Russia to Improve Access to Construction Permits and Energy Infrastructure

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Jun. 14 – Two road maps to improve Russia’s investment climate, by addressing the construction sector and energy infrastructure in particular, have been approved by the cabinet.

One of the road maps promises to bring the country to 34th out of 183 countries for getting construction permits by 2020, up from the current 178th. The total number of permission processes by then may drop from 51 to 11 and the average amount of time spent on obtaining them will go from 423 days to 56 days.

The plan includes a proposal to move from the need to get permission in advance of building to one in which builders issue a notification and then begin.

According to the latest World Bank data, Russia is in last place in terms of energy access, but the second road map intends to move the nation up to 20th by 2020. As of now, connecting to electricity and gas networks takes an average 281 days, 10 separate steps and 1,852 percent of per capita income. By 2020, the road map foresees reducing this to 40 days, five steps and 25 percent of per capita incomes.

“The soonest possible time for a connection is two years from now, but if an ‘agreement’ is made, the bribes paid — costing from 10 percent to 100 percent of the cost of connection, reaching up to 10 million rubles (US$340,000) — things can be done much faster,” a Moscow construction company official said to the local press.

Meanwhile, some experts doubt the second road map will be as successful as it intends due to the Russian government’s desire to capitalize on the high demand for hydrocarbons. In the opinion of specialists, this will continue for the next few decades.

The International Energy Agency (IEA) has forecast the demand for hydrocarbons increasing by approximately 25 percent by 2030.

Russia, being one of the key oil and gas producers, does not wish to find itself outside the main trends. According to IEA forecasts, oil production in Russia will begin to fall after 2015. The development of new fields – which in most cases are technologically complicated and very expensive – requires changes in the rules of operation in this sector.

Despite the government’s declarations and some efforts, the conditions of doing business in Russia, including those related to the protection of private property and claiming one’s rights in court, have not improved, and the corruption level has not been reduced.

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