Energy, utilities

Oleg Kouzbit on Shantsev's big push for NN investment

30 May '08
Valery Shantsev, the charismatic Governor of the Nizhny Novgorod region, and his deputy in charge of investment policy, Dmitry Svatkovsky went to Moscow earlier this week to sell investors on why Nizhny is once again “the pocket of Russia”.

Speaking to a select group of foreign investors and media at the offices of the European Commission in Moscow, the governor took the lead from the start and for almost two hours kept the audience under the spell of his eloquence and personal magnetism. The meeting was sponsored by the Association of European Businesses in the Russian Federation (AEB).

After a general overview of the Nizhny Novgorod region including basic demographics, historical references, and economic indicators, Shantsev paid tribute to the “glorious industrial past of the region”, and then swung into a PowerPoint presentation (it’s on the web

$300bn in the pipeline, with GlobeTown leading the pack

With more than $300 billion worth of investment projects currently in the pipeline, listeners were showered with names and figures, getting a sense of the tremendous a pace of development in Nizhny. Heading the list is the $150bn Globe Town project, a futuristic Manhattan-sized city designed by the famed Iatlain architectural firm of Dante O. Benini & Partners to be built in Bor, a small town just across the Volga River from downtown Nizhny. Globe Town has received worldwide press. Shantsev said the cost was $45bn, but did not elaborate on whether or not this was the city’s contribution to infrastructure or a figure for the first phase of the project.

RusVinyl’s $900m PVC complex and others

Another massive development is RusVinyl;s new PVC complex (Sibur, Solvay+ BASF) with an estimated investment $900m; the “Ankudinovka” IT technopark, one of a projected eight to be built in Russia, worth $625m; ; a $195.8m aviation component and building machinery production project (Liebherr, Germany) a $94m pharmaceutical facility built by Germany’s Schott; Heineken’s $90m investment in the Volga Brewery; a $22m upgrade of Kstovo-based Nizhegorodnefteorgsintez Oil Refinery approved by LUKOIL and others, whose investment worth was not specified, including Vyksa Metalworks, Ingersol-Rand, and Iveco.

Nizhny to go nuclear?

Shantsev then stunned some of the audience with his announcement that the administration plans to bring back nuclear power to the region. Projected are four nuclear power plants, generating 1.15GW each. The governor did not give details as to timeframe or cost of these projects.

Logistics are a priorty

Nizhny’s logisitics have long been a sore point with industrial and retail firms. IKEA, for example, still warehouses all of its furniture because there are no Class A logistics facilities here. Nizhny’s airport, a hulking relic from the Soviet era has just a handful of flights and handles less than 1,000 people a day. Truck and car traffic jams are legendary and the long-awaited Metro extension has dragged on for years.

Shantsev, well aware of these problems, outlined projects to “prepare world-class infrastructure for future investment”. Among the priority projects are the construction of a second bridge over the Volga, a network of logistics centers, and an impressive project to build a first-class highway encircling Nizhny Novgorod that also includes connecting the existing Kazan (south-east of the city) and Kirov (north) highways.

The governor once again declared as a priority the completion of Nizhny’s first metro-bridge (this year) and an upgrade of the airport (Marchmont reported earlier this week that the RF had approved almost $30m to help build a second runway and over $120m total) Shantsev said the airport upgrade will be completed within 3-4 years and enable the airport to serve 3 million passengers a year.

Last but not the least, the governor touched on the new high-speed Moscow-Nizhny rail line (one of only two, the other is Moscow-St. Pete). Scheduled for completion within the next three years, Siemens has already been tapped to provide the engines and Shantsev mentioned that the Japanese were also involved. The new train will cut the present time of 5 hours to 3 hours and 20 minutes.

Before the Revolution, Nizhny was called the “pocket of Russia” (its famous Yarmaka was where the wealth of the region was on display for all to see). With hundreds of projects worth more than $300bn in the pipeline the “pocket” is definitely back. The only fly in the ointment is that with so many projects to choose from, are investors' pockets deep enough to make sure they will all become a reality?
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