First Tranche Paid by VEB.RF to Finance LNG Carrier Construction at Zvezda
VEB.RF has paid the first tranche to the Zvezda shipyard to finance the construction of the pilot LNG carrier under the Arctic LNG 2 project.
The gas tanker (ice class Arc7) is designed to transport LNG on a year-round basis in the ice-bound conditions of the Kara Sea and the Gulf of Ob. The ship has the ice-breaking capability to navigate in ice with a thickness of more than 2 metres.
The LNG carrier is to be leased to Sovcomflot. NOVATEK has already signed a long-term contract with Sovcomflot to charter the ship under the Arctic LNG 2 project.
Overall, financing for 15 gas tankers received approval from the Supervisory Board of VEB.RF. They will be supplied when Arctic LNG 2 begins operation.
The shipyard’s larger business portfolio will provide the basis for implementing the presidential decree aiming to create a cluster of shipbuilders in the Russian Far East, increase the local content of Russian-made products, build medium- and large-sized vessels, and manufacture marine equipment in order to promote the Northern Sea Route and develop Arctic hydrocarbon deposits.
“The first tranche paid for the pilot LNG carrier is 66 million US dollars, or an amount equivalent to about 4.2 billion roubles. This year, VEB.RF has already disbursed an amount equivalent to over 9 billion roubles in total to finance the construction of four tankers at the Zvezda shipyard. Support for Russian shipbuilding is a strategic area of VEB.RF’s activities. Financing for the construction of tankers at Zvezda is a substantial contribution to promoting high-tech production and increasing the local content of Russian-made products in the Far East,” VEB.RF’s Deputy Chairman Artyom Dovlatov commented.
Financial documents for Phase 4 of the Moscow Region’s Central Ring Road (CRR) construction project were signed on 12 December 2019. The syndicate consisting of Gazprombank, Sberbank, the Eurasian Development Bank (EDB) and VEB.RF formalised its arrangement with South-Eastern Highway LLC to lend a total of 35.8 billion roubles for 17 years.
South-Eastern Highway LLC is a special purpose entity created by the Avtoban Group and the Russian Direct Investment Fund (RDIF) to carry out the CRR-4 project. Apart from the Avtoban Group and RDIF, the project also involves financial sponsors—the EDB, VEB.RF and InfraVEB—providing 4.1 billion roubles in subordinate financing for 20 years.
Nikolay Tsekhomsky, First Deputy Chairman – Member of the Management Board, VEB.RF: “Support for major infrastructural projects is high on our list of priorities. In the arrangement, VEB.RF will join the syndicate of senior lenders and provide a portion of subordinated debt as a financial sponsor for the project. Our participation made it possible to finalise the financing structure required by the concession agreement, which is essential to the smooth implementation of the project.”
Konstantin Pesotsky, Senior Managing Director of Structured Lending Products, Sberbank: “We are very honoured to participate in financing the country’s biggest transport infrastructure projects. When put into operation, the Central Ring Road can be a driver of economic growth in Russia, because this highway will considerably speed up the movement of people and goods in the Moscow Region.”
Pavel Brusser, Executive Vice President and Head of Infrastructure & PPP Projects, Gazprombank: “The syndicate of Russia’s largest banks, along with international financial institutions and the Russian Direct Investment Fund, will participate in the project by providing the financing necessary to keep to a tight construction deadline. The syndicate has experience of implementing a similar project, namely Phase 3, which will allow the project risks of the concession to be managed effectively.”
Timur Abdullakhanov, Managing Director and Head of Transport and Infrastructure, EDB: “This is a transport infrastructure project, belonging to a sector that we view as a priority. The project will promote cross-border transport through the Western Europe-Western China transport corridor. For instance, the Phase 4 road is immediately adjacent to the Western Europe-Western China highway and is connected to the M-7 Volga highway and farther to the border with Kazakhstan. The project not only contributes to interregional economic integration between Moscow and neighbouring areas and, in a wider context, across Russia’s transport system in general, but also helps the EDB member countries to increase their transit potential in Eurasia in the long term.”
