The results of pilot testing the Impact and Responsible Investing for Infrastructure Sustainability (IRIIS) system were presented at the St. Petersburg International Economic Forum (SPIEF-2021). The Ufa East Exit concession project implemented by the government of the Republic of Bashkortostan and the Bashkir Concession Company (part of the VTB Infrastructure Holding) was successfully assessed for compliance with the IRIIS principles having been assigned the ‘Golden’ achievement level. Respective certificates were officially handed over to the Head of the Republic of Bashkortostan Radiy Khabirov, VTB President and Chairman of the Management Board Andrey Kostin and General Director of the Bashkir Concession Company Asabali Zakavov.

The IRIIS system was developed by VEB.RF jointly with the PPP National Development Center and AECOM with support from the Russian Ministry of Finance to improve the quality and sustainability of infrastructure projects. The assessment methodology comprises three major aspects: Economy and Governance, Quality of Life, and Environment and Climate, each having certain criteria. The East Exit is Russia’s first IRIIS certified project.

After verification, the project got 1,879 marks or 62.6% of the highest possible value (3000 marks).  The highest marks were given on the Economy and Governance (76.7%) and Quality of Life (68.2%) aspects of the IRIIS methodology. The best results were demonstrated by the following criteria: the quality of project structuring, the minimum impact of construction on people, mobility and access, effective human resource management and internal communications.

Specifically, the project is subject to risk management regulations specifying the major stages and responsibility of participants. 1,500 people will be working at the site, with half of them being local residents. The share of local companies is 48.6%. Local companies provided materials and services for 5 billion roubles. The project provides for regular medical examinations and assessment of working conditions. Special conditions apply to conveyance of vehicles and people at the construction site including barrier-free environment.

In addition, the concessioner demonstrates rational use of natural resources: specific water consumption was reduced by 28.2% against the forecast volume. Wastes were reduced by 20% through their processing and reuse. There are no any designated forest or water fund lands, or any specially protected natural areas within the facility boundaries. Additionally, the company repairs environmental damages and engages in land reclamation and reproduction of aquatic biological resources. The facility’s commissioning will also have a positive impact on the environment. It is expected that pollutant emissions from vehicles will reduce by 35%, and greenhouse gas emissions - by 27%.

Radiy Khabirov, Head of the Republic of Bashkortostan:  

The East Exit project has proved its economic, environmental and social significance, thus increasing its implementation efficiency and attractiveness for domestic and foreign investors. Besides, the IRIIS certification proves that the project is interesting for federal investors. This will minimise risks for all participants. Ultimately, this joint systemic work will allow us to create in Ufa a quality road construction infrastructure complying with international standards and make the life of local residents comfortable and safe.

Andrey Kostin, President and Chairman of the Management Board, VTB Bank: 

“The East Exit co-financed by the VTB Group is a good example of successful implementation of major infrastructure projects in the regions. We, jointly with Bashkir government, tried to set high quality standards at the stage of project preparation and planning, which were confirmed by the IRIIS certification. I think that the introduced certification system will improve the quality of projects launched in Russia and contribute to spreading global best practices.”

Svetlana Yachevskaya, Deputy Chairperson and Member of the Board, VEB.RF:  

“When selecting pilot projects, we decided to include ‘our’ project where VEB.RF is a creditor or a direct participant. So we selected the Ufa East Exit project in which we are involved through the Project Financing Factory. The first IRIIS testing results demonstrate that the system is fully operational and it can show the project’s strengths and weaknesses and identify growth opportunities, and the IRIIS certificate assures the project quality. I’m confident that joint and well-coordinated work of the infrastructure market participants will allow us to extend the IRIIS certification system nationwide.”

Asabali Zakavov, CEO, Bashkir Concession Company: 

“The selection criteria for pilot projects were rather strict. In Autumn, with the assistance of VEB.RF, the Bashkir Concession Company being a concessioner for the East Exit devoted considerable effort to be included in the list of pilot projects. To become Russia’s first certified project is both a great challenge and enormous development opportunity. And, of course, it’s a unique experience offering additional advantages for the project team.”

Pavel Seleznev, CEO, National PPP Development Center: 

“The assessment process for the first pilot project was rather long and labour-intensive and that brought about the necessity of digitalisation. To speed up the certification process and make its mechanism friendlier for all participants of the infrastructure market, we are planning to launch a special online module in Autumn 2021 using ROSINFRA resources. The launched service is intended to be used for applying for project certification, tracking the major verification stages and communication with participants and verifiers.”

The project for construction of a new exit road from Ufa to the M-5 Ural Highway (the East Exit) is implemented under a concession agreement entered into in 2017 between the Bashkir Concession Company (the concessioner) and the Republic of Bashkortostan (the concedent). A total of RUB40bn will be invested in the project. VEB.RF and VTB will invest RUB11.6bn in the project under the Project Financing Factory programme. It is intended that the exit road will be commissioned in late 2023.

The shareholders of the Bashkir Concession Company include the VTB Infrastructure Holding and Limak Group (Turkish construction and investment holding). The VTB Group and VEB.RF are partially financing the construction. The general contractor is Limakmarashavtodorogi.

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