Airports pegged to loans

The Far East Development Fund (FEDF, fully owned by VEB.RF) will issue loans to build up infrastructure at Yakutsk and Blagoveshchensk airports. The formeris estimated at RUB 1.4 bln and the latter — at RUB 3 bln. The loans to be provided by the FEDF may cover up to 50% of the costs. Experts view the Yakutsk project as a promising one, but feel that the expansion of the Blagoveshchensk terminal might fail due to low passenger traffic.

As Kommersant was informed by the Fund’s representatives, the FEDF would issue soft loans to finance the construction of new international terminals at Yakutsk and Blagoveshchensk airports. The agreements with the regional governments will be signed at the Eastern Economic Forum (EEF). The FEDF may provide a loan at the rate of 5%, to reduce the costs of debt repayment. The terminal in Yakutsk is estimated at RUB 1.4 bln and in Blagoveshchensk — at RUB 3 bln. The Fund representatives refused to disclose specific sums to be provided for the airports, but said that the FEDF may invest up to 50% of the loan funds, the rest being possibly contributed by VEB.RF or private investors.

For instance, if we look at construction of the new terminal for domestic airlines at the Khabarovsk airport (to be commissioned on 04 September 2019), the FEDF invested around RUB 2 bln, another RUB 1.9 bln was contributed by VEB.RF, the rest (RUB 1 bln) being provided by the airport owner.

In 2018, the Yakutsk Airport served 908,400 passengers, exceeding the figures for 2017 by 0.8%. Yakutsk Airport Management Company is fully owned by the republican Property Ministry. The traffic at Blagoveshchensk airport amounted to 419,000 passengers in 2018, exceeding the figures for 2017 by 5.1%. The Amur Region government is planning to award concession, and the management company is supposed to be selected till the end of 2019. Roman Trotsenko’s Novaport has declared its interest in the airport.

As Kommersant was told by industry insiders, the FEDF would also take part in financing of the Novy Urengoy airport renovation project.

VEB.RF confirmed this information, while the airport concessionary (Airports of Regions, affiliated with Viktor Vekselberg’s Renova) declined to comment. Nikolay Tsekhomsky, First Deputy Chairman of the Management Board at VEB.RF, said that the agreement with the contractor (Urengoygazinvest) and Gazprombank that has been financing the project since 2018 would also be signed at the EEF. According to Mr. Tsekhomsky, the the airport overhaul will cost RUB 10 bln. Loan funds will be provided for the construction of a passenger terminal for domestic airlines with the total area of 18,000 sq m; the project is slated for completion by 2021. The airfield infrastructure revamping is already underway, but the terminal construction has not been launched yet.

Andrei Kramarenko, Senior Research Fellow at the Institute for Transport Economics and Transport Policy Studies of NRU HSE, views the the project of Yakutsk airport’s terminal as more promising than the one in Blagoveshchensk. “Blagoveshchensk obviously needs new infrastructure, especially for international flights, but it will not be easy to award concession due to the low traffic”, he says. The expert notes that investors should equally factor in the risk of failure to meet the deadlines for completing the new runway “that will enable to accommodate larger wide-body aircrafts, and yet the Federal Air Transport Agency succeeded in holding a tender for renovation at the sixth attempt only”.