Perched above the Black Sea city of Sochi sits one of Russia’s richest men. Vladimir Potanin, one of the world’s largest metals players, is spending billions of roubles to transform a patch of mountainside into a global showpiece. Mr. Potanin has paid for the construction of new buildings, new lifts and several of snow canons in the hope of transforming slopes into a world-class ski resort.
Similar to the bulk of plans to hose the Winter Olympic Games next year, Russia’s ambitions for the ski village and various other venues are outsized in scale and spirit. Total investment to transform the sleepy region into a full-fledged showcase is expected to exceed $50 billion, according to Russia’s international premiere news agency, RiaNovosti.
The investment would make it the most expensive Olympic Games, summer or winter, ever produced. Comparatively, the 2010 Winter Olympics in Vancouver, Canada cost a measly $3.6 billion to stage.
While Russia’s President Vladimir Putin has not contested the bill, many private investors and wealthy oligarchs—who were recruited by Putin to help finance the bill–are scoffing at how much they are expected to contribute. In a rare challenge to the Kremlin, these investors are demanding that the state help with the rising costs of the project.
Though precise contribution amounts are hard to obtain, RIA Novosti claims that investors have underwritten roughly $25 billion towards the project. Regional and Federal budgets have accounted for approximately $13 billion of the costs incurred to date, according to various research reports.
Potanin, whose net worth exceeds $14 billion, is griping of the at least $530 million of extra work his company was required to undertake. As a result of the added work, he is demanding the government boost its contribution to the projects by slashing interest rates on his debt, which includes loans through state banks of up to $750 million.
Oleg Depripaska, another billionaire, voiced similar complaints which reflected the complex relationship Putin has with the nation’s elite.
Putin hopes the games will project a positive image of Russia; a goal that seemingly has no budget to achieve.
Russia’s elite were always going to play a major role in the construction of the village as they were encouraged by the prospect of securing other high-profile state contracts in the future. Infrastructure is thought to remain a surging market as regional governments and Moscow look to replace decaying Soviet-era facilities for the World Cup of Football which will take place in Russia in 2018. American investment bank Morgan Stanley says infrastructure spending is thought to account for 7 percent of Russia’s surging GDP at least until the year 2018.
