TRANSPORT INFRASTRUCTURE DEVELOPMENT IN THE FAR … · Road BCP “Kraskino”: construction of a multilateral border crossing point capable of handling 250 vehicles per day. Railway

TRANSPORT INFRASTRUCTURE DEVELOPMENT IN THE FAR EAST OF RUSSIA AND NEW IDEAS AND PROJECTS FOR PRIMORYE

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JOINT STOCK COMPANY “FAR-EASTERN MARINE RESEARCH, DESIGN AND TECHNOLOGY INSTITUTE”, JSC «FEMRI», VLADIVOSTOK, RUSSIA

Dr. Mikhail KholoshaMember of the GTI Transport Expert Group and GTI Transport Corridors Study Project Team

JSC «FEMRI», bld. 40, Fontannaya St., Vladivostok, 690091 Russia http://www.dniimf.ru/Tel.: +7 423 240 26 53 E-mail: [email protected]

Vladivostok Free Port Territories

Far-Eastern Federal District (FEFD)

ECONOMY AND TRANSPORT DEVELOPMENT

IN THE RUSSIAN FAR EAST

(PART 1)

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B-KHOLOSHA2016 Northeast Asia International Conference for Economic Development (NICE) in Niigata

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0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

GDP, millions rubles

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Primorsky Territory

Russia

GDP per capita, rubles

http://www.gks.ru/ 2015

FEFD

FEFD

Primorsky Territory

0

200000

400000

600000

800000

1000000

1200000

2005 2010 2011 2012 2013

Investments in Capital Assets, millions rubles

Primorsky Territory

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

2010 2012 2013

Foreign Trade, millions USD

FEFDFEFD

Primorsky Territory

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

2005 2010 2011 2012 2013

Foreign Investments, thousands USD

Primorsky Territory

FEFD

4http://www.gks.ru/ 2015


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0

100

200

300

400

500

600

700

2006 2007 2008 2009 2010 2011 2012 2013 2014

Russia

Far East

Primorye

5

Growth2014/2006 (%)

+47%

Million tons/year

Shares in 2014:Baltic – 36%, Arctic – 6%,

Caspian & Azov-Black Sea Basins – 32%, Far East Basin – 26%

+132%

+123%

Muchfaster!

FREIGHT NOMENCLATURE

GROWTH (TONS)

2013/12 (%)2014/13

(%)

Russian Far East +7.5% +12.2%

Containers +18.0% +5.2%

Coal, coke +11.8% + 23.3%

Liquid Bulk and LNG +10.3% +6.8%

General (without TEUs) -11.0% +28.5%

Timber -17,7% +3.8%

REGIONGROWTH (TONS)

2013/12 (%) 2014/13 (%)

Russian Far East +7.5% +12.2%

Primorsky territory +10.2% +15.6%

Khabarovsk territory +10.9% +11.4%

Sakhalin ~0.0% +3.7%

Kamchatka4.9%

Magadan4.1%

Sakhalin7.3%

Khabarovsk0.2%

Primorye83.6%

Vostochny+ Nakhodka

31.0%

Vladivostok

52.6%

Primorye:Average annual growth rates = 11.6 %,

18.5% in 2013

CONTAINERS: FEFD TURNOVER STRUCTURE(TEU, %) 2013

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Territorial Subject Share (%) of local public roadscomplying with standard requirements

2007 2008 2009 2010 2011 2012 2013 2014Russia 64.5 60.1 56.5 55.0 55.4 58.3 56.0 56.6Far-Eastern Federal District (FEFD) 36.2 44.9 29.8 31.4 41.0 51.9 56.6 53.8Primorsky territory 50.8 52.0 51.7 54.2 60.1 69.7 62.0 60.6

Share (%) of containerized cargoes (TEU/FEU) in total cargo amount (Russia)2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Railway transport 0.7 1.1 1.2 1.3 1.4 1.4 1.5 1.9 1.9 2.1 2.2Sea transport … … … 5.5 4.4 3.4 3.5 3.1 7.5 9.2 8.3

Inland water transport … … … 0.2 0.3 0.4 0.5 0.4 0.2 0.2 0.2

Share (%) of electrified tracks in public railroads (Russia) 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 201447.6 50.3 50.4 50.4 50.4 50.4 50.4 50.5 50.6 50.6 50.7

http://www.gks.ru/ Updated 07.07.2015



7FURTHER DEVELOPMENT AND GROWTH ARE NECESSARY

Coal, coke (36.2%)

