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Project Initiator
The Government of the Republic of Karelia
Mr. Sergey Leonidovich Katanandov
Chairman of the Government of the Republic of Karelia
19 Lenin Av., Petrozavodsk 185028, Republic of Karelia, Russia
Tel.: +7 (8142) 76-41-41; Fax: +7 (814-2) 76-41-48
E-mail: government@karelia.ru http//:www.gov.karelia.ru
Initiator's Brief Description
The Government of the Republic of Karelia is the supreme executive power of the
Republic of Karelia (which is a Subject of the Russian Federation) and is formed by
the Chairman of the Government of the Republic of Karelia. The Chairman of the
Government RK is elected by direct ballot vote. The last elections took place in 1998.
The Government of the Republic of Karelia has already implemented several large-
scale construction projects, namely: Wood Chipboards Plant in Pindushi,
Medvejegorsk District, Republic of Karelia; The Shoksha Quarry Facilities (output 500
000 m3/ per annum); The Karelian Granite Facilities; Children's Creative Works &
Arts Palace in Kostomuksha; Reconstruction of the Swimming Pool of the Republican
Sports Centre in Petrozavodsk.
Project Economic Environment
The Republic of Karelia (project implementation location) has a unique economic and
geographic position in Northwest Russia. The Republic has an extensive State Border
with Finland through which it is connected with all Scandinavian countries of the
Northland. The Besovetz Airport may help to arrange air communications between the
Scandinavian Countries and the Russian Regions of West and North Priuralje,
Arkhangelsk, Vologda, Republic of Komi. The only competitor of the kind is the
Pulkovo International Airport. Petrozavodsk is located close to an airway, which is
advantageous for transpolar connections. Such advantageous location gives broad
opportunities to organise international cargo & passenger traffic through the Besovetz
Airport. The Airport has already received cargo flights of the China - Naryan-Mar –
Petrozavodsk - Saint-Petersburg Polar Route. Taking into consideration the growing
role of China in the world economy, one may forecast a further development of air
services of the named polar traffic.
Basic Project Parameters
Project type: New building. Total area of the International Flights Airport Building is
2087 m2. Term of construction: 18 months.
Estimated Gross Income Forecast in Five-Year Plans (Thousand Rubles))
| 1-5 years | 6-10 years | 11-15 years | 16-20 years | 21-25 years |
| 46067 | 107118 | 136722 | 203461 | 220398 |
Net Operating Income in Five-Year Plans (Thousand Rubles)
| 1-5 ãã. | 6-10 years | 11-15 years | 16-20 years | 21-25 years |
| -29912 | -22066 | -8473.1 | 35475 | 123907 |
Competitive Position of the Project and Prospective Ways of Investments Repayment
Along with the important role of the Besovetz Airport as a prospective terminal station
for foreign air carriers, it necessary to emphasise that the Airport has a potential
opportunity to facilitate the establishment of the air communication between Kola
Peninsula and the southern regions of Russia, Ural and Siberia. As predicted up to 10%
of passenger and cargo traffic falling to the share of the airports of St-Petersburg would
go through Petrozavodsk provided that the Airport of Petrozavodsk has facilities to
handle a certain class of aircrafts (ßÊ-40, ÀÍ-24, ÀÍ-38-100, ÒÓ-134, ÈË-76).
Landing fees in the Besovetz Airport are at the same rate with those in other airports of
Northwest Russia, i.e. they are 2 times less than the landing fee of the Pulkovo Airport
for handling of goods and 3.8 time less than Pulkovo's fee for passenger servicing. In
addition to proceeds from passenger servicing, servicing of aircrafts and handling of
goods the Airport will be receiving gains from non-aviation activities as follows:
- Storing of fuels;
- Leasing of premises for a shop, buffet, Police post;
- Paid parking lot;
- Fare for freight transportation on the Airport's territory.
The planned marketing policy will allow the Airport to repay investments starting from
the 3rd year and complete the investment repayment within 20 years.
Brief Description of the Building and Plan of Premises
The International Flights Airport of Besovetz is two-storied right-angled (square)
building with metal panels and double-glazed windows. It has a terrace slope towards
the ramp. The entry zone from the direction of the city is accentuated by a stained glass
window to the full building height. Over the entrances there are coloured shelters, over
the baggage zone – light shelters on trusses. Shelter stands over the entrances to the
building are finished with lights. Fencing structures are of technological nature and are
coloured. For fire security as well as corridor and hall lighting there are coloured lights
on the roof. The area in front of the building is paved with concrete tiles.
Ground floor space is for passenger service. Here there is a hall, ticket offices,
international and domestic passenger service sectors. The domestic flights sector is
divided into two sections: "arrivals" and "departures". Departing domestic line
passengers proceed from the hall to the control sector and then to exits to domestic
flights.
Arriving passengers claim their luggage at the entrance to the building and through the
hall proceed outside. International flights sector works in the reversing regime.
Departing passengers from the hall go through the control service, customs area and
after passport check proceed to exits to international flights. Arriving passengers after
passport check proceed to the baggage claim area and customs area and then leave the
airport building.
On the ground floor there are: a buffet for 32 seats, left-luggage office, mother and
child room, first aid room, police station, ATM, post-office kiosk, currency exchange
and Intourist office. Also on the ground floor there are other services. On the first floor
there are offices of the customs and border patrol, migration service, sanitary and
veterinary control, air traffic control.
