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Business news, 03.11.2008 19:06

Skyscraper Funding Reviewed

The chairman of St. Petersburg’s budget and finances committee, Vladimir Barkanov, told Interfax on Thursday that the city’s participation in the controversial Okhta Center skyscraper project would be reviewed as part of amendments to the city’s 2009 budget necessitated by the global financial crisis.

“Firstly, we are postponing the project’s financing for the first half of the year until the project’s budget documentation is ready. Secondly, negotiations are currently being held between the St. Petersburg government and Gazprom about changes to the project’s financing,” Barkanov told Interfax.

The evening before, Barkanov told STO television channel that “the city was confident that the construction project would be realized,” Interfax reported. “The city is not anxious on this front, but different forms of financing will be found,” the news agency quoted him as saying.

Natalya Vyalkina, a spokeswoman for Gazprom Neft whose headquarters would be housed in the planned complex, told Interfax that the company had not received any documentation stating that the city would not after all be co-financing the project.

The city had planned to allocate 2.9 billion rubles ($108.2 million) from next year’s budget for the construction of the 397-meter high skyscraper, which will cost an estimated 60 billion rubles ($2.24 billion), Vedomosti reported Wednesday. Forty-nine percent of that amount was due to be financed by the city, and 51 percent by Gazprom. The project is due to be completed by 2016.

The funds made available by the amendment to the city budget may be directed to the construction of the new stadium on Krestovsky Island, a high-ranking City Hall official told Vedomosti on Tuesday. He said then that the decision had almost been made and that the city was pulling out of the Okhta Center project, Vedomosti reported.

Alexander Vakhmistrov, deputy governor of St. Petersburg, said that next year, 10-12 billion rubles ($373.4 million) will be allocated from the city’s budget for the construction of the new stadium, the newspaper reported.

City Hall announced a new stadium would be built in 2004. In 2005, funds for its construction were allocated from the city budget, which grew after Sibneft (now Gazprom Neft) and Sibur re-registered in St. Petersburg, boosting the budget with tax payments. After construction costs soared, City Hall began negotiations with Gazprom about joint financing, but the energy giant declined to take part, Vedomosti reported.

“During the last three years, we have brought about 56 billion rubles ($2 billion) to the St. Petersburg budget. That is enough to build two stadiums,” Sergei Kupriyanov, press secretary to Gazprom head Alexei Miller, was quoted by the paper as saying.

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