Belarus signs up to first PPP as six more projects are unveiled
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Emerging Markets

Belarus signs up to first PPP as six more projects are unveiled

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Belarus’s first ever PPP — a $350m highway project — is just the start as country looks to boost economy and reduce Russian dependence

Belarus is preparing to roll out dozens of new public-private partnerships (PPP) in the years ahead, as the country looks to suck in much-needed foreign capital and reduce its dependence on Russia’s troubled economy, government officials told Emerging Markets.

At a ceremony to mark the official signing of the country’s first ever PPP project — a $350m contract to widen and lengthen the M10 highway — Belarus’s first deputy minister for transport and communication, Aliaksei Auramenka, said the partly privately-funded scheme was set to be the first of many in the landlocked eastern European nation. “We will have not just this project but several others available for funding soon,” he said.

A finance ministry spokesman added that the government was preparing to unveil a flurry of new PPP schemes if the upgrade to the east-west M10 highway, which links Russia with Poland, is a success.

“Six other PPP projects are preparing for the bidding process — including greenfield power plants, a hospital in Minsk, and a waste processing facility. There are 63 other projects in the pipeline, all of which will be completed over the next 15 years. So the M10 project has huge symbolic value to Belarus. If it is successful, it is clear that many others will follow.”

BABY STEPS

These are still baby steps for a country that remains wary of private capital in any form. The economy is tightly controlled by president Alexander Lukashenko, who has been in power since 1994, and a coterie of state firms.

Yet Belarus’s recent travails, resulting from structural rigidity and an unhealthy dependence on its economic and commercial ties with neighbouring Russia, have become hard to ignore. The Belarusian economy shrank 3.6% year-on-year in the first quarter of the year, having slipped into recession in 2015.

So the unveiling of the PPP at a time of deep economic strife has heartened many in the international development and investor community. “The EBRD is pleased to note a real reform momentum in Belarus with regard to private sector involvement in infrastructure,” said its managing director for infrastructure, Thomas Maier.

Belarus follows other regional econ-omies, notably Turkey and Kazakhstan, which have embraced the PPP model. Kazakhstan’s first major PPP project, a ring road encircling its financial capital Almaty, is expected to cost more than $650m and will be part financed by the EBRD, the IFC, and China’s newly minted multilateral, the Asian Infrastructure Investment Bank.

Insiders at the EBRD said the multilateral was likely to contribute “well in excess of $100m” to the Belarusian project, with the European Investment Bank likely to match that investment.

A formal tender will be launched in the first half of 2017, with the construction mandate set to be awarded to the winning group of private-sector investors and corporates before the year is out. The EBRD is helping structure the project, prepare and organise the tender, and help the authorities negotiate with their preferred bidders.

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