Arthur Zurabyan, the head of Dispute Resolution Practice of ART DE LEX, assessed the prospects for the participation of an investor in the public private partnership project (PPP) for the Irkutsk Airport on a noncompetitive basis
Korean Incheon International Airport may become a co-investor of the Irkutsk Airport and join with the consortium of Rostek and Rosneft.
The Korean company, Incheon International Airport Corporation, may co-invest in the reconstruction of the Irkutsk Airport, according to information that Sergei Eroschenko, the representative of the governor of the Irkutsk Region, provided to Vedomosti. A source close to one of the investors confirmed that the Korean company may join the consortium with Rostek and Rosneft. The governor stated that “negotiations with potential investors are in progress. Rostek and Rosneft held preliminary talks with major corporations in Korea and China.” A representative of Rostek confirmed that the company would participate in the project to search for investors and to create a database service. Representatives of Rosneft and Incheon have not responded to requests for comments.
Incheon, one of the largest airport holding firms in Asia, also manages the airport of Seoul. In 2012, it gained a 10 percent stake in Russia’s Khabarovsk Airport, and a source close to the airport said that the arrangement continues. The Fund for the Far East will provide the money for the Irkutsk Airport project, and Alexei Chekunkov, the director of the fund, remarked that it will create joint ventures with Asian investors to reconstruct the airport. A source close to one of the parties to the negotiations reported that Incheon may be one of them.
On 31 December 2014, President Vladimir Putin signed a decree transferring shares of JSC International Airport Irkutsk as well as the property complex of the airport, except for the air traffic management system, to the Irkutsk Region to attract investors for the public-private partnership (PPP). The purpose of the PPP is to reconstruct the existing airport infrastructure. According to TASS, Eroschenko stated that the project involves the construction of the airport complex and turning the existing runway 33 degrees. Investment in the construction of the new complex should account for at least RUB 20 billion, as stated in the decree.
Arthur Zurabyan, the head of Dispute Resolution Practice of ART DE LEX, emphasized that it will be necessary to hold competitions for both the process of privatization and the conclusion of the concession agreement. Changes in the law, which came into force on 1 May, create some exceptions. For example, if an investor makes a proposal for the implementation of a reconstruction project that meets the formal requirements, an owner of the infrastructure can publish it. If other investors do not show any interest in the project, the conclusion of the concession agreement may take place without a tender. Also, according to Zurabyan, an investor can get a preferential right to privatize the package if the asset is part of the privatization plan and this right appears as part of the concession agreement.
The representative of the governor has not clarified when the competition for the privatization of the Irkutsk Airport will take place or when they will sign the concession agreement. Alex Germanovich, a board member of the Irkutsk Airport, noted that the Korean investors have been showing strong interest in the project. Other Russian airport holdings also may be interested in the project, he said. The representative of Novaporta stated that the holding company was interested in all airports with the passenger traffic of one million or more. The representative of Basel Aero confirmed that firm’s interest in the development of Irkutsk Airport. The representative of Airports of Regions, a private holding company that manages and develops airports, declined to comment.
