Russia Infrastructure Report Q3 2008

The major event in Russia in the last quarter has been the election of a new president. Dmitry Medvedev was elected to the position, with his predecessor Vladimir Putin taking on the role of Prime Minister.

BMI believes that a political policy break is unlikely. In the area of infrastructure this also seems to be the case, with BMI predicting that investment will continue to be concentrated into developing and upgrading the country's power and road sector.

In February 2008 Medvedev outlined major policy initiatives during a talk at the East Siberian Krasnoyarsk Economic Forum. In his speech he stated that infrastructure would be one of the four key economic priorities for Russia over the next four years. Medvedev drew specific attention to the country's roads, describing the network as one of Russia's famous obstacles. He announced plans to streamline the sector by creating a publicly traded company and getting rid of existing bureaucratic structures.

Improving Russia's roads and transport network is an aim shared by Prime Minister Putin. In April 2008 he announced that one of the most important tasks for the country was to develop infrastructure in order to diversify the Russian economy. More specifically, he cited the need to build motorways, ports and airports, as well as deepen waterways. To fund this initiative the Russian government has approved a RUB900bn (US$37.79bn) program for investments in transport infrastructure for 2008.

Power is another infrastructure sector that will continue to attract investment. The privatisation of the country's power sector is set to be completed by the end of 2008. The country is continuing to utilise indigenous fuels, namely coal and gas. Russia will also continue to expand its nuclear power capacity and has recently taken steps toward developing a meaningful renewable power sector, with plans for a wind park.

Construction will continued to be centred in the country's major cities, but one area, Sochi, looks set to attract more investment than most. Since winning the rights to host the 2014 Winter Olympics a number of construction initiatives have been announced. Projects include upgrades and expansions to the regions infrastructure, as well as the building of Olympic venues.