 percent government-owned.

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