Russia to become the world’s largest infrastructure market?

Russia should be one of the largest and most dynamic infrastructure markets in the world over the next 15 years, and now "the time is right to begin a major push." Patrick Smith reports

A new report examining Russia's overall capacity to support a long-term worldclass infrastructure 'build' concludes that it should be one of the largest and most dynamic infrastructure markets in the world over the next 15 years.

The conclusion comes from global infrastructure expert Norman Anderson who says such infrastructure is critical to the country's long-term competitiveness and its modernisation.

Anderson, a noted international authority on infrastructure, is president and CEO of 1576 CG/LA Infrastructure, a strategic advisory company dedicated to the identification, structuring and financing of strategic infrastructure projects around the world.

According to the US-Russia Business Council (2843 USRBC), which commissioned Anderson's report, government and private sector estimates that the amount of infrastructure investment needed in Russia, just in the next decade, range from US$830 billion to US$1 trillion.

"It goes without saying that this will be a tremendous undertaking that will require the close cooperation of the public and private sectors," says USRBC's CEO Ed Verona.

"Russia possesses enormous potential and some of the essential building blocks for a strong infrastructure market, but it has not yet presented a commanding vision to provide direction and organisation for a sustained initiative necessary to transform the country's competitiveness," notes Anderson.

The USRBC is a Washington, USA-based association representing approximately 250 companies, among them some of the leading companies in the US, Russia and Europe. Its primary mission is to promote trade and investment between the United States and Russia.

The USRBC-CG/LA Report, Russia's Infrastructure at a Crossroads: the Key to Modernisation, was rolled out in the Russian capital Moscow in advance of the Russia Strategic Infrastructure Leadership Forum (11- 13 May), where identifying Russia's priority infrastructure projects was the focus of the conference in the city, organised jointly by Anderson's CG/LA Infrastructure and the USRBC.

The projects [covering surface transport, airport, electricity, water, mining and exploration, oil and gas, ports and logistics, strategic, tourism and manufacturing], selected by CG/LA and USRBC in close consultation with the public and private sectors active in infrastructure project creation and execution, describe Russia's global competitiveness over the next 20 years.

When presenting the findings of his report, Anderson suggested that concerns about whether Russia is "serious" about infrastructure development are misplaced.

"Getting the model right and focusing on the right projects" is the challenge.

Anderson's report delves into Russia's infrastructure environment and builds recommendations from a diagnostic of strengths and weaknesses using a proprietary model to assess the capacity for infrastructure creation and project feasibility.

Ed Verona noted that the USRBC has been highlighting the issue of infrastructure development for several years in small discussions and panels, but that "the time is right to begin a major push now" on this fundamental pillar of President Dmitry Medvedev's government programme as Russia emerges from the economic crisis.

SHOWTIME IN MOSCOW

Construction equipment manufacturers are continuing to sign up for the ConExpo Russia area at the 2010 CTT Moscow.

A major factor for growth is that companies also recognise Russia's enormous business potential with huge infrastructure needs, and "these companies also know the proven value of AEM [1100 Association of Equipment Manufacturers] trade exhibits to deliver maximum return on investment.

Indeed, AEM says that projects such as preparations for the Sochi 2014 Winter Olympics (an estimated US$20 billion) face shortages of reliable equipment.

CTT, the Construction Equipment and Technologies Specialised Demonstration Show, will be held 1-5 June, 2010 at the Crocus International Exhibition Center in Moscow.

Exhibitor 255 JCB's David Hill, general manager JCB Russia, says: "CTT and ConExpo Russia are the best places for business for anyone involved in the construction industry including contractors, operators, rental companies, dealers and the machine, attachment and component manufacturers who display the equipment. It will be the global meeting place in Russia where buyers and sellers meet. The partnership between CTT and ConExpo Russia allows manufacturers to increase their return on investment by focusing on a single event for the industry in Russia." Another exhibitor 257 John Deere Construction & Forestry's Tom Trone, director Russia/CIS, says: "John Deere is making a significant commitment to the Russian marketplace, and our participation in the ConExpo Russia exhibit area at CTT is an important aspect of our outreach." And Volvo Construction Equipment (Volvo CE) says it is strengthening its position in the Russian Federation by signing an exclusive agreement with Ferronordic Machines that covers the distribution and sale of the company's products throughout the country.

As 359 Volvo CE's exclusive dealer in the world's largest country Ferronordic Machines plans to invest in the region of ??100 million ($133 million) in distribution development by the year 2015. This commitment will see a substantial growth in the number of branches, rising from the current 30 outlets today to around 90. The agreement is subject to final closing.