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31 Aug, 2010 07:34

Putin pushes forward road construction financing

Russia has finished building its first cross-country road connecting Moscow to Vladivostok. It has been a vast undertaking and has taken decades to complete.

To test the new road and estimate its quality for future adjustments in other road constructions, Prime Minister Vladimir Putin drove 2,500 kilometres through the country.

Russia’s road network is notoriously patchy and underdeveloped. According to the Ministry of Transport, there are about 28,000 settlements with a total population of more than 12 million people which have no connection with the network of hard surface public roads. In some regions, including the Republic of Sakha (Yakutia), Magadan Region, Chukotka Autonomous District, and others, there is no reliable network of highways, which complicates the delivery of goods in restricted areas. As such it worsens the country’s transportation and logistics, notes director of Infranews Aleksey Bezborodov.

“If roads in Russia are at least lit up – the speed of cargo transport would rise 1.5 times. If the potholes are fixed – it would rise 2.5 times. That alone could add about 3% to Russia’s GDP.”

The government is setting up a road fund, which will be financed by raising the duty on petrol. The development of the road network has been set as the main agenda for budget financing, Putin pointed out.

“We have made a decision in principle to make road construction a priority part of budget spending. The volume of the federal road fund will reach more than $12 billion next year which is $3 billion more than what we are spending on road construction this year. And the amount of money available will continue to grow.”

Industry analysts say Russia already allocates plenty of money for roads. The problem is that it is not spent efficiently, which makes the cost of construction in Russia one of the highest in the world, despite the often poor quality of the driving surface.