The governor’s amendment:
The governor’s amendment to the St. Petersburg budget for 2024 included the end of a long history associated with the construction of the Western High-Speed Diameter. The city has already understood everything about the Central Bank’s policy and is in a hurry to give away 40 billion not in parts, but at once.
It is traditional to adjust the city budget started at the end of the year — when it became clear how much the treasury will actually earn in 2024 and which projects are not behind schedule. In the draft law, both revenues and expenses increased by 54.6 billion rubles, and the deficit, accordingly, remained the same. Amendments arrived in time for its second reading, and the most important one was the governor’s. The release explained that the main directions are social: money is added for healthcare, salaries for public sector employees, cleaning yards.
But if you look at the explanatory note to the draft gubernatorial amendment, the most noticeable thing there is 42.445 billion rubles, which in one fell swoop adds to the budget investments of the city JSC WHSD. The day before, Deputy of the Legislative Assembly Irina Ivanova drew attention to this during a discussion of the project at the relevant parliamentary commission.
An investments of WHSD JSC:
The investments of WHSD JSC, which is entirely owned by the city, are not uncommon, especially in recent years. The Northern Capital Highway (MCS) concessionaire, which built and operates the Western High-Speed Diameter, is developing the route with new interchanges – Shuvalovskaya, Shkiperskaya, Vitebskaya and more. This is being done within the framework of the same concession and additional agreements to them, and the city is represented in them by WHSD JSC. So in the original version of the budget for 2024 (as well as for 2025), one can find his investments – in the development of the transport system, and now also in the construction of the Latitudinal Expressway (within the framework of his powers, namely, preparation of the territory).
But the governor’s explanatory note says something different. This year, 42.4 billion rubles are being added to WHSD JSC for the implementation of the agreement dating back to 2012. We are talking about the construction and operation of the Western High-Speed Diameter on the PPP principle.
The issue of payments to the Northern Capital Highway has been discussed several times. In short, we are talking about compensation for investment and subsequent operating costs. MCC must receive some guaranteed revenue, due to which it will cover the costs of maintaining the road and servicing loans once taken for construction. If this cannot be done at the expense of the toll, then the city reports what is missing. If the traffic exceeds expectations, then the concessionaire, on the contrary, gives 90% of the excess income to WHSD JSC. The principle in general similar to the conditions for the rapid construction of the Latitudinal Highway.
JSC WHSD itself at one time also took out a line of credit, more than 7 billion rubles. But for several years now the city has not paid MSS, since the route, to put it simply, has reached self-sufficiency. Moreover, JSC WHSD, with the help of excess income from the highway, repaid its debts last year by 800 million.
The end of 2024:
The end of 2024 threatened to change everything. The deadline for the planned refinancing of the MSS loan has approached – in fact, obtaining a new loan to pay off the old one. We are talking about the loans that the concessionaire took specifically for the Central Section of the WHSD.
If the Central Bank rate had been more lenient, then the concessionaire’s revenue could well have been enough to service its obligations. But now we would have to refinance at 25 percent. According to Fontanka, Smolny calculated about 10 years in advance (and the concession is valid until 2042) and realized that at this rate, annual payments from the city through JSC WHSD would amount to something it’s very ugly. And while there are funds in the budget, it’s better to close the debt once and for all right now.
The Finance Committee’s commentary confirms this plot: “Due to the difficult economic situation and high rates on market loans, refinancing in the future will lead to significant additional expenses for the budget of St. Petersburg in accordance with the terms of the agreement,” the press service told Fontanka. “In order to avoid further additional expenses, the city decided to repay the balance of borrowed funds raised by the partner for the construction of the Central Section.”
If the debt issue is closed in such a radical way, then, according to the city’s calculations, the concessionaire will continue to receive revenue above the cost of obligations.
“A comparison of two financial scenarios (market borrowings and subsidies from the project budget) showed that the chosen option is more effective for the city,” they say in the committee. “The decision made will lead to the fact that the city will not subsidize JSC WHSD, which will be able to receive excess income and use the funds for the further development of city infrastructure projects.”
In particular, according to Fontanka, JSC WHSD will not need money from the budget to fulfill obligations under the bond loan, which the company raised in five series of 5 billion rubles each in 2011–2012.
Reminder:
Let us remind you that the Latitudinal Expressway also will be built on the principle of concession with a minimum guaranteed income. According to the financial model, the city will initially have to report about 70 billion to the required amount, but in subsequent years the return from windfall revenues from traffic will exceed these costs many times over.
By 24webs.
