City Hall Reconsiders Trio of Investment Projects

City Hall Reconsiders Trio of Investment Projects

‘It’s clear that the ambitious policy era has passed with Matviyenko,’ said Igor Ivanov.

Published: October 5, 2011 (Issue # 1677)


Poltavchenko (r), pictured here with Finnish Prime Minister Jyrki Katainen, has scrapped plans for the Orlov Tunnel.

Plans to build a tunnel under the River Neva have been scrapped and the fate of two more of the city’s biggest investment projects hangs in the balance after the new city governor, Georgy Poltavchenko, questioned the need to realize the schemes.

Plans for the Novoadmiralteisky Bridge and the Palace of Arts on Vasilyevsky Island may be abandoned along with the Orlov Tunnel after City Hall’s new deputy governor in charge of finance, Sergei Vyazalov, proposed canceling the allocation of budget funds to the public-private partnership projects that were all launched under former city governor Valentina Matviyenko.

Poltavchenko said Tuesday that he had taken the decision to cancel plans for the tunnel, Interfax reported. The governor said last week that City Hall needed to establish “how rational and urgent the projects are today.”

The Orlov Tunnel under the Neva was due to connect the Smolnaya and Sverdlovskaya embankments at the beginning of Piskaryovsky Prospekt. The project was to cost about $2 billion rubles, and preparatory work had already begun.

Igor Rimmer, a Legislative Assembly member, said Monday at a roundtable devoted to the projects that he could not help but agree with the decision to withdraw financing for the mammoth projects.

“There are more important issues such as social problems, which can’t wait any longer for a solution, whereas building projects are not urgent at the moment,” he said. Rimmer argued that hard times lie ahead and it would be a crime to invest budget money into projects other than social ones.

Other participants in the roundtable discussion disagreed.

Igor Ivanov, head of the Roads and Bridges Association of Enterprises, argued that projects that have already been approved should not be stopped. He said the construction of the Orlov Tunnel and the Novoadmiralteisky Bridge, alongside repair work on the Palace and Tuchkov bridges, was crucial to the city’s infrastructure and residents’ comfort. When money is invested in material projects such as building ones, it can be clearly verified whether the costs are justified, while the value of social programs is not always evident, Ivanov added.

Ivanov said that the Palace of Arts on Vasilyevsky Island was initially due to be entirely funded by private investment, but later it was announced that city budget funds would be allocated as well.

“The problem is apparently with the investor itself, and that’s why the question of finding another one could be underway,” Ivanov said.

Nina Oding, senior economist at the Leontieff Social and Economic Research Center, said the decision to at least postpone the three projects was “excellent.”

“The number of gigantic projects started in St. Petersburg was excessive, though they were no threat to the budget at the time they were initiated,” Oding told The St. Petersburg Times.

“The unrestrained number of projects sometimes affected their quality. Some projects were not very well developed,” she said.

Oding said that given the current situation surrounding the federal budget and risks on the global markets, it made sense to consider projects whose completion could take many years.

“Perhaps they will find less expensive and more short-term projects instead,” Oding said.

Oding said that all of the projects under discussion were aimed at easing traffic flow in and out of the city, rather than at solving congestion inside the city itself.

“Meanwhile, the main transportation priorities of city residents are problems with parking inside the city and the lack of metro stations. The distance between most of the city’s metro stations is too long and it is inconvenient for people,” she said.

“If there were more metro stations, like in Moscow, quite a number of car owners would choose to take the metro instead of their cars inside the city,” Oding said.

Other analysts expressed concern that an unclear and changeable government policy will scare off potential investors. Alexander Khonfisakhor, a political scientist, said that illogical and unpredictable decisions by City Hall would dampen the city’s investment prospects.

“At the same time, there was a real need to postpone some projects, because they weren’t well thought through from the very beginning,” Khonfisakhor said.

The backtracking was also interpreted as a sign that the investment problem lies deeper, in the economic and political instability of the country. Rimmer said that investments are not safe because money is subject to governmental influence in Russia, and therefore the result often doesn’t equal the cost.

“St. Petersburg needs to develop, but the rationality of proposed projects needs to be very carefully verified,” he added.

All of the experts at the roundtable agreed that the investment potential of St. Petersburg must be built comprehensively, taking into account Russia’s demographic crisis. Training and education programs for blue-collar workers are in decline, and there might not be sufficient labor power in the city to carry out the building of the projects under discussion.

“If there is no one to work on the projects, what’s the point in launching them?” said Khonfisakhor.

“What the policy of the new administration will be like is too early to talk about, but it’s clear that the ambitious policy era has passed with [the departure of] Valentina Matviyenko,” said Ivanov.

“It is necessary to create an ideology of further development. St. Petersburg must choose its future image,” said Rimmer.

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