About the project

InfraOne Research prepared the following analytical review “Investment in Infrastructure. Far East” for the Eastern Economic Forum 2021. The paper deals with the current state of the District’s infrastructure, perspectives of using different investment tools for industry’s development, and trends in private and public capital expenditures. InfraOne Research has also analyzed current federal and regional governmental infrastructurе plans.

About InfraOne Research

InfraOne Research is the research team of InfraOne investment company. The team provides independent analysis of all significant investment plans, projects, and events related to different types of infrastructure. This includes projects in which InfraOne acts as an organizer, investment agent, and investment counsel for any state or private party, as well as investor. The research includes only project information that is available to the public.

All materials published by InfraOne Research comply with the independence principle for analytical judgments. InfraOne Research's opinion may differ from that of InfraOne.

The company publishes its research to inform the market on topical infrastructure investment issues. This represents neither an advertisement nor offer.


Alexandra Galaktionova
Alexey Zhundrikov
Ekaterina Yakunina
Marina Fomina
Galina Bartseva
Anastasia Yakovlevskaya

InfraOne Research | the research team of Group InfraOne


The authors wish to express their gratitude to the experts working for federal and regional authorities; the investment, banking and financial community, project participants; and everyone else who contributed to this review or its parts by sharing their professional experience and opinions through interviews, surveys, and brainstorming sessions.

Design and code by Yaroslav Bragin and Igor Ukharov

Data collection by Dmitry Arsenievich

Production by Darina Badmaeva

You can find additional analytical materials from the research team of InfraOne Research at infraone.ru in the Analytics section.



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Русская версия
Investments in infrastructure
Far East
What is the state of the infrastructure of the Far Eastern Federal District?
How much
investment is needed
to maintain it?
What projects and instruments will help the District attract private capital?

The "Coronavirus Crisis" year 2020 was not as hard for the infrastructure of the Far East as it might have been expected. The drop in passenger traffic was compensated by the positive dynamics of freight transportation, the first social bonds in the country were issued to implement projects in the Federal District, budget investments in infrastructure grew, albeit insignificantly, and the territory market of concessions and PPPs showed record growth.

The Far Eastern regions, however, were not able to escape their actual problems. The depreciation of their fixed assets risks crossing the 50% threshold soon, the industry's need for additional investment is slowly increasing, it still receives too little money from the budget, and the inflow of private capital is limited by the shortage of shovel-ready projects and the lack of experience in using of advanced investment instruments.

Infrastructure and instruments

The Far East's special status at the federal level gives it a small advantage in the struggle for budget investments. Special tax treatments appeared in the District not long ago to make it possible to assess their effectiveness unambiguously. And other development mechanisms are not yet widespread here.

The infrastructure of the Far East is wearing out at a fast pace and risks crossing the 50% threshold for this indicator soon.

According to the Russian Statistics Committee (Rosstat), by early 2020 the depreciation of fixed assets in the FEFD regions reached 44.2%. This is lower than the national average (51.3%) and better than in all other districts, except the Central one (where the figure was 41.7%). However, the Far East is the first in the country in rate of infrastructure aging: since 2010 the wearing out level of its assets has increased by a record 15.3 p.p. against the national average of 5.6 p.p.

A noticeable role in the weak renewal of the Far Eastern infrastructure is played by the transportation and extractive industries, which are among the most important ones for this macroregion. They account for nearly half of the District's total fixed assets — 44.2% in 2019. According to our calculations, more than 10% of the infrastructure of these two industries is completely worn out.

Degree of fixed assets depreciation by federal districts in 2010–2019

The average depreciation of fixed assets in the FEFD for 2010–2017 is presented without data for Buryatia and Trans-Baikal Territory, which were included in the District in 2018.

for Russia for FEFD

Sources: Rosstat data, analysis by InfraOne Research

The "Covid" year 2020 hit the country's transport sector, but the FEFD got over it better than other districts.

In 2020 the passenger traffic in the Far East fell by more than 40% in the aviation industry and by almost 25% in railroads. However, this is less than in another macroregions, and in the freight transportation industry the indicators were even positive unlike in the rest of the country. According to our calculations, in 2020 the volume of freight transported by air in the FEFD increased by more than 4%; by rail — by almost 1%; by roads — by more than 15%, and cargo transshipment in the Far Eastern basin ports increased by almost 5%. The drop in these figures in other districts ranged from 3% to almost 13% depending on the industry.

