Fate of Investment Project Puzzles City

VTB has already spent about 10 billion rubles on the European Embankment project.

By Irina Titova

The St. Petersburg Times

Published: October 31, 2012 (Issue # 1733)

The future of the European Embankment looks to be in doubt, with speculation swirling around the large-scale project after its investor announced the discontinuation of funding for it last week.

The site is now tipped to be inhabited by the Supreme and Supreme Arbitration Courts, which will reportedly move from Moscow to St. Petersburg and occupy the site where Peterburg City, a daughter structure of VTB Development, had planned to construct an elite multi-functional residential complex at a cost of 47 billion rubles ($1.5 billion).

The presidential administration has earmarked the site for the courts, Kommersant daily reported Monday, referring to anonymous sources in the courts. No other media reported the claims.

Last week, VTB Development, which is headed by Sergei Matviyenko, son of St. Petersburg’s former governor Valentina Matviyenko, officially announced the discontinuation of construction financing for the European Embankment project. The company did not comment on the reasons for the decision.

The presidential administration allegedly plans to buy the European Embankment from VTB. The prospect of impending negotiations on the issue serve as an explanation for the discontinuation of the project, though VTB Development has still made no official comment, Kommersant said, referring to sources on the St. Petersburg real estate market.

The proposed relocation of the Supreme and Arbitration Supreme courts to St. Petersburg appears to be part of an ongoing plan to concentrate the country’s three upper courts in one location. The Russian Constitutional Court has been located in St. Petersburg since 2008, when it was relocated from Moscow.

VTB has already spent about 10 billion rubles ($320 million) to meet its obligations as stipulated by the federal investment contract, having moved the State Institute of Applied Chemistry that was located on the site in question to a new location and started demolition of the buildings located on the site. According to the contract, VTB was also to recultivate and improve the chemically contaminated land on the site of the project and to build and transfer to state ownership the Boris Eifman Dance Palace, which President Vladimir Putin had promised Eifman would be erected as part of the project.

VTB had planned to complete the construction of top-end elite residential accommodation on the Neva River embankment with a view of the Spit of Vasilyevsky Island by 2017. In May this year, the city’s preservationists spoke up against the project, suggesting that a park should be laid out there instead.

Meanwhile, the Boris Eifman Theater has received no official notification about the changes in the European Embankment project and therefore declined to comment on it, Interfax reported Tuesday.

The European Embankment project is located between the Birzhevoi and Tuchkov bridges on the Petrograd Side of the city, and was due to include a pedestrian area, residential buildings, a retail and office center and a five-star InterContinental Hotel Group hotel, as well as the planned dance theater.

The project was estimated to be completed by 2017.