The water is supplied from two artesian wells minimum 100 m deep. The ho-water
shall be supplied from plate heat exchangers, which are located in the heat unit of the
Building. The waste water is drained through a gravity water drainage to the Sarlin
Sewer Transfer Pumping Station (made in Finland) then is offtaken to the Bioclar
Treatment Plant for complete biological purification (made in Finland). The treated
water is offtaken into the Shuya River.
The heating of the Building is supplied from a separate 0.7 Megawatt Boiler-Plant
fuelled with Diesel oil. The Building is equipped with a double-pipe district hot-water
heating.
The Building will be equipped with a combined extract-and-input heat-recovery
mechanical and natural ventilation system. The air supplied by the input ventilation
system is cleaned from dust and heated in air heaters. The input ventilation units
include noise dampers. The extract ventilation units are equipped with channel air-
exhausters.
The building is also equipped with TV observation and control system and fire &
intruder alarms.
The Airport building structure also includes:
- Networks and communication and monitoring facilities;
- Block-modular boiler-plant;
- Water supply pumping station over the artesian well;
- Sewage disposal and treatment plant;
- Outdoor power mains.
Financial Results and Financial Analysis of the Project Initiator's Situation for Prior Periods
The Republican revenue budget performance in the year of 2000 was 3509 million
Rubles, or 104% as to detail plan (for reference in 1999 =– 2498 thousand Rubles).
The supply of the Republican Budget in the year of 2000 was performed 99% to the
detail plan (3632 million Rubles). According to the results of the budget performance
in the year of 2000 the budgeted deficit was 124 million Rubles or 4% as to the home
revenues. The budgeted deficit of the Republican Budget was financed out of the
commercial banks' credits of 59 million Rubles and budget loans of 65 million Rubles.
The Republican Budget performance results for the year of 200o show an improvement
of financing of budget purposes: on-budget expenditures performance on the whole is
close to 100% (for reference in 1999 the supply of the budget was performed 81%).
Capital Structure
Own revenue sources = 2927 million Rubles or 81.1%
Transfers from the Federal Budget = 554 million Rubles or 15.5%
Budget loans = 65 million Rubles or 1.8%
Commercial banking credits = 59 million Rubles or 1.6%
Administration and Management
The Government of the Republic of Karelia is an executive power, which performs
controlling and regulatory functions within the power and authority stated in the
Constitution of the Republic of Karelia. Karelia's ministries and state committees
independently perform the operational administration and are subordinate directly to
the Chairman of the Government of the Republic of Karelia. The financial
management is performed by the Ministry of Finances of the Republic of Karelia/ The
administrative and management staff is to pass a regular personnel certification.
Project Stage
Feasibility Study is prepared.
Support of State Authorities
The Feasibility Study has been approved by the respective Republican Authorities and
the State Non-departmental Expert Examination Department of the State Building
Committee of the Republic of Karelia. The Feasibility Study awaits approval of some
other Federal Authorities.
Financial Plan of the Project Initiator (in consideration of the Project implementation)
The project development & survey works has already been financed in the amount of
2961 thousand Rubles. Within 2 years 129 190.5 thousand Rubles shall be laid out to
finance the Project, out of that 129000 thousand Rubles shall be used directly for
building and construction works and purchase of equipment and 190.5 thousand Rubles
shall be used to finance the floating funds. To finance the Project it is required to
attract borrowed current assets, viz. 94061 thousand Rubles for the 1st Year and 38494
thousand Rubles for the 2nd Year. Later on the Airport shall be a self-financing
structure with no need for any borrowed money. As from the 3rd year the Airport will
start the debt repayments and shall completely recover the debts during the 20th year of
its operating. The Airport shall have the gross profit since the 5th operating year and is
estimated as 286.2 thousand Rubles. The gross profit will continue growing and during
the 25th operating year it is estimated as 34728 thousand Rubles. The Airport shall have
net profit since the 12th operating years which is estimated as 3054 thousand Rubles.
By the 25th operating year the net profit is predicted as 24958 thousand Rubles.
Project Efficiency Indicators
The benchmark data for the investment project efficiency estimation are the receipts
and expenses of the company. The calculation shows that the Besovetz Airport will be
able to recover 1893 thousand Rubles within the 3rd operating year. The final debt
repayment shall be made during the 20th operating year. Integral commercial effect or a
net discount income will be 47105 thousand Ruble; Internal Return Rate 9%. Net profit
shall be 217031 thousand Rubles. Accumulated cash flow for the 27th operating year
(forecasting time-frame) is 198436 thousand Rubles. Project Recoupment in respect to
discount cash flow at 6% rate shall be 19.6 years. The project implementation costs for
the State Government is to compensate the VAT for the purchase of component parts,
materials, fuels and energy. The gains of the State shall be formed by tax proceeds. The
accumulated cash flow of the budget during the 27th operating year shall be 159284
thousand Rubles. The volume of returns and expenses of the budget are discounted at
6% rate. The calculation shows that under the predetermined conditions of the Project
and at 6% discount rate the accumulated budget revenue shall be 60180 thousand
Rubles.
Efficiency Factors from the point of National Economy:
- Improvement of natural resources utilisation;
- job creation;
- currency saving as concerned foreign goods:
- other economic and social benefits.
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