Shohin Warns Mikhustin of Rapid Deterioration in Road Construction Sector

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Systemic imbalances in the infrastructure construction sector are creating critical risks for major contracting companies, requiring immediate government intervention, according to a letter from Alexander Shokhin, President of the Russian Union of Industrialists and Entrepreneurs (RSPP), to Prime Minister Mikhail Mishustin, as reported by RBC.

"Time for lengthy discussions has run out: if urgent support measures are not taken in the coming weeks, we risk facing a rapid degradation of a key economic sector," the organizations stressed.

According to RSPP estimates, transportation construction companies have incurred losses exceeding 280 billion rubles over recent years, with about 30% of companies facing high debt loads and cash flow problems. The financial situation of industry enterprises was described as "critical," with more than a third of systemically important companies in near-bankruptcy status. Contractors on state contracts are experiencing funding issues, forcing them to take out expensive loans, creating a "snowballing debt burden."

Among the urgent measures proposed by Alexander Shokhin are:

- Ensuring "consistent funding" of approved infrastructure contracts and improving "execution discipline" of state customers;

- Extending the deadlines for concluding supplementary agreements related to the VAT increase until December 31, 2027;

- Establishing a unified legal approach to protect honest participants in the contract system;

- Refining the structure of estimated costs;

- Creating a task force to monitor the state of the infrastructure complex, involving the Ministry of Construction, Ministry of Transport, Ministry of Finance, Ministry of Economic Development, Federal Treasury, and relevant business associations;

- Accelerating the implementation of an updated methodology for calculating the aggregated forecast deflator index for linear infrastructure objects, aligned with inflationary processes.