The infrastructure of the Far East still has little to gain from its priority status.

The Far East is on the list of priority geostrategic territories of the country and has a number of preferences in receiving federal support, it has its "own" strategy and state program, and in 2020 the government adopted a special national program for it — none of the federal districts has the same yet. However, all this has a small impact on the infrastructure. For example, according to our calculations, in 2020 the FEFD received about 17 billion rubles of federal infrastructure subsidies compared, for example, with almost 70 billion rubles that the government allocated to Crimea and Sevastopol.

Territories of Advanced Development (TAD) in the Far East considerably support the projects in resource-based industries, but their impact on the District’s economy as a whole is still ambiguous.

According to our estimates, the TAD residents have invested about 1.5 trillion rubles in their projects, and more than 70% is accounted for by the construction of facilities depend on the gas supply through the Power of Siberia pipeline. In total, investments in initiatives related to the extraction and processing of minerals accumulate 80% of the total investments of the TAD residents.

On the one hand, any project creates jobs, develops related infrastructure (roads, railways, energy facilities) and has other positive effects on the FEFD economy. Large-scale initiatives in the processing sphere also promote technology development in the industry and reduce the exports of raw materials with low added value. On the other hand, in 2018–2020 alone, the FEFD regions lost more than 8 billion rubles of their income, and we can see how small the share of TAD residents in regional budgets income is in comparison with their investments.

It might be too early to estimate the effectiveness of TADs. The first ones were created only six years ago, and their effect will not have been seen until 2025–2030. Moreover, the TAD residents had invested only 35% of the total amount of planned investments by the second half of 2021: many initiatives in different sectors of the economy are only being prepared for launching.

The amount of shortfall in tax revenues of the FEFD regions from the TAD residents' activities

Data are provided on the amounts of corporate property tax and corporate income tax in connection with the application of tax exemptions and reduced tax rates for organizations — TAD residents in 2018–2020.

 Kamchatka Territory  Khabarovsk Territory  Primorye Territory  Amur Region  Republic of Sakha (Yakutia)  Chukotka Autonomous Area  Trans-Baikal Territory  Sakhalin Region  Jewish Autonomous Region  Buryatia

Sources: Ministry of Finance data, calculations by InfraOne Research

Investment Protection and Promotion Agreements (IPPAs) have not become widespread in the Far East yet. Investors are used to TAD and Free Port of Vladivostok regimes.

The IPPA register published on the budget.gov.ru portal contains information about the only agreement signed in the Far East — regarding the construction of a methanol plant in Skovorodino, Amur Region, with an investment volume of 55 billion rubles. It was signed by the Ministry of Economic Development, the regional authorities and Technoleasing (the ESN group) in December 2020.

Probably there is at least one more Far Eastern IPPA on the market — regarding the construction of the multimodal transport corridor "Eastern Grain Gate" in Primorye Territory for 16.8 billion rubles. It is not in the IPPA register but according to open sources an agreement with the company "Morskoy port v buhte Troitsi" was signed in December 2020 as well.

There are a lot of other investment instruments in the District therefore we do not expect a substantial growth in the number of IPPAs there in the next few years. Investors will likely continue to use more “traditional” ways of getting benefits mainly within the TAD and Free Port of Vladivostok regimes. Moreover, the instrument itself still requires a fine-tuning that holds back its spread not only in the FEFD but also in the whole country.

Remarkably the Technoleasing company which signed the IPPA is a resident of the Svobodny TAD.

Bonds to finance infrastructure projects are not very common in the FEFD yet but some classes of securities may become more actively used in the next few years.

There is a chance that in the next few years projects with concession bonds emissions will appear in the FEFD but there are a few prerequisites for this: so far, this instrument has been rarely used even in the European part of the country where concession projects are more widespread.

ESG-bonds may become more popular within the next three to five years. But in our opinion, they will likely be issued by the most financially sustainable regions or by the investors that have already had experience in green and social bonds emissions.

