Funding Russian Roads – Oil Revenues or Privatized Toll System?

About a year ago, Jeremy Bransten noted:

Russia’s roads – with a few notable exceptions – are abysmal. Levitin put the reason down to a combination of corruption and inefficient spending … For the future, the state also plans to build a network of new toll roads to ease congestion and ensure revenue for their upkeep. Moscow region governor Boris Gromov tells RFE/RL plans are under way for a toll road linking Moscow to St. Petersburg. “The first stage will run from the Moscow Ring Road to Sheremetyevo-1 and Sheremetyevo-2 [airports] and then this toll road will continue to St. Petersburg,” Gromov says.

The recent news is that:

MOSCOW’S new-found prosperity has brought with it a familiar problem: traffic jams. Now Europe’s largest city, which is clogged by 3 million cars, is to get a new ring road to ease congestion with one of post-Soviet Russia’s biggest infrastructure projects. Construction of the 276-mile (444km) motorway is expected to begin next year. It will cost about $10 billion (£5.4 billion). Authorities hope that the road will divert freight traffic away from the city, which is expected to absorb another 100,000 cars this year as increasingly affluent residents take to the roads. The project is part of a campaign to use some of Russia’s oil wealth to improve its notoriously poor road network. Russian authorities are also planning to build a toll road from Moscow to the country’s second city, St Petersburg. But even before winning final approval, the ring road is stirring controversy, not least among hundreds of dacha owners along the proposed route, about 20-30 miles outside Moscow. Residents of Ramensky district say that at least 500 dachas will have to be razed to make way for the road.

Dacha is Russian for a house in the countryside. It’s interesting that the construction of roads raises the same property right concerns in Russia that often delay road construction in the U.S. Now the fact that oil wealth might be paying for the new roads is interesting given the controversies surrounding the management of Yukos Oil and how the Russian government seized some of its key assets and sold them to the state oil group Rosneft. Which makes the news from the Moscow Times interesting:

The company report puts the cost at 262.9 billion rubles ($9.7 billion). The region is expected to provide from 25 percent to 50 percent of investment in cash or land for the construction. Private companies are expected to invest the rest in exchange for the right to collect toll fees.

Privatization of formerly owned state assets is not something that has worked all that well under the crony capitalism of Russia.