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The bridge across Lena - the flagship project of Yakutia

The general director of the Investment Development Agency of Yakutia Aleksey Zagorenko told in an interview to EastRussia about the work to raise the level of investment attractiveness of Yakutia and the most important projects capable of opening the world's coldest region to the world business

- Alexey Sergeyevich, in April, there will be three years since the Agency for Investment Development of Yakutia exists. Tell us about the most important, what results are you proud of?

The bridge across Lena - the flagship project of Yakutia
- I think the key achievement is the creation of the team. We tried to immediately gather in a team of professionals, to interest them and keep them. Now the agency employs highly qualified specialists in its fields: developing financial models, business plans, oriental studies, holding congress and exhibition events, implementing projects in the field of PPP and full complex support for a potential investor on the principles of a "one-stop shop".

The first significant external event was the creation of an investment portal investyakutia.com with an interactive map. According to the requirements of the regional investment standard, unified for the country, it had to be done before the end of 2013; We managed to solve this problem in two months. In 2014, it was recognized as the best in the Russian Federation along with the portal of the Primorsky Territory.

Our agency is a specialized organization to support investment projects and provide services to investors in the "one-stop-shop" mode. In 2013, we developed the necessary regulatory framework and in March 2014 launched a service unit both directly on the basis of the Agency and through the MFC "My Documents". This practice was later included in the best practices of Russia.

Throughout the year 2014, we have been actively involved in the development of the investment image and brand of Yakutia, participated in international investment forums in the United Arab Emirates, Japan and China.

In 2015, the Agency has already participated as co-organizer and organizer of this kind of visiting events. The apotheosis of this work was the participation of the delegation of the republic in the Eastern Economic Forum. The Agency, which acted as the organizer of the Yakutia delegation's participation, was responsible for the development of the delegation's business program and logistics scheme, the curriculum of the cultural program and the organization of an official reception on behalf of the head of Yakutia and ALROSA - in other words, the work "from" and "before" was carried out.

At the II Russian-Chinese Expo, as part of the presentation of Russian regions, the Agency presented to the business community of China a strategically important investment project for creating a bridge across the Lena River in the Yakutsk region.

We set up work to improve investment activity on the ground, began to provide business services for local start-ups: the development of business plans, their expertise, marketing research. We help small business to go from idea to obtaining financing. For example, in 2015, we developed 25 business plans, 10 of them received funding.

- What amounts are we talking about?

- Three large enough for small business - 60 million, 60 million and 120 million rubles, the rest on 5 million rubles. Some projects of local entrepreneurs were financed by large companies: PJSC "ALROSA", PJSC "Railways of Yakutia".

For example, recently in the Khangalassi district a workshop was launched to shock the vegetables frost - this project was funded by the Yakutia Venture Company. A number of projects received funding from the Sakha (Yakutia) Fund for Small Business Support.

- Could you please give other figures that convey the effectiveness of the agency.

- In 2015, 17 projects of public-private partnership have been launched and we can really be proud of this. This 28 objects, of which 16 - kindergartens in the regions of the republic and 12 facilities in the city of Yakutsk: schools, kindergartens, cultural facilities.

Total investment exceeded 11 billion rubles. If we talk about kindergartens in the country - 3,6 billion rubles, urban facilities - 7,5 billion rubles. Thus, in three years the agency was able to cover all areas of investment - from small to large.

- There is a Development Corporation of South Yakutia, in December of 2015 the Corporation for the Development of Yakutia was established. There is JSC "Republican Investment Company" and the Agency for Investment Development, which you manage. You mentioned the venture company. Are there any fundamental differences between these institutions?

- A complex of investment-conducting infrastructure has been created in the republic, where each institute occupies its own niche and performs only its inherent function, which is in demand by the market - business and investors. At the same time, the government did not go in a roundabout way and, after reviewing the existing experience, used the best practices developed both in the world and in the Russian Federation.

Business incubator, technology park, the territory of advanced development is an elevator, according to which businessmen enter comfortably in business. They receive the maximum support, benefits on rent, taxes, which allows the business to grow and strengthen.

The Yakutia Development Corporation implements specific investment projects: co-financing them, creating an industrial infrastructure and operating as a management company.