The FEFD has great potential to raise funds from the placement of DOM.RF infrastructure bonds in housing construction projects. Sakhalin Region has already become one of the pilot regions where the mechanism will be tested: it will receive 11.6 billion rubles to create infrastructure in two new residential areas.

According to our calculations, the minimum additional requirement of the FEFD for infrastructure investments exceeds 230 billion rubles in 2021.

These funds might prevent the FEFD fixed assets from further deterioration. The least amount of investments — about 16 billion rubles in all — is required by the Jewish Autonomous Region, the Chukotka Autonomous District and Buryatia. The greatest needs are in Yakutia (over 50 billion rubles), the Sakhalin Region and Primorye Territory (about 40 billion rubles for each of the regions). The Khabarovsk, Trans-Baikal and Kamchatka Territories as well as the Amur and Magadan Regions have "medium" requirements of about 80 billion rubles in all.

The minimum additional need is an indicator that includes our estimate of investments that are necessary to meet the basic infrastructure needs of the population (without taking into account the infrastructure needs of industrial enterprises). The calculations are based on the assumption that for the development of the country's economy in 2021 additional investments in the public infrastructure should be about 5.8%–6% of GDP.

These investments will help the regions of the Far East turn around the trend of their infrastructure accelerated depreciation. But it is unlikely that the regions will be able to attract such an amount of funds and apply them in a short time. According to our estimates, they will not manage to attract a large amount of extrabudgetary capital, so it will cover up to 50% of regions’ demand. There is also a little opportunity to increase budget infrastructure investments: in particular, the budget loans — a new measure of industry support — might cover less than 4% of the annual needs of the District.

Infrastructure investment needs of the FEFD and its regions in 2021

The figure shows the results of our estimation of the minimum additional infrastructure financing requirement for Russian regions. The calculations are based on the regions’ GRP data and their current expenditures on the industry. The needs of those regions that have a sufficiently developed economy and the infrastructure demand are estimated higher.

 Minimum additional infrastructure financing requirement, RUB bln

Sources: analysis and calculations by InfraOne Research

Industry spending

In 2020 the Far East was the only macroregion whose infrastructure investments were declining even in nominal terms (i.e., excluding inflation). But it seems to be related not only to the COVID-19 pandemic.

The District's economy is still relatively small and depends on large industrial projects including those in the oil and gas sector. The life cycle of such initiatives has a significant impact on the dynamics of infrastructure investment in the District.

In 2020 infrastructure investments in the Far East declined more than in other districts.

Capital investments of the FEFD from all the sources in 2020 amounted to 1.55 trillion rubles. It was the only District whose spending fell even in nominal terms, down 6.6% from 2019 (adjusted for inflation the drop reached 12.6%).

It caused not only a coronavirus pandemic but the life cycle of some large-scale projects primarily in the oil and gas sector. For example, the completed construction of the Power of Siberia gas pipeline in 2020 resulted in plummeting of the capital expenditures by 50% in Yakutia which used to be a leader in infrastructure investment in recent years.

Capital investments by federal districts in 2015–2020

In current prices Central  Ural  Volga  Northwestern  Siberian  Far Eastern  Southern  North Caucasian  In 2015 prices, %

Sources: Rosstat data, analysis and calculations by InfraOne Research

Budget expenditures of the FEFD regions on infrastructure have barely exceeded 150 billion rubles in 2020.

This is nine times less than what the private sector invested in the industry and one and a half times less than the minimum additional investment needs of the District we have calculated (about 230 billion rubles for 2021). Moreover, the share of infrastructure did not exceed 10% of government spending in the FEFD. Some other districts had the same level of capital public expenditure but it is not enough even to maintain the current state of fixed assets.

The Far East has a chance to increase investments in the coming years but it will depend on decisions with respect to major infrastructure initiatives, the distribution of budget infrastructure loans, the activity of the authorities and investors in the segment of public-private partnerships and in the use of other investment instruments.

