Reserve Fund should be used for highways – minister

Moscow Traffic file photo

MOSCOW. Dec 5 (Interfax) – Russian Economic Development Minister Andrei Belousov has said money from the Reserve Fund should be used to build new highways.

“We need to resolve the problem of funding highway construction. I do not think we can really resolve it without using oil and gas money – our resources from the Reserve Fund to build roads. Highway construction through raising private funds or Pension Fund resources – and such opportunities certainly do exist – is very limited because the recoupment on these projects is either very significant or completely absent. That is why this problem that has now become very urgent (lack of highways) must be resolved,” the minister said at the “100 Steps to a Favorable Investment Climate, New Directions for Regions” conference in Moscow on Wednesday.

“The state of highways now have a 100% probability of sabotaging all efforts to improve the investment climate,” he said.

In the Soviet Union, 10,000 to 12,000 kilometers of public road was introduced every year, in the mid-nineties this was down to 6,000 – 7,000 kilometers and now it is 2,000 kilometers and “we are unable to reverse this situation. We have come up with a new mechanism – highway funds. The mechanism seems a good one, but now the situation is only worse,” Belousov said.

Excises from the sale of gasoline became the sources of funding for the highway funds, but at the same time incentives were introduced to reduce excises and improve gasoline quality. “As a result improving the quality of gasoline means a reduction in our financial source for the highway funds,” Belousov said.

“While this problem seems to have been solved, a second problem remains – when setting up the highway funds we introduced the requirement – which is perfectly normal – to carry out repairs, so that road maintenance should be 100% covered by sources of funding,” the minister said.

However, road maintenance does not ensure an increase in capacity, he said.

“As a result funding for maintaining and repairing roads increased, while sources increased by a lesser extent and now funding for road construction has actually narrowed.” This problem, the minister says, can only be resolved by using Reserve Fund resources.