I read that Mr. Alexei Miller, the Managing Director of Gazprom, declared that “the South Stream pipeline will be operational by December 2015”. Whether this actually happens or not is debatable. However, the important observation which needs to be made relates to how various countries decide and implement projects of strategic importance. When it comes to countries like Russia and China, economics play an important role, but strategic investments are being pursued even if the economics are uncertain or they are not economically viable. Strategy always wins over economics.
In the West, whether a project is recognized as strategic or not, it has to be implemented by the private sector, which needs to be convinced that the project is economically and financially viable. Strategic considerations are not reflected in the balance sheet of the company. Hence, we have important projects which are stuck in the planning stage and may never be implemented. This is a major problem. Public sector participation is essential. Private Public Partnerships (PPP) is one option.
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