China-Russia JV To Consider US$9 billion Meridian Highway Construction
Proposed route will link Russia and China by toll highway in what would be China’s largest BRI investment into Russia.
Meridian-CC7, a joint venture formed between Russia’s JSC RHC, and China’s National Chemical Engineering and Construction Company CC7 (a subsidiary of China National Chemical Engineering Group Corporation), is preparing a private concession initiative for the construction of the Meridian High-Speed Toll Road. The JV split is 51-49 in the favour of JSC.
The Meridian High-Speed Toll Road is an ambitious project aimed to complete the 2000 km route from Russia to China, and stretches from the Belarus border with the European Union to the Russian border with Kazakhstan, providing the European and Urals leg of an existing highway that already crosses Kazakhstan to China. The Meridian Highway will effectively link China directly to Western Russia by road.
The new toll link is expected to cost around 600 billion rubles (US$9.5 billion) and is currently scheduled to be built using a public-private partnership such as the proposed JV – with guarantees to investors about returns. It is expected to take some of the freight that currently uses the Trans-Siberian Rail and the Suez Canal.
The Meridian-CC7 JV was registered in Moscow on September 21 this year and has an initial capital of Rubles 1 million (US$16,000), enough for it to submit its tender application and explain its shareholders credibility in undertaking the project. The JV’s stated scope of business is to build roads and highways, and to initially prepare a Private Concession Initiative (PCI) to realize the Meridian project. The JV will submit the PCI in accordance with Russian laws, while a Russian government-authorized body will consider the PCI, if submitted.
Work needs to be carried out by the JV as concerns feasibility, and the technical economic justification, which forecasts the model for traffic, optimal tracking and will be ready by the year end. Based on that the JV will make its PCI submission and if granted, commence construction of the Meridian highway. It will be the largest single BRI project China has undertaken in Russia should it go ahead.
The Russian and other regional Governments are also considering investing, with discussions taking place between the Russian Transport Ministry and their counterparts in Belarus, Kazakhstan and China. No details as concerns decisions have yet been made.
The Meridian Highway was initially planned as a 2,000km toll road from China to Europe, via Russia, Belarus and Kazakhstan. The road will cross eight Russian regions: Orenburg, Samara, Saratov, Tambov, Lipetsk, Oryal, Bryansk and Smolensk.
However, the Meridian Highway has a partial competitor in the M12 motorway that is now being built between Moscow and Kazan, although Russian government officials have said that a road which passes in-transit through eight agricultural, underdeveloped regions would produce a greater socioeconomic effect than the Moscow-Kazan route.