The Investment Development Agency provides non-financial services to create a single communication corridor for an investor entering the region for the first time, establishing a link between the investment infrastructure of Yakutia and him. To somebody, the necessary small financing - from 1 to 5 million rubles - is sent to the Entrepreneurship Support Fund, to whom the larger funds - that with the Venture Company we introduce and so on. We help to meet the individual needs of all investment projects, from the smallest to the largest.

Depending on the wishes of enterprises and investors applying to the Agency, we offer services, from the development of business plans to assistance in the selection of land. Foreign investors need more detailed help: explain and tell how Russia is doing business, what are the benefits, what legislative acts they should take into account. We help to enter comfortably in the territory of Yakutia and start a business here.

- If you evaluate from the point of view of investment attractiveness, what will be the first five projects of the republic?

- Our flagship project, which is now on hearing - the construction of a bridge across the river Lena. This project can significantly improve the investment attractiveness of Yakutia and substantially enrich the portfolio of those who can implement it in our unique conditions. It is not for nothing that world-class companies create their own landfills in Yakutia, test their products for durability: automobile tires, cars. If they survive our extreme temperatures, we can assume that they will endure any conditions at all.

The next most attractive projects are related to gas and oil refining. You know that in the republic we have oil and gas, but most of the fuel is imported from outside, and the transport component of costs is very high. The Yakut oil refinery in the city of Aldan for 2 million tons is a very promising project worth up to 2 billion dollars. The project was initiated by OAO NK "Tuymaada-neft".

There is a search for a strategic investor to implement the second stage of the Yakutia gas processing plant. The initiator of the project is the state-owned company Sakhatransneftegaz. We also have a project to create a plant for liquefying natural gas in Nizhny Bestyah, it is offered by a private company Sakhametan.

An interesting agricultural object is a year-round greenhouse, initiated by the construction of which is Almazergienbank. The agency accompanied the project on the basis of an agreement with the bank, we helped to form a financial model, created presentations in different languages, accompanied the bank delegation in the road show in Japan. As a result, successful negotiations were recently held with the Japanese Hokkaido Corporation on the construction of a year-round greenhouse in Yakutsk.

- How do you work in the light of the current economic situation - which areas are in priority, and which of them is better to wait for better times?

- I would not say that some projects need to be postponed. We are absolutely open to offer all projects. I can note that there are fears with currency risks, now investors pay more attention to this, but all risks can be hedged. It's no secret that the Russian Federation uses swaps in rubles and yuan, it is possible to provide financing in rubles, thus minimizing currency risks. For each negative, you can always find an adequate plus, the question is how much it will cost.

- In Yakutia, projects related to the extraction of minerals and aimed at import substitution are planned. For example, there is a deposit of tin, the reserves of which could fully meet the needs of the country. What's New?

- This is a project of OJSC "Yanolovo", a subsidiary of the Republican Investment Company. At the moment, a financial model has been prepared, a presentation, the project is waiting for its investor. Work under the license agreement is on schedule, the necessary funding is allocated. In order to develop large-scale production, we will need appropriate investments: we assume that it is necessary to extract a minimum of 3 000 tons, otherwise it makes no sense. In this case, the investments there are quite large and a strategic investor is needed.

- The leadership of Yakutia said that by the time of 2018, a park of high technologies will be built in Yakutsk. What is the current information?

- IT Corporation is engaged in the Corporation for Development of Yakutia, negotiations are successfully conducted with a potential investor - the company Merlion. The high-tech park is one of the objects timed to the 100 Anniversary Yakutia, we hope that it will be implemented in the near future.

- Construction of kindergartens and schools in the capital of the republic, planned jointly by the International Bank for Reconstruction and Development, according to the head of Yakutia Yegor Borisov, is frozen for an indefinite period. Is it possible to involve other partners in this project?

- It is implemented through public-private partnership. As I said earlier, last year in Yakutia the implementation of PPP projects for the construction of 16 kindergartens and 12 more educational and cultural facilities in Yakutsk began. In the current year we plan to launch construction projects 4-5 Schools and 4 kindergartens in the regions of the republic, but more specific figures can be said after negotiations with investors. Most likely, the objects of education will be represented by one lot. There is a so-called "long list", from which the objects that the investor is ready to finance will be selected.

- And who is he - the investor of kindergartens and schools?

