Bad roads - a Russian curse?

24.10.2011 — Analysis

The Sverdlovsk region is planning to spend 10 billion rubles on road repair in 2012. Builders claim that if the state continues to allocate such small sums, it will take 50 years to renovate the highway network. Independent experts predict that even the region's entire budget won't be enough to fix the roads, if the state doesn't tighten up oversight of the construction and just keeps paying highway workers by the kilometer. However, as this columnist for RusBusinessNews has determined, government officials must be quite satisfied with the current status quo, or they wouldn't have tried to use toll roads to solve all the problems in this sector.

The Sverdlovsk region has 11,000 kilometers of roads. State regulations require that 1,000 kilometers be repaired each year and the same number be completely overhauled. The road builders claim the roads are underfunded and won't last from one repair cycle to the next. According to Nikolai Khamitsevich, the deputy head of the regional agency Roadway Management, financially the best year was 2006, when the industry was allotted 12 billion rubles (10% of the regional budget), which allowed them to repair 500 kilometers of road and construct another 180 kilometers of new roads. Then things went downhill. In 2009, spending was reduced to 4%. There has been some growth in the last two years, 5% of the budget in 2010 and 6% in 2011. In absolute numbers, 240 kilometers will be repaired this year, and 18 kilometers of new roads will be constructed. Funding will increase to 10 billion rubles in 2012, but Nikolai Khamitsevich believes that at least 15 billion is needed.

Drivers think the highway-construction companies are whining. Many Russians believe that it's several times cheaper to build a square kilometer of road in Europe than it is here at home. Supposedly the difference ends up in the pockets of the construction companies. Drivers are convinced that the needed funding can be found by reducing theft and by constructing roads out of concrete instead of asphalt (which will require less frequent repairs). But experts claim these arguments cannot be substantiated.

Igor Petrunin, the former chief engineer at OJSC URALGIPRODORNII, notes that a cost estimate is subjected to expert analysis before it is approved by the regional government. It is unlikely that the numbers are affected by corruption, since the integrity of the experts involved is at stake. He claims that the cost of building one kilometer of road in Russia is comparable to that in Europe or America. The people who claim it's too expensive are those who want everyone to ignore the evidence in the numbers. The fact is that Russia spends only 0.5% of its GDP on its roads, compared to 3% in the US and 5% in Japan. The reason for this huge difference is that Russian roads are funded with whatever is left over in the budget.

Highways paved in concrete are of higher quality, which ultimately saves money on maintenance costs, but they require a larger initial investment. Asphalt could be as cost-effective as concrete, if appropriate measures were taken so that the highways could go 15 years before needing repair. Igor Petrunin claims that a road can last that long before it needs a major overhaul, if the construction firms are provided with imported highway equipment (Russian equipment is not yet able to do all types of jobs at a high level of quality), and if oversight is exercised over all stages of the work, especially in the preparation of the roadbed.

Currently the Russian highway sector has no high-quality equipment and is not subject to the proper oversight. Nikolai Khamitsevich suggests that only administrative or legislative action can compel highway-construction companies to obtain more useful equipment. The Byelorussian government chose the first option, promising to provide contractors with new equipment when the old machinery becomes obsolete, and one has to admit that real progress has been made there. That country's highway industry is developing rapidly and leaving its richer Russian neighbor far behind. The second option involves more stringent standards for the quality of roadbeds, which would force companies to buy new equipment. The Russian government has not yet settled on an approach and is not particularly interested in who builds the roads or what equipment they use.

Nikolai Khamitsevich believes that the poor quality of the roads is a direct result of the Law on Government Purchases (Federal Law No. 94), which permits companies that are obviously very weak to win a tender. These unprofessional companies cannot meet their deadlines, cannot cope with the scope of the work, and go bankrupt. To prevent this from happening, officials believe that the highway-construction companies should have to prequalify before they are allowed to bid on a tender. If the weaker players are weeded out, it may be possible, for example, to complete the road work more quickly. Then companies with better, more effective equipment will have the advantage.

The government promises to solve the industry's existing problems with a project to construct toll roads. The specially-created Avtodor corporate group has been given specific authority to do this. But it's true that the very idea of creating a system of alternative toll roads strikes experts as ridiculous. According to Sergei Ruzhetsky, the head of OJSC Irmash's sales department, the cost of those roads can never be recouped, because there is not and never has been the requisite amount of traffic in the Russian hinterlands (20,000 vehicles per day). And Russians are not psychologically prepared to pay for something they can get for free. Thus there is only one way to get the money for the roads - by leaving drivers with no alternative to the main highway. Experts think it's obvious that that's where this is all heading.

Vladimir Terletsky