Timber (1.7%)

General (without containers) 6.9%Containers (7.7%)

Liquid & LNG (40.2%)Other (1.1%)

CARGO TURNOVER STRUCTURE (%) (FAR EASTERN PORTS, 2014)

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PORTFOLIO OF EXISTING IDEAS AND PROJECTS IN THE RUSSIAN FAR EAST

INCLUDING PRIMORYE

(PART 2)


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FREE PORT VLADIVOSTOK15 municipalitiesPopulation 1.4 millionSquare area 28,400 km2

REDUCED INSURANCE TARIFFS7.6% total sum of insurance premium for 10 years payable by residents during 3 years after adoption of the law

5 years exemption from profit, property and land taxes

VAT BENEFITS10 days accelerated refund procedure

ACCELERATION IN CONSTRUCTION INDUSTRYShorter period for obtaining capital construction permits

MEASURES TO STREAMLINE AND REDUCE REGULATORY INSPECTIONS OF BUSINESSShorter duration of regulatory inspections, approval of inspections by the Ministry for Development of the Russian Far East and joint inspections

MANAGING COMPANY HAS THE RIGHT TO FILE LAWSUITS IN FAVOR OF FREE PORT RESIDENTS

SUPERVISORY BOARD – a single governing body of the free port

PROCEDURE FOR OBTAINING A RESIDENT STATUSRegistration of organization orindividual entrepreneur

Application to the Ministry for Development of the Russian Far East

Examination of application within 15 business days

Decision whether applicant may perform its activities

Signing of an agreement and entering applicantinto the list of residents

“SINGLE WINDOW” PROCEDURE

when being cleared on the border, 24-hour operation of border crossing

points

SIMPLIFIED VISA PROCEDURESIssue of 8-day visa when crossing

the border

FREE CUSTOMS ZONE FOR RESIDENTS

Duty-free and tax-free:- Importation, storage, consumption

(use) of foreign goods- Exportation of goods (equipment)

- Importation of foreign goods (equipment)

10 10806,7 ha

3885 ha

SPECIAL ADVANCED ECONOMIC DEVELOPMENT ZONES (RAPID DEVELOPMENT AREAS)

Строительство свиноводческих комплексовООО «РусАгро-Приморье»ООО «Мерси трейд» /ООО «Приморский бекон»

ООО «Инком ДВ» -Транспортно-логистический комплексООО «Приморский кондитер» -Кондитерский и хлебобулочный завод

ООО «Невада-Восток» -Логистический комплекс и производство


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PogranichnyPogranichny

ArtyomArtyom

PoltavkaPoltavka Logistic complex Primorsky (Russian Railway)

RDA«Mikhaylovsky»

Specialized petrochemical complex, VNKhK (JSC NC Rosneft)

RDA «Nadezhdinsky»

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PRIMORYE: MAIN IDEAS & PROJECTS MAP

Vladivostok - the Business, Scientific, Finance, Transport, Logistic and Tourist Center

RDA Idea «Russian Island»

Gambling Zone

Project Khasan-Rajin (RZhD)

Posiet

Khasan Posiet Port Modernization (Mechel Group)

KraskinoKraskino Industrial & logistic cluster in Slavyanka (“BERKUT” Managing Company LLC)

“Greater Port Zarubino” (Summa Group)

“Trinity Bay Sea Port” modernization (“SP International Sea Port Zarubino” LLC)

Intermodal production & logistic complex, Slavyanka (“Transit DV Group” LLC)

SlavyankaSlavyanka

ZarubinoZarubino

Ideas Project + ongoing Mixed status

Logistic complex «Dry Port» (Aqua Resources Group)

Airport Airport

Logistic (warehouse) complex (Pantos Logistics)

Logistic complex (Group of companies Union)

Port and IndustrialComplex «Sukhodol»

UssuriyskUssuriysk

Development of port terminals in Vladivostok: VMTP, VMRP, Pervomaysky terminal, Dalzavod etc.

Kozmino

Coal Port «Vera» Rostech State Corp.

Solid bulk terminal (coal)(Summa Group)

Mineral fertilizer plant with port (JSC National Chemical Group)

VostochnyVostochny

Development of existing port terminals : Evraz NMTP, Nakhodka Fishery port etc.