- For those projects that are already contracted on the territory of the Republic, private partners are working: various republican construction companies, partially financed at their own expense, partly at the expense of loan funds of OJSC Almazergienbank. The tender for facilities in Yakutsk was won by JSC Gazenergomontazh, they also partially finance themselves, partly with the use of loan funds.

- What is the interest of these investors, what do they get as a result of public-private partnership?

- PPP projects are similar to life-cycle projects: they not only build, but also operate these objects, i.e. Enterprises are guaranteed additional income over a number of years. For Yakutian companies this is a completely new phenomenon, they do not always understand that we are in fact offering them not only to lead as before a construction business, but also additional income.

This is beneficial for us. If you compare with the state contract, where construction is simply carried out for a budget account, enterprises do not have the incentive to build qualitatively. They handed over the object, waited for the warranty period, and that's it. And under PPP projects, the company is responsible for operating buildings for a certain period of time, but all repairs, if they are required, must be carried out at their own expense. Therefore, they have a great incentive to build qualitatively, so that later they do not have to be corrected. As a result, we get a quality product.

- Next month, the ice crossing over the Lena River will be closed and difficulties will begin with the delivery of goods and products to Yakutsk. How is the issue of building a bridge being solved - perhaps the most acute for locals?

- In 2013, the design and estimate documentation for the construction of the bridge was developed, in 2014 the competition took place, under which the federal agency Rosavtodor determined the winner. The agreement with him was not concluded for various reasons, including geopolitical ones. The financing structure is quite large: the size of the capital grant from the federal budget amounted to 40 billion rubles and only 6 billion was to be found by the concessionaire.

Last year the government of Yakutia appealed to the federal authorities with the initiative to attract foreign investors to the project. The financing structure has undergone a change: the investor is offered to build at his own expense, and the return of investments from the budget will be deferred for longer periods (after 2020 year). With the support of the federal government, the republic began to promote this project and search for investors.

We presented it at Russian and foreign events and received a warm response from both private corporations and government. At this stage, we have identified several leaders. There is a private corporation that is preparing to sign a memorandum of understanding with Rosavtodor, and two global world corporations with significant experience in the construction of infrastructure facilities. Both companies have a high status in China - if compared with Russian corporations, not below the level of Gazprom.

The first is the state Chinese corporation "Sinohydro", a subsidiary of China Power Investment Corp. The second one is called "18 Bureau", it is a subsidiary of the "Chinese Railway Company". We hope to come to the finish line with these companies by the end of the year. There are several options for how the selection will take place: either in the competitive procedure, or, if there is only one company, within the framework of a private initiative; Such a procedure is also envisaged by law.

- Many agreements on cooperation were concluded at the Eastern Economic Forum, the volume of planned investments reached 1,3 trillion rubles. According to your observations, how many percent does it usually come to reality?

- When the agency was created, I had the impression that only a small mass of foreign investors knew about Yakutia, who somehow already had experience of coming to the region or heard about it from their acquaintances. Many did not even know that it was part of the Russian Federation. The last three years we worked on the recognition of the brand of Yakutia to bring the republic closer to its neighbors - the countries of the Asia-Pacific region. Our Minister of Economy came up with a new slogan "Yakutia - NEAR", that is, "North East Asia Region - North-East Asian Region", which also translates "Yakutia - close".

Since any relationship begins with acquaintance, first of all we sign a memorandum of intent with the interested company, but it does not guarantee that the investor 100 percent Will enter the project. The document serves as the beginning of the work for us, and for them it becomes the basis to learn more about the project. Not everyone passes through the "valley of death", someone goes further, others lose interest. Approximately 30% of agreements reach the implementation phase of agreements.

In general, the process of making an investment decision is a little longer than normal. For a foreigner to enter the business of another country, you need to cross some barriers, including psychological ones. Of course, everyone is reinsured, they want to get maximum information from different sources, come once or twice, establish informal relations, which is very important for trust.

But, as can be seen, there is a movement, the companies come to Yakutsk after meeting at international events. The agency as a "one window" provides them with all the information necessary to make management decisions, organizes meetings with Russian, Yakut partners, so that foreigners receive professional information from the first mouth.

I think we now need to launch a flagship project - such as a bridge across the Lena River, which would show everyone that you can work in Yakutia. A favorable investment climate has been created, there is a competition for "delicious" projects, we are waiting for good signals and forward!
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