China not to ask for state guarantees for Russian high-speed network loan

China not to ask for state guarantees for Russian high-speed network loan
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The Chinese authorities have made the decision not to demand state guarantees from Russia for loaning 400 bln roubles for the implementation of the Moscow – Kazan high-speed network program.

Initially, China asked for state guarantees for the whole sum, but the Russian Finance Ministry, as well as the RF Transportation Ministry and the Economic Development Ministry of Russia, declined the request, Kommersant newspaper reported on Tuesday.

Instead, collectability and profitability guarantees on China’s investment will be ensured in accordance with Russian concession legislation.

According to the newspaper’s sources, China agreed because the concession itself includes the guarantees.

The Moscow – Kazan high-speed network’s financial model involves minimum guaranteed profitability for the concession owner and compensation in case of a disparity between the expected and actual returns from the project.

The whole amount of the loan will be provided by the China Development Bank. The corresponding intergovernmental agreement on this matter is scheduled to be signed within the framework of Vladimir Putin’s visit to Beijing in June.

As a reminder, the Moscow – Kazan high-speed network construction, with a length of 770 km and with a speed of 200 – 400 km an hour, will cost 1.068 trn roubles.