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"It’s pretty frustrating," Elinson said. "But we think it’s curable if the government takes certain responsibility for those actions and comes up with a solution that would allow the project and the investor to recover."
He said at this stage all investors are concerned about the additional costs they have faced in Sochi.
Who is building what in Sochi for the 2014 Olympic Games
The Russian government » It is building five of the six arenas that will host indoor competitions such as ice skating, for about $10 billion. The government will spend a total of about $18 billion before the games begin in February 2014.
Gazprom » The world’s largest natural gas producer, a publicly traded company, has many Olympic projects in Sochi, including building a cross-country skiing and biathlon center, one of the three Olympic villages and an Alpine ski resort. Gazprom is also building a power station in a Sochi suburb for $740 million and a pipeline to bring gas supplies to the Sochi area for $1 billion. The total price tag for Gazprom stands at roughly $3 billion.
Potanin » Metals tycoon Vladimir Potanin, whose fortune is estimated at $14.3 billion, started building the Roza Khutor ski resort before Sochi was picked to host the 2014 Olympics and has spent $2.5 billion. Interros also has built an Olympic village and a snowboarding and freestyle park.
Deripaska » Metals tycoon Oleg Deripaska, estimated to be worth $8.5 billion, is mainly involved in infrastructure development in Sochi. His holding company, Basic Element, is building an Olympic village, a sea port and has just finished revamping the Sochi airport. Basic Element expects to spend a total of $1.4 billion in Sochi.
Sberbank » The state-controlled bank is set to spend at least $1.3 billion building a media center in Sochi, as well as a ski jump complex.
Last month, Basic Element, Interros, Gazprom and state-owned Sberbank asked the government for help in covering some of their losses. Although there has not been an official response to the plea, the government has said in the past that investors bear full responsibility for any losses.
"Those are the risks of those who made the decision," Deputy Prime Minister Dmitry Kozak, who is overseeing the Sochi preparation, said in response to complaints last year.
In contrast to the Boris Yeltsin-era oligarchs like Deripaska and Potanin who are involved in capital-consuming projects with uncertain commercial prospects, the new generation of billionaires with close ties to Putin seems actually to be making money in Sochi.
One man who stands to profit from the games is Arkady Rotenberg, who has known Putin since he was 12.
Through a majority-owned subsidiary, Rotenberg holds nearly 39 percent of the Mostotrest company, which has amassed a dozen Olympics-related state contracts to build nearly all of the highways in the area. Its projects include a $1.6 billion bypass for Sochi, as well as tunnels, bridges and railroads for a total of at least $3.4 billion.
"Those who became billionaires before Putin’s rise to power now have to pay the price, and that’s why they’re being forced to invest and build," Kasyanov said.
The futility of it all • One Russian businessman in charge of an Olympic project was publicly disgraced when he failed to deliver. On a tour of Olympic sites in February, Putin harshly scolded officials for the huge delays and cost overruns in building the ski jump, a project run by real estate developer Akhmed Bilalov, who had once owned 90 percent of it. The state-controlled Sberbank had taken a controlling stake in 2012 when it was clear the project was in trouble, and Bilalov’s younger brother handed over the remaining 40 percent stake after Putin’s televised dressing down.
Bilalov was immediately stripped of his position as a vice president of the Russian Olympic Committee, but Putin still was not done with him. In April, prosecutors charged Bilalov with abuse of office in relation to his work as chairman of a state company that is building ski resorts elsewhere in the Caucasus Mountains of southern Russia. Facing up to four years in prison if convicted, Bilalov left Russia.
At least one company has already acknowledged the futility of its investment in Sochi.
During his inspection tour in February, Putin asked the chairman of mining giant UGMK, Andrei Bokarev, whether he would give the new $100 million hockey arena that UGMK has built to the state after the games.
"There’s nothing standing in the way of you doing it," Putin commented.
That was not a direct order but its intent was clear.
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