A key rail infrastructure project in Russia’s Arctic turns to private investment

With costs outstripping government funds, Moscow is proposing a public-private partnership deal to build the Northern Latitudinal Railway.

By Atle Staalesen, The Independent Barents Observer - April 11, 2018
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A photo from a project presentation, shows possibly routes of Russia’s Northern Latitudinal Railway project. (Atle Staalesen / The Independent Barents Observer)

A series of new Russian railway lines leading to the Arctic Ocean will heavily depend on private investments.

The 707-kilometer Northern Latitudinal Railway will connect Russia’s Ural and West Siberian region with the Northern Sea Route and prepare the ground for additional big out-shipments through Arctic waters.

It will link two of Russia’s key existing Arctic railway lines, the Northern Line from Arkhangelsk and the line between Nadym and Tyumen. A 170-kilometer line between Bovanenkovo and Sabetta on the northern tip of Yamal Peninsula is also planned.

Yet thought the project is one long sought by Russian authorities, it comes with a price tag that exceeds the capacities of the increasingly cash-strapped government budget. Investments are estimated to be as much as 236 billion rubles (€3 billion).

A public-private partnership is the answer, Moscow says. In a government decree signed in February this year, Prime Minister Dmitry Medvedev makes clear that the Northern Latitudinal Passage will be built based on a concessional agreement, which will give the investor exclusive rights over usage in return for costs for construction and maintenance.

Russian gas company Gazprom is set to be key part of the deal. The company, which holds major natural gas reserves in and around the Yamal-Nenets region, in March 2017 signed a cooperation agreement with federal company Russian Railways over the Northern Latitudinal Passage. Gazprom already operates the 525-kilometer railway line between the stations of Bovanenkovo and Obskaya, a key piece of infrastructure for the major natural gas field developments in the Yamal Peninsula.

More stakeholders are onboard. According to regional leader Dmitry Kobylkin, the Yamal-Nenets Autonomous Okrug is ready to cover the lion’s share of construction costs related to the projected 40-kilometer long bridge across the Ob River.