The concession agreement was signed by Russian Highways, on behalf of the government, and South-Eastern Highway LLC on 2 June 2017. The CRR-4 project includes the financing, construction and operation of a 96.5-kilometre road section. The Phase 4 road is to run in the south-east of the Moscow Region, 50 kilometres from the Moscow Ring Road, through the Noginsk, Pavlovsky Posad, Voskresensk and Ramenskoye Districts and the municipalities of Elektrostal and Domodedovo.
The route is from the M-7 Volga federal highway (km 0 of the A-113 Central Ring Road) to M-4 Don. The predicted average daily traffic for 2030 is 40,300 vehicles. The design speed is 140 km/h. The first construction stage includes four lanes (two in each direction).
Phase 4 consists of 17 bridges and wildlife crossings, 40 flyovers and nine elevated structures. The project uses six grade-separated junctions for the following roads: M-7 Volga, Moscow Smaller Ring Road, Yegoryevskoe Highway, Moscow Smaller Ring Road–Chechevilovo–Moscow Greater Ring Road, M-5 Ural, Vostryakovo–Obraztsovo (access to Domodedovo Airport), M-4 Don.
The Central Ring Road (CRR) is of vital importance for the Moscow Region. The CCR project consists of five phases, each of them can be fully functional as an independent investment project. Phase 3 and Phase 4 are built under the concession agreements signed by Russian Highways with Motor Road Construction Corporation LLC (CRR-3) and South-Eastern Highway LLC (CRR-4).
On 11 December, at the 25th UN Climate Change Conference (COP 25), the VEB Group held a session on a green approach to urban sustainability. The delegation was headed by VEB.RF’s Deputy Chairman Cesare Ragaglini.
The session was opened by Russian Deputy Minister of Economic Development Mikhail Rasstrigin, speaking about Russia’s main climate change initiatives.
Cesare Ragaglini told the audience about the new role of VEB.RF as a coordinator of development institutions and VEB.RF’s new priorities in urban development, noted the significance of VEB.RF’s involvement in Russian national projects and underlined that they were consistent with the UN Sustainable Development Goals 2030.
According to Ragaglini, VEB.RF shares international concern about climate change. “Russia is a party to the Paris Agreement, ratified in September 2019. In the issue of climate change, countries are so interdependent that any green initiatives in one country will be of benefit to the entire global community,” he said.
VEB.RF’s representatives also emphasised the importance of adopting a practical approach to achieving the UN Sustainable Development Goals 2030. In this connection, Cesare Ragaglini mentioned that a high proportion of projects approved by VEB.RF in 2016–2018 met the green project financing criteria of the International Development Finance Club (IDFC). Additionally, VEB.RF’s representatives described the programme to implement the Environmental Protection national project and presented VEB.RF’s participation in the project worth 155 billion roubles to build energy-from-waste plants in the Moscow Region.
The session also noted that the UN Sustainable Development Goals 2030 could not be attained without the adequate development of urban areas, which are home to most people in the world. In this context, DOM.RF presented the results of its efforts to develop and test-operate the Urban Environment Quality Index and the Integrated Territorial Development Standards based on international best practices.
The session took place at the pavilion of the International Development Finance Club. VEB.RF has been actively involved with IDFC since its inception in 2011. The IDFC members are 26 national and regional development banks from Europe, Asia, Africa and the Americas. IDFC traditionally focuses its efforts on the global issues of climate change and the UN Sustainable Development Goals 2030.
About COP 25
The United Nations Framework Convention on Climate Change (UNFCCC) was adopted in May 1992 and entered into force in March 1994. The parties to the UNFCCC are currently more than 180 countries, including Russia, taking joint action to mitigate climate change and greenhouse gas emissions. The signatory nations (Russia signed the UNFCCC in 1994) agreed to implement national climate change programmes, carry out studies and report on their findings.