NakhodkaNakhodka

New BCP

Transport & logistic complex (Inkom-DV)

completed

PRIMORYE: LAND BCPS PROJECTS AND IDEAS

Ideas of new BCPs (along ITC Primorye-3 via Fenshuiling)

Ideas of new BCPs (Lesozavodsk-Hulin)Reconstruction of Railway BCP “Pogranichny”

(Grodekovo): border crossing, railway station Grodekovo, container terminal, railway border crossing

Road BCP “Kraskino”: construction of a multilateral border crossing point capable of handling 250 vehicles per day.

Railway BCP “Makhalino”: Far Eastern Railroad Branch implements a set of measures to reinstate the infrastructure of Makhalino railway border crossing point.

Road BCP “Pogranichny”:upgrading of throughput capacity to 1300 vehicles and 4000 passengers per day: 500 trucks/day, 200 buses/ day, 600 cars/day

Railway BCP Khasan (Project Khasan-Rajin, RZhD)


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completed


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MAIN IDEAS IN NEW AND EXISTING PROJECTS

(PART 3)

Pogranichny

Vostochny

Khasan

SLB within Primorsky Territory

Vladivostok-Moscow Highway

Zarubino

Kraskino

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Pogranichny (Grodekovo)

Makhalino

Ussuriysk

Poltavka

Posiet

Peschany

Slavyanka

Airport

Gambling Zone

«Dry port» Projects

«Dry Rail Port» Project

PRIMORYE: EXISTING ROADS AND RAILWAYS PROJECTS AND IDEAS

Sukhodol Port

Project of a toll highway segment "Vladivostok - Nakhodka -Vostochny”

Project of a toll road "Kraskino (BCP) –Zarubino"

Stage-by-stage development of infrastructure of the East railroadsnetwork for 2013-2017 (RZhD)

Railway Network: state border (Sukhanovka) – Zarubino (ITC Primorye-2), Pogranichny (Grodekovo) – Sukhodol, Nakhodka, Vostochny (ITC Primorye-1) and state border (Sukhanovka) – Pogranichny (Grodekovo) (ITC Network with Ring).Motor Road Network: Road BCP Kraskino – Zarubino (ITC Primorye-2), road to Nakhodka/Vostochny: 18-148 km (ITC Primorye-1), Road BCP Kraskino – Road BCP Pogranichny (ITC Ring), new option of Primorye-3 route with a bridge across the Amur Bay + Vladivostok Outer Ring Road.

Ideas of the speed and high-speed railroads:- from the Provinces Jilin and Heilongjiang- from the Republic of Korea- local lines (Vladivostok-Ussuriysk, several options)

Idea (rail)

Idea (road)

Vladivostok


Nakhodka


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MANY EURASIAN IDEAS. HOW TO COMBINE? NEW MODEL OF CORRIDORS IN PRIMORYE IS BEST SOLUTION FOR MULTILATERAL COOPERATION IN NEA AND THIS MODEL IS CAPABLE OF HARMONIZING IDEAS AND PROJECTS PROPOSED BY RUSSIA, CHINA, ROK, JAPAN AND OTHER COUNTRIES

Image from Roman Wilhelm/ MERICS

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Pogranichny

PosietVostochny

Khasan



Segment from Khasan to the

connection with the SLB (road/rail)


Korean East Corridor

Nakhodka

Zarubino

Vladivostok

Kraskino

- border crossing points (BCP) on land- border crossing points (BCP) in seaports

Russian segment of Suifenhe Transport Corridor (ITC “Primorye-1”)

Road/rail ~354/382 km + 44km км

Russian segment of Tumen Transport Corridor

(ITC “Primorye-2”)Road/rail ~71/75 км

Poltavka

Makhalino

Slavyanka

OLD MODEL OF CORRIDORS ROUTING IN PRIMORYECurrent routing ITC Primorye-1 + Primorye-2:

road/rail ~425/457+44 км

Sea lines: China-China, China-ROK, China-Japan, and other countries of NEA,

excepting VLCS lines16

This model looks obsolete today:

- it includes too long and expensive routes for the

transit corridors;- it includes several small

ports of Gateway type with a minimum of logistic

services.- It includes sea lines without calls of VLCS

containerships.


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Pogranichny

Vostochny

Khasan

Segment from Khasan to the

connection with the SLB (rail/road)

Korean East Corridor

Nakhodka

Zarubino

Kraskino

- border crossing points (BCP) on land- border crossing points (BCP) in seaports

ITC “Primorye-1” + “Primorye-2” Road/rail ~320/368 км

NEW MODEL OF CORRIDORS ROUTING IN PRIMORYEKey channel ITC Primorye-1 + Primorye-2:

~320/368 km (shorter on 119/89 km)

Sea lines: China-China, China-ROK, China-Japan, and other countries of NEA

and APR, including VLCS lines17

The new model is oriented at concurrent

development of the Eurasian Economic Union

and China’s “Silk Road Economic Belt Project” as

well as “Northeast Asian Peace and Cooperation Initiative” and “Eurasia

Initiative” handled by the government of the

Republic of Korea.


