China Will Give Russia's First High-Speed Rail a $6.2 Billion Loan without State Guarantees

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The Russian "Kommersant" reports said that China agreed to provide 4000 billion rubles (about $62 billion) loan for Moscow to Kazan high-speed railway project, without Russian state guarantees.

Sources said that Russia and China agreed that Russia will not provide a sovereign guarantee on the loan, although at first Chinese requirements for full loan guarantees, but the Russian Ministry of Finance refused this request, the Russian Ministry of Communications and the Ministry of Economic Development also support the position. Russia’s Economic Development department confirmed that Russia will not provide guarantees with Chinese side.

high speed rails

The source said that China on security issues to make concessions because of the high speed of the financial model of the tenant of the minimum guaranteed income: compensation for the difference between the high-speed rail plan and the actual income. The difference between the extremes is over 600 billion rubles (about 9.2 billion US dollars). If the high-speed rail traffic is less than the plan (at least 10 million passengers per year), Russia will repay the debts to China, and to ensure that China can have a substantial income.

According to the existing agreement, China Development Bank will provide the loan in full. Currently preparing an intergovernmental agreement documents, which are expected to be signed during President Putin's visit to China in June.

high speed rail
high speed rail
high speed rail

April 26 to 27, high-speed cooperation working group meeting in Beijing between China and Russia decided that China will provide 400 billion rubles (about $6.2 billion) loan for Moscow - Kazan high-speed railway, including Moscow to Nizhny Novgorod sections of 250 billion rubles (about $38.8 billion), Nizhny Novgorod to Kazan 15 billion rubles (about $2.33 billion). Both sides discussed the possibility of using the dollar and RMB to inject capital into the project.

Russian Railway Company announced that China will also provide 520 billion rubles (about $8.1 billion) of equity financing to ensure the implementation of the Moscow to Nizhny Novgorod railway project. Meanwhile, China will provide additional equity financing of 10 billion rubles (about 0.2 billion).

High-speed Eurasian transport corridor
High-speed Eurasian transport corridor

Moscow - Kazan high-speed rail project will use public-private partnership model of franchising. The two sides will set up a special project company to execute this agreement for high-speed rail. The project will attract more investment in equity and bond financing, and the franchise agreement will be signed in 2016.

Moscow to Kazan high-speed rail connects the Moscow and the Tatar Autonomous Republic capital, Kazan, with the total length of 770 km. This high-speed rail future will be extended to Beijing, and in order to create the "Moscow - Beijing" high-speed Eurasian transport corridor.

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