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Photo Credit: http://www.vsluh.ru
The Olympic Games in Sochi will set a new record in costs, surpassing Beijing’s price tag of $40 billion.
According to Vedomosti, the tally has reached RUR 1.5 trillion, or some $45 billion, a striking contrast to the initial estimate of RUR 314 billion.
Many of the venues were put into operation much later than expected, with the ski jump facility and the mountain media village cited by the Ministry of Regions as the most troubled sites.
Cost overruns were due to the enormous construction volumes, difficult geological conditions and additional requirements by the International Olympic Committee, say officials.
For instance, the cost of the Central Stadium rose from RUR 8 billion in 2010 to RUR 17.5 billion, the Main Olympic Village built by BasEl doubled in price to reach 26 billion, the cost of the Biathlon and Ski Complex, Mountain Olympic Village and Mountain Tourist Center developed by Gazprom, tripled to a total of RUR 54 billion and the price of the ski jump facility quadrupled.
The share of private investment into the Sochi Games has been fractional. Many of the venues were built by state-run companies or businessmen with close ties to the Kremlin.
Among them are Sberbank, Russia’s largest lending institution, gas giant Gazprom, Oleg Deripaska’s BasEl, billionaire Viktor Vekselberg’s Renova, Itera, Vladimir Potanin’s Interros. All of them requested that their loans should be restructured due to poor payback prospects. Credits worth RUR 190 billion turned out to be non-performing loans.
The government has pledged support to investors offering a delay in debt service and help in the development of infrastructure, including hosting a G8 summit in the summer of 2014 and a Formula 1 leg in the autumn.
Sochi is expected to boast more hotel rooms after the Olympics that Moscow, with the total number reaching 55,000.
Opinions are split on whether the authorities will manage to put expensive infrastructure to good use.
Sources: http://www.vedomosti.ru
Author: Mikhail Vesely
