VEB.RF and BRICS Development Banks to Form Common Approaches to Financing for Infrastructure Projects
State Development Corporation VEB.RF signed a Memorandum on Mobilization of Private Investment in Infrastructure with the BRICS Inter-Bank Cooperation Mechanism.
The BRICS Inter-Bank Cooperation Mechanism will create a working group which will study business cases, financing formats, project selection models and legal innovation success stories which contribute to mobilization of private investment in infrastructure.
The Memorandum will establish a new ICM working group and promote the sharing of best infrastructure PPP practices between key BRICS development institutions.
VEB.RF Chairman Igor Shuvalov said “Currently, we see great interest in PPP projects, primarily in infrastructure projects. It is the global trend, which we are striving to implement to ensure sustainable economic growth. The development banks play a special role. Many banks aggregate PPP competencies. We plan to follow this way in Russia by creating an integrated infrastructure development centre. VEB.RF has extensive experience in mobilization of private investment in major transport infrastructure projects; our state corporation’s portfolio features dozens of sea, land and air infrastructure assets. Under the supervision of the Government and the President’s Executive Office, VEB.RF plays a role in promotion of PPP legal instruments to encourage and mobilize investment.”
As a reminder, VEB.RF will hold the presidency of the BRICS Inter-Bank Cooperation Mechanism in 2020. The BRICS Inter-Bank Cooperation Mechanism members are VEB.RF, BNDES, Eximbank of India, CDB, and DBSA. The BRICS ICM was established in 2010 to promote and strengthen economic and investment cooperation between BRICS countries. Currently, the BRICS ICM has five working groups.
VEB.RF and VTB to Finance Coal Transhipment Facility Construction at Port of Vanino
The project will be carried out under the Project Financing Factory programme.
State Development Corporation VEB.RF, VTB and VaninoTransUgol have signed a loan agreement to finance the project to build a high technology transhipment facility at the seaport of Vanino in the Khabarovsk Territory.
Phase 1 of the transhipment facility will have a capacity of 12 million tonnes of coal per annum. The facility’s commissioning and start-up are planned in 2020. The project will create more than 600 new jobs. Overall potential capacity of the facility is up to 24 million tonnes of coal per annum.
The partner banks will provide 34 billion roubles to the project using the Project Financing Factory’s programme. Under the syndicated loan, VEB.RF will provide financing to cover more than one third of the project’s Phase 1 expenses.
VEB.RF’s First Deputy Chairman and Member of the Board Nikolay Tsekhomsky said: “Investment into state-of-the-art port infrastructure is one of the key priorities of VEB.RF. We would like to thank our esteemed partners and are confident that our joint efforts will have not only positive impact on the Far Eastern economy but also will open more opportunities for Russian exports to the Asia-Pacific Region.”
VTB’s Head of Client Coverage and Senior Vice President Dmitry Snesar said: “Financing for the project to build the high technology coal transhipment facility at the seaport of Vanino is the first port infrastructure financing deal between VTB and VEB.RF under the Project Financing Factory. VTB has extensive experience in financing major infrastructure projects. The construction of VaninoTransUgol’s terminal means new infrastructure to develop further Russian coal export and contribute to the economic development of the Far East.”
VaninoTransUgol’s CEO Yuri Tyamushkin said: “Construction of the terminal’s Phase 1 is at an advance stage. VaninoTransUgol is not only developing the Far Eastern economy and infrastructure but is also actively contributing to the regional infrastructure, including corporate housing, educational establishments support, building a talent pool and establishing high living standards in the Far East.”
VEB.RF Finances Ust-Luga’s Gas Chemicals Polyethylene Production Facility
- The loan will be allocated to finance the early phase of the project
State Development Corporation VEB.RF and Baltic Chemical Complex signed a loan agreement to finance the early phase of the project to build the largest Russian gas chemicals facility next to the sea port of Ust-Luga (Leningrad Region). The total capacity of the gas chemicals facility will be up to three million tonnes of polyethylene per annum.
