Medvedev suspends Vinci’s Moscow-St. Petersburg road

Russian president Dmitry Medvedev has halted construction for a stretch of the Moscow to St. Petersburg highway, awarded earlier this year to Vinci. The $2bn project became Russia’s first road public-private partnership to reach financial close, in April.

Dmitry Medvedev, Russia’s president, suspended construction yesterday for a portion of the Moscow to St. Petersburg highway, awarded earlier this year to a consortium led by French company Vinci.

The decision to halt construction came after repeated protests from environmental groups, opposition parties and even members of the ruling party, including a 2,000-strong protest held last weekend in Moscow to halt construction of the highway. At the heart of the dispute lies the highway’s chosen route, which passes through a centuries-old forest in Khimki, a suburb of Moscow, with tree-cutting for the road already underway.

“Given the number of appeals, I have made a decision,” Medvedev said in a message on his video blog. “I order the government to halt the implementation of the decision to build this highway and conduct further civic and expert discussions.”

The decision – which “has flabbergasted” environmentalists, according to the leader of one of the groups – seems to have caught Russia’s prime-minister, Vladimir Putin, by surprise. In a rare show of friction among Russia’s political elite, Putin issued a statement defending construction of the highway:

“We need a new highway to connect Russia's two largest cities, St. Petersburg and Moscow. That is absolutely clear, it is important for the economy and for common citizens,” Putin said. “The question is what route this road is going to take, and that is, of course, a serious question.” But he warned protesters not to use “the ecological problem […] for political purposes” and downplayed any disagreement with Medvedev over the highway.

It is unclear how Medvedev’s decision will affect the long-term fate of Vinci’s contract. In his video message of yesterday, the Russian president appeared to hint that the suspension might be a temporary measure. “I do not see anything bad in returning to the talks once again in order to dot the i's and cross the t's,” he said.

Vinci reached financial close on the RUB70 billion (€1.79 billion; $2.3 billion) contract in April backed by RUB43.5 billion of debt from local investors, including commercial bank debt and bonds. The federal government also provided RUB23 billion for the project.

The first portion of the highway will run over 43 kilometres and aims to alleviate congestion on the existing M10 link between Sheremetyevo International Airport, Moscow’s main airport, and the city centre.