The event, organized jointly by KPMG and the Center of Strategic Research, brought together about 70 of the most likely participants in the upcoming concession projects in the transportation sector. The Russian government was represented by officials from the Ministry of Transport, the Ministry of Economic Development and Trade, the Federal Agency for Special Economic Zones, Federal State Agency "Roads of Russia", and others. The private sector participated actively in the roundtable, represented by directors of major Western and Russian construction companies (Bouygues, Gebr. Von der Wettern GmbH, Hochtief, Lotte Engineering & Construction, Marubeni, Strabag, VINCI, Sistema-Gals, Transstroy, and others) and leading financial institutions (BBVA, Citigroup, Deutsche Bank, HSBC, Macquarie Bank, Nordic Investment Bank, Raiffeisen Investment, Sumitomo Mitsui Banking Corporation Europe, Vneshekonombank, Vneshtorgbank, the World Bank, Gazprombank, the EBRD, International Financial Corporation, and others), and also consulting firms (CMS Cameron McKenna, Ernst & Young, Freshfields Bruckhaus Deringer and others).

More than 300 questions and comments, collected by KPMG from Russian and foreign investors, were used to prepare for the round table.

Alexander Gennadievich Nosov, First Deputy General Director of FGU Dorogi Rossii, opened the roundtable with a report on the investment opportunities in the field of highways, speaking in detail about the main prospective projects for toll roads in Russia, which were expected to involve private investors.

During the first session, participants in the roundtable also exchanged opinions on upcoming toll road projects, for which tenders to select a concessionaire will be announced in the near future.

The session on payment mechanisms and risks of Russian concessions, which was led by Erich Thewanger, a Partner in the Corporate Finance Department of KPMG Austria, discussed the following topics:

• The system and mechanisms for collecting tolls, the possibility of introducing availability payments, shadow tolls, and mechanisms for regulating tolls.
  
• Distribution of risks among participants at various stages of the first road projects as well as mechanisms for risk compensation.
  

The third session of the roundtable was dedicated to issues of financing and state support of Russian concessions. Richard Threlfall, Director of Corporate Finance with KPMG in the UK, led the session, focusing participants’ attention on the following issues:

• Methods of financing transportation concession projects from budgets of various levels and an investment fund. Method for receiving funds.
  
• Options and types of public sector support and state guarantees for the concessionaire.
  
• Methods for compensating income shortfalls in future concession projects.
  

The concluding session concerned issues of the legal regulation of Russian concessions, specifically:

• Issues of a pledge in concession projects, security of the guarantees of parties in a concession agreement.
  
• The issue of the jurisdiction of the concessionaire and applicable law, makeup of the consortium and the possibility of changing the consortium.
  
• Procedure for conducting the concession tender; issues related to negotiations and making changes to the concession agreement.
  
• Approaches to building objective, balanced assessment criteria for tender bids with respect to technical parameters, price parameters and parameters on securing financing and so on.
  

Summing up the roundtable, Alexander Yerofeyev, a Partner with the Financial Advisory Department of KPMG in Russia and the CIS, noted: The roundtable provided investors and others interested in participating in Russian road concessions with a real opportunity to exchange opinions on the vital issues (organizational, financial, technical, legal) in respect of the first projects, and also obtain the relevant commentary and answers from representatives of the state authorities. This event was unique in that it provided a forum for a direct dialogue between business and the government regarding the development of toll roads. I think this is especially important at this formative stage of the market for such projects. We will continue to strive to help the government and the private sector to establish a constructive dialogue."

For his part, Alexander Gennadievich Nosov, First Deputy General Director of Federal State Agency "Roads of Russia", had this to say about the event: "Today we can safely say that private–public partnership is becoming one of the key priorities of the government’s economic policy. The Russian Federation has created the legal framework for concession projects, and we are on the very brink of beginning the practical implementation of these projects. Concession tenders for the first four projects are planned for this year. Essentially, this signifies the birth of the concession market in Russia. For this reason, the realization of all subsequent stages of the government road construction program will depend to a large degree on how successful these projects are."

The representative of the co-organizer of the roundtable, Grigory Ivanovich Senchenya, Director of the Department of Project Preparation of the Center of Strategic Research, added, "The development of private–public partnership is now a priority objective of the socio–economic development of Russia. This roundtable has once again confirmed that business is highly interested and involved in taking up the Government’s initiative. I would hope that discussions in this format could happen more often, since they help to raise the quality of economic policy and contribute to bringing foreign investment into the Russian economy. This is especially relevant at the launch stage of concession mechanisms, when they have not yet been turned into a smoothly-running and fully understood mechanism for investors."

The third roundtable was the logical continuation of the first two, which were held in 2004 and 2005, when concession projects were in their infancy. Thus, participants in the roundtable were unanimous that the annual Roundtable on investment in transportation infrastructure had become a real focal point for the development of concessions in Russia.

The roundtable allows the government to gauge the mood of the investment community, and allows investors to better understand the needs of the government. This makes it possible to make prompt corrections to state policy in private–public partnership and to support the success of PPP projects.

Participants agreed to conduct the next roundtable at the end of 2007.