Budget investments in the infrastructure of the FEFD and other districts in 2015–2020

Infrastructure expenditures of consolidated regional budgets, RUB bln
 Central  Ural  Volga  Northwestern  Siberian  Far Eastern  Southern  North Caucasian
Share of regional budget infrastructure expenditures in capital investments from all sources, %  national average  Far Eastern Federal District
Share of regional budget infrastructure expenditures in total budget expenditures, % -- national average -- Far Eastern Federal District

Sources: Treasury data, Rosstat data, analysis and calculations by InfraOne Research

The FEFD could attract additional funds through budget loans. But the District will not receive more than 30 billion rubles.

Such budget limits have been approved for the Far Eastern regions until 2023. They will be able to get these funds if regional authorities have time to prepare their projects by October 2021. But for many of them it may not be enough time because of the shortage of initiatives ready for launching. Those regions that have such projects may not meet the selection requirements: in our opinion, they are quite confusing and sophisticated.

Volume of infrastructure loans until 2023 by districts

 Volume of infrastructure loans  % of the total volume

Sources: Ministry of Finance data, calculations by InfraOne Research

Far Eastern projects

While infrastructure investments in the Far East have sufficiently declined in 2020 the number of signed agreements in its market of concessions and PPPs and the volume of investments in them have significantly increased.

The District is able to maintain the high rate of projects launching, and the new mechanism of investment accelerator may help to do it. But, in our opinion, the District is unlikely to show the same results as in 2020 at least in the next few years.

Despite the pandemic the previous year turned out to be a "boom" period for Far Eastern concessions and PPPs.

At the end of the year the FEFD set a personal record for the number and volume of investments in signed concessions and PPPs: 16 projects for 102.3 billion rubles. In total, since the beginning of 2020 this market has increased one and a half times in number and 2.5 times in volume of investments in such projects. According to our estimates, as of the end of August 2021 there were almost 70 initiatives totalling 260 billion rubles launched in the segment of 100 million rubles and above.

The Far Eastern market of concessions and PPPs can maintain its growth rate as well as by using the investment accelerator. The new mechanism was launched in June 2021 by the Ministry for the Development of the Russian Far East and the Far East Development Corporation (FEDC). It is designed to "bring together" projects at the initial stage of development, investors, investment agents and federal and regional authorities. In our opinion, this is a positive example of support for the seed stage: similar mechanisms are relevant for other regions too because the problem of shovel-ready projects shortage still remains.

Distribution of concessions and PPPs in the Far East by years

Data are presented on the agreements with investments of more than 100 million rubles concluded under Federal Law 115 or Federal Law 224 by the end of August 2021. Terminated agreements are not taken into account.

 Investment volume  Number of agreements

Sources: authorities’ data, media, analysis and calculations by InfraOne Research

By the end of 2021 about ten concessions and PPPs may be launched in the FEFD with total investments of nearly 100 billion rubles.

According to our estimations as of August 2021, the Far East accounts for 19 initiatives in the top 100 National Infrastructure Projects Pipeline for a total of 243.2 billion rubles. Ten of them totalling 95.3 billion rubles have the greatest launch potential. There is a high chance that these agreements will be signed by the end of the year.

In May 2021 the top 100 National Pipeline projects included 17 Far Eastern initiatives totalling 160.7 billion rubles. Thus, the FEFD has strengthened its position relative to other districts.

Distribution of National Pipeline projects by federal districts

The data are as of August 2021.

