Title: Putin Shifts Operational Control of St. Petersburg Airport, Affecting Fraport's Stake
In a move aimed at safeguarding national interests, Russian President Vladimir Putin has mandated a transformation in the management of Pulkovo Airport in St. Petersburg. Consequentially, Fraport AG, a leading German shareholder with a 25% stake in the previous operating company, finds itself on the outside looking in. Putin cited "unfavorable actions by certain foreign nations and international organizations" as the impetus for this decision, as stated in his decree.
When asked for comment, Fraport revealed that they would first assess the situation and consider the implications for their ongoing investment in St. Petersburg, which had been paused following the Russian conflict against Ukraine.
Following the unfolding of the Russian war against Ukraine, multiple Western enterprises, including Fraport, exited the Russian market in response to war-related sanctions levied upon various sectors of the Russian economy. More recently, Putin has instructed compulsory administrations to maintain the operations of factories, companies, and jobs within Russia.
According to recent reports, the Russian government will transfer complete possession of the Northern Capital Gateway (NCG) consortium's shares, registered in Cyprus through Thalita Trading Ltd, to a newly established Russian-registered holding company. This abrupt shift allows Russian shareholders to retain their rights while eliminating foreign stakeholders' involvement.
Fraport expressed its intention to abandon its involvement in the airport's operations following the commencement of the conflict. Fraport reported that their investment in St. Petersburg was put on hold at the time. In September 2022, the head of Russian bank VTB, Andrey Kostin, announced that the conditions of Fraport's exit should be determined by the end of the year, valuing Fraport's stake at €111 million. The NCG consortium, which secured a 30-year contract to manage Pulkovo Airport in 2010, comprised a total of thirteen different firms.
Refer to the for further insights on the context and background of this situation.
- The Russian President's decision to take control of Pulkovo Airport operation in St. Petersburg impacts the German shareholder Fraport, which held a 25% stake in the previous company.
- Putin justifies his move due to "unfriendly actions of some foreign states and international organizations."
- Fraport is yet to ascertain the implications of this development on their investment in St. Petersburg, which they suspended post-Russian war against Ukraine.
- After the Russian war against Ukraine, many Western firms, including Fraport, left the Russian market due to sanctions resulting from the conflict.
- Putin's recent measures to safeguard Pulkovo International Airport, a crucial hub for air traffic in Russia, aim to protect the nation's interests and economic security.
- The Russian government plans to take over 100% of the NCG consortium's shares, leaving foreign investors without rights.
- (Enrichment Data) The Pulkovo Airport expansion project is a significant example of public-private partnership (PPP) in Russia, involving international financial institutions and a consortium led by Northern Capital Gateway, including Russian VTB Group, German Fraport AG, and Greek Capelouzos Group. The project totals €1.19 billion, with 60% of funding needs covered by debt financing. This PPP agreement ensures that the city's interests are represented while achieving a return on investment through traffic-triggered development and efficient operation.
