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Corridor for investments

In May, Moscow and Tehran signed an agreement on the construction of a section of the North-South ITC (international transport corridor) in Iran.
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Russian banks are ready to finance the construction and modernization of transport corridors. The projects that will allow increasing the trade turnover are of particular interest. Experts agree that the key factors for investments in transport corridors are the cost of the project, the payback period, the conditions for co-financing and the possibility of return on investments.

Russia and Iran have recently signed a cooperation agreement on the construction of the Resht-Astara railway in Iran. The 162-km-long section will make it possible to establish a direct uninterrupted connection along the North-South ITC. An interstate loan of 1.3 billion euros is allocated for this project, while its total cost is 1.6 billion. The agreement was signed by Russian Minister of Transport Vitaly Savelyev and Iranian Minister of Roads and Urban Development Mehrdad Bazrpash.

Bankers' interest

The key parameters for investment in transport infrastructure are the availability and prospects of the cargo base, as well as an understanding of how much it costs to transport cargo on specific routes, taking into account alternative routes, Kirill Nikoda, deputy head of Gazprombank's Center for Economic Forecasting, told "1520 International".

"All projects which, firstly, allow more shippers to participate in foreign and domestic trade, secondly, remove the problem of infrastructure constraints, and thirdly, ensure the loading of Russian enterprises with orders, and promote import substitution are in demand and generate interest," the expert stressed.

According to Dmitry Baranov, the leading expert of Finam Management, the return of funds for the bank is much more preferable than getting a share in the project.

As the press service of VEB.RF told "1520 International", the largest Russian banks with experience in project financing deals can take part in financing the creation or development of transport corridors. "Transactions can be arranged using a syndicated lending mechanism, which will allow risks to be distributed among financial institutions," the press service of VEB.RF noted.

Prospects of the North-South ITC

It should be noted that the development of the North-South ITC is due to the fact that this transport corridor provides faster and cheaper delivery of Russian goods to the countries of the Caspian region, the Persian Gulf, India and China.

"Creation of a new transport corridor of such scale will require financial participation not only of the largest Russian banks, but also of the states-initiators of the projects and private business", the press service of VEB.RF says.

As Russia's Deputy Prime Minister Marat Khusnullin said the other day on the sidelines of the economic forum "Russia - the Islamic world. KazanForum", the total investment in the development of North-South ITC from 2022 to 2030 will reach some 280 billion rubles.

According to Alexander Karavaev, a researcher of the Center for Post-Soviet Studies of the Institute of Economics of the Russian Academy of Sciences, half of the amount will be used to build new ships and modernize Caspian Sea ports.

According to Alexander Karavaev, today the most interested in financing the North-South ITC is the Russian VTB Bank. "The bank may finance the construction of railway infrastructure of the transport corridor, given their interest associated with the export of Russian grain," he specified.

Regional banks may invest in certain infrastructure projects of the North-South ITC. For example, in transport and logistics centers. Credit organizations dealing with the United Shipbuilding Company may finance works at Krasnoye Sormovo plant in Nizhny Novgorod and Lotos shipyard in Astrakhan, summarized Alexander Karavaev.

Olga Shelkova

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