 Investment volume  Number of agreements

Sources: analysis and calculations by InfraOne Research

Projects of the Far East
from National
Infrastructure Pipeline

#ProjectRegionProject cost, bln rublesShare of extra-budgetary funds, %Contract formatAgreement term, years Project levelCurrent status of a project
1Construction of the Vladivostok Ring Road (VKAD)Primorye Territory100*n/aConcession agreement25 RegionalThe concept of the first stage of the route's construction is under discussion. Concession is a possible format for launching the project.
2Construction and modernization of water supply and wastewater disposal systems in Yuzhno-SakhalinskSakhalin Region33,7n/aConcession agreementn/a MunicipalAt the end of May 2021 the investor presented an unsolicited proposal to the municipal government. The project is currently at the stage of discussion of the terms and conditions.
3Construction of five healthcare facilities in MagadanMagadan Region31,560Concession agreement14 RegionalIn July 2021 the investor presented an unsolicited proposal. The results are planned to be summed up in September 2021.
4Creation of a multifunctional educational complex for secondary professional education in the Kangalassy district of Yakutsk (Supercampus)Yakutia14n/aConcession agreementn/a RegionalIn 2020 a concept of the facility was developed. In the summer 2021 the regional authorities and the potential investor discussed  the idea of implementing the project on a concession basis.
5Reconstruction of a waste incineration plant in VladivostokPrimorye Territory12100Concession agreementn/a RegionalIn the summer 2021 the regional authorities and a potential investor have been working on a financial model of the project.
6Construction of a surgery unit at Sakhalin Region Clinical HospitalSakhalin Region9,3n/aPPP agreementn/a RegionalThe investor presented an unsolicited proposal. According to the regional government, the signing of an agreement is planned for 2021.
7Construction of a regional clinical infectious diseases hospital in VladivostokPrimorye Territory6n/aConcession or PPP agreementn/a RegionalAccording to the regional government, negotiations with the potential investor were suspended in the summer 2021.
8Creation and modernization of heat supply facilities and construction of gas-fired boiler houses in Korsakov urban districtSakhalin Region4,674Concession agreement24 MunicipalIn March 2021 the investor presented an unsolicited proposal. The terms of agreement have been discussed. The results of the unsolicited proposal are planned to be summed up in September 2021.
9Creation of a cultural and educational facility in Yuzhno-SakhalinskSakhalin Region4,2n/aPPP agreement20 RegionalThe investor presented an unsolicited proposal. The terms of the project implementation are being discussed. According to the regional government, the signing of an agreement is possible in 2021.
10Construction of a proton beam therapy center in KhabarovskKhabarovsk Territory460Concession agreement15 RegionalConstruction of the center was planned to begin in 2019 and to be completed in 2023. In June 2021 the regional authorities worked out a project of the facility construction.
11Reconstruction of water supply and wastewater disposal systems in Korsakov urban districtSakhalin Region4n/aConcession or PPP agreementn/a Municipaln/a
12Construction of a regional hockey center on Russky Island in VladivostokPrimorye Territory3,4n/aPPP agreementn/a RegionalIn summer 2021 the investor presented an unsolicited proposal. So far the regional authorities are not ready to enter the project under the conditions proposed by the potential investor.
13Creation and reconstruction of heat supply facilities and centralized hot water supply systems in Vanino settlementKhabarovsk Territory3,1100Concession agreement25 RegionalIn March 2021  the investor presented an unsolicited proposal. The terms of agreement have been discussed. The results are planned to be summed up in September 2021.
14Construction of a new facility of Sovetskaya Gavan district hospitalKhabarovsk Territory3n/aConcession agreementn/a RegionalAccording to the regional authorities, the signing of an agreement and the start of construction are planned for 2021.
15Creation and reconstruction of heat supply facilities in DolinskSakhalin Region2,974Concession agreement25 MunicipalIn December 2020 the investor presented an unsolicited proposal. The terms of agreement have been discussed. The results are planned to be summed up in September 2021.
16Construction of the Transliman all-season cable bridge between Anadyr and Ugolnye Kopi villageChukotka Autonomous Area2,7n/aConcession agreementn/a RegionalIn the summer 2020 the investor sent an offer. All pre-project works have been completed. In May 2021 an unsolicited proposal preparations were underway. The signing of an agreement is possible in 2021.
17Construction of school in the Stroitel microdistrict in KhabarovskKhabarovsk Territory1,8n/aConcession agreementn/a RegionalIn the summer 2021 the terms of the agreement were being worked out by the regional authorities and potential investors. Construction is planned to begin in 2022, and commissioning - in 2023.
18Construction of school in BirobidzhanJewish Autonomous Region1,540Concession agreement10 RegionalIn May 2021 the investor presented an unsolicited proposal.  The results are planned to be summed up in September 2021.
19Construction of the Far Eastern Center for Children's Recreation and Health ImprovementKhabarovsk Territory1,5n/aConcession agreementn/a RegionalThe regional authorities are working on the project. A building land plot has been selected. The project implementation is planned for 2021–2023.

* The estimated budget of the first stage of construction is 70 billion rubles.

Sources: torgi.gov.ru, governmental portals, analysis by InfraOne Research