Makhalino

- new ideas

Ussuriysk

Poltavka

Posiet

The junction of many routes will form a key land corridor channel which may have additional “tributaries”.Thus, we will create a multimodal port HUB which may be included in VLCS lines rotation in routes between Europe and Asia and in trans-Pacific routes.

Passenger HAB

Vladivostok

Peschany

Slavyanka

Container port-HAB

Airport

Gambling Zone

«Dry port» Project

«Dry Rail Port» Project

+ “Primorye-3” idea



Sukhodol Port

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CHALLENGES FOR PROJECTS IMPLEMENTATION

AND EXPERIENCE

(PART 4)


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SPECIFICS OF RUSSIAN INVESTMENT PROJECTS (EXPERIENCE IN PRIMORSKY TERRITORY)

KEY ASPECTS

OF INVESTMENT PROJECT IMPLEMENTATION

IN TRANSPORT INDUSTRY

AND FOREIGN INVESTOR ENGAGEMENT OPTIONS:

1. THROUGH OWNERSHIP OF LAND PLOT AND/OR WATER AREA

2. THROUGH OWNERSHIP OF CARGO SOURCES AND/OR LOGISTIC CHAINS

3. THROUGH PARTNER RELATIONSHIPS WITH INVESTMENT PROJECT OPERATOR (PARTICIPATION IN AUTHORIZED CAPITAL, INVESTING MONEY, ETC.)

4. PROVISION OF SERVICES (ENGINEERING, CONSULTING, ETC.)

Note: in all options it is necessary to borrow resources from international development institutes on a refundable basis

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Project categories included in ITCfrom the viewpoint of investment specifics

Category of ITC facility groups

Specific features Scale of investment

s

Border crossing points

Significant portion of federal-owned facilities, “no” microeconomics, domestic investments

Billions of rubles

Ports, logistic sites

Significant portion of private-owned facilities, capital recovery “envisaged” in microeconomics, broad opportunities for raising foreign investments

Tens or hundreds of billions of

rubles

Railroads Dominating role of budgetary investments, capital recovery is combined (in micro- and macroeconomics), strong imperative of RZhD’ decisions, foreign investment raising at level of international governmental agreements

Hundreds of billions of

rubles

Motor roads Significant portion of budget grants, capital recovery is combined (mostly through macroeconomics),

t iti f f i i t t i i t l l

Hundreds of billions of

rubles

SPECIFICS OF RUSSIAN INVESTMENT PROJECTS (EXPERIENCE IN PRIMORSKY TERRITORY)

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SYSTEM OF ECONOMIC RETURNSOF TRANSIT TRANSPORT INFRASTRUCTURE

Macroeconomic efficiency = growth of

turnover of economic agents (М3)

Budget efficiency = growth of tax revenues compared

with inertial scenario (М2)

М1 (for infrastructure) is interesting for investor only when CAPEX are borne by government;М2 nears to zero if special tax policies are applied;М3 – primary objective of governmental policies

Microeconomic efficiency =OPEX + profitability rate

(М1)

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Goods and services of Country A

Goods and services of Country B

Economic activities of Country A

Economic activities of Country B

WAYS TO ELIMINATE DISPARITY OF М3

?

Balancing mechanisms:- taxes of Country B;- or participation of Country A in creation of infrastructure in Country B;- another mechanism for risk Sharing Solutions…

International trade leads to parity

at all levels

Transit transport schemes can’t create parity without M3 level

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Party “1” which

support construction activities in abroad bears CAPEX risk

s

Party “2” which invest in construction for

the futuretransport flows

from abroad bears OPERATING ris

ks


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DR. MIKHAIL KHOLOSHAGTI TRANSPORT CORRIDORS STUDY PROJECT TEAMhttp://www.dniimf.ru/ Tel.: +7 423 240 26 53 E-mail: [email protected]

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TRANSPORT INFRASTRUCTURE DEVELOPMENT IN THE FAR … · Road BCP “Kraskino”: construction of a multilateral border crossing point capable of handling 250 vehicles per day. Railway