VEB.RF’s loan will be allocated to finance FEED, advance payments under license agreements and subcontracts, including long lead items and other project related expenses.
Financing will be allocated in instalments matching the project’s schedule milestones. VEB.RF financing the early stage of the project will improve significantly credit and investment ratings of the project, which is important to attract other Russian financial institutions, international ECAs and banks.
RusGasDobycha’s CEO Konstantin Makhov said: “We are creating an unprecedented industrial cluster. It will be the largest in Russia. The vertical integration of gas supply and treatment in Russia represents a new economic model for the gas industry. The facility may export its products to Europe, Asia, India, and China. It is a large scale project. The construction phase alone required more than 25 thousand specialists. The start-up of Phase 1 is scheduled in 2023-2024. The full ramp-up will be in 2025. More than five thousand new highly qualified jobs will be created to operate the facility.”
VEB.RF’s First Deputy Chairman and Member of the Board Nikolay Tsekhomsky said: “Today, it is the largest greenfield project with 100% export potential in VEB.RF’s portfolio. As a development institution, we see that it is important to offer financial leverage to the project which will build the largest gas chemicals facility in the world and make Russian products more competitive in the global market.”
Sovcomflot and VEB.RF Sign Financing Agreement for Construction of Pilot LNG Carrier at Zvezda Shipyard
SCF Group, the VEB.RF Group and the Zvezda shipyard formally agreed to finance the construction of a pilot LNG carrier at the Zvezda. The carrier will be time chartered by Novatek for Arctic LNG 2 project.
The ice class (Arc7) will enable the LNG carrier to be used for year-round navigation in challenging ice-bound conditions. The carrier is designed to navigate without an icebreaker escort through more than 2-metres-thick ice.
In total, VEB.RF’s Supervisory Board approved financing for 15 carriers of this type. The supply of carriers will be synchronised with the start-up of Arctic LNG 2.
“It is the seventh vessel to be built by the Zvezda under a loan facility signed here. The vessels will be leased by Sovcomflot. VEB.RF’s governing bodies approved participation in the financing of 21 tankers. The growth of the shipyard’s portfolio will enable our partners to keep localising their manufacturing,” VEB.RF’s Deputy Chairman Artyom Dovlatov said.
VEB.RF and the African Export-Import Bank (Afreximbank) signed a master agreement for VEB.RF’s participation as a confirmation bank in Afreximbank’s Trade Confirmation Guarantee Programme. The agreement was signed at the Russia-Africa Economic Forum in Sochi.
The document was signed on behalf of VEB.RF by its Deputy Chairman Daniil Algulyan and on behalf of the African Export-Import Bank by its Executive Vice President Amr Kamel.
“Providing export support and promoting Russian goods, work and services to open up new markets are high on VEB.RF’s list of priorities. African countries have tremendous potential to develop economic partnerships with the Russian Federation. The VEB.RF Group now has an anchor partner in this area of cooperation. It is Afreximbank. We’ve joined Afreximbank’s Trade Confirmation Guarantee Programme as it will enable us to use Afreximbank’s guarantees to mitigate the risks involved in trade financing transactions with local African banks,” Daniil Algulyan said.
“By signing the agreement, Afreximbank will strengthen its support for Russian companies with a presence in Africa,” Amr Kamel commented.
The African Export-Import Bank (Afreximbank) is a development bank mandated to promote intra- and extra-African trade. In December 2017, Russian Export Center on behalf of Russia became a shareholder of Afreximbank.
The bank is headquartered in Cairo and has regional offices in Cote d’Ivoire, Nigeria, Kenya and Zimbabwe. The bank’s rating: Baa1 (Moody’s), BBB- (Fitch), BBB+ (GSR). Founded in 1993. Authorised share capital: USD5bn. As at the end of 2018, the bank’s total assets were USD13.4bn.