The Paris Agreement is an agreement signed by 195 UNFCCC members in 2015 to regulate greenhouse gas emissions and curb the increase in global average temperature as part of efforts to reduce global warming.
VEB.RF and Gazprombank to Participate in Creating Russia’s Track & Trace System
The financial institutions will give a syndicated loan totalling 24.2 billion roubles.
VEB.RF, Gazprombank and Operator-CRPT (a subsidiary of the Center for Research in Perspective Technologies (CRPT)) have signed a syndicated loan agreement for 24.2 billion roubles. The loan will be provided through the Project Financing Factory to finance the project to create the Chestny ZNAK track & trace system.
The project is structured as a public-private partnership between CRPT and the Russian Ministry of Industry and Trade. The agreement is the first PPP in information technology and the first federal-level PPP in Russia.
CRPT shareholders will invest more than 220 billion roubles in creating and developing the system over 15 years, with a payback period of seven or more years. This will enable the government to achieve its goals of combating the grey economy and counterfeit goods without budgetary financing.
The syndicated loan is limited to a total of 24.2 billion roubles, with VEB.RF’s commitment of 8.7 billion roubles and Gazprombank’s commitment of 15.5 billion roubles.
“This project is important for the transparent operation of the entire consumer goods sector. Its implementation will make it possible to formulate equal and fair rules for commerce. Consumers will receive reliable protection and will be assured that they buy things coming through distribution channels authorised by the original manufacturer or trademark owner,” VEB.RF’s First Deputy Chairman – Member of the Management Board Nikolay Tsekhomsky said.
“Signing the syndicated loan agreement with Gazprombank and VEB.RF made it possible to achieve financial closure in Russia’s first federal-level public-private partnership project. The project will result in building the Russian track & trace system in important sectors such as the production and sale of pharmaceuticals, milk and consumer goods, as well as substantially reducing the sale of counterfeits,” Gazprombank’s Deputy Chairman of the Management Board Alexey Belous commented.
“We have already created the track & trace system with more than 6 billion unique digital codes for cigarettes, pharmaceuticals, furs and footwear. The number of product categories increased on 1 December, and the system will continue to develop next year. Cooperation with VEB.RF and Gazprombank will improve the operator’s financial flexibility in the next 18 months and create the conditions for the accelerated introduction of new product groups, including dairy products intended for the ultimate consumer,” CRPT’s Chairman of the Board of Directors Mikhail Dubin said.
The project to build the Russian end-to-end track & trace system is scheduled for completion in 2014, covering a wide range of goods. The existing system is used for tobacco products, certain pharmaceutical products, fur coats, tyres, footwear and perfumes. Starting from January 2020, the system will include all pharmaceuticals. As from June 2020, inclusion on the track & trace system will be mandatory, including for dairy products.
Belarusian Government and VEB.RF Agree on Financial Support for Exports to Third Countries
The Belarusian Government, represented by the Ministry of Finance, and VEB.RF have agreed on the terms and conditions of VEB.RF’s support for both Belarusian exports and Russian-Belarusian joint exports to third countries.
The agreement was signed by Minister of Finance Maksim Yermolovich on behalf of the Government of the Republic of Belarus and First Deputy Chairman – Member of the Management Board Nikolay Tsekhomsky on behalf of VEB.RF.
This is the first agreement under the government’s export support programme updated this year. The main changes in 2019 allow the export support mechanism to be used for exports not only to Russia but also to third countries (outside the United State of Russia and Belarus).
“Belarusian manufacturers can now take advantage of the Russian programme to have subsidised loan interest rates for the export of Russian-made components in their end products. Buyers from third countries will, in turn, be able to use the Belarusian programme subsidising interest rates for products imported from Belarus and containing Russian components,” Nikolay Tsekhomsky said.
The agreement between VEB.RF and the Belarusian Government provides for all kinds of soft-term financing involving non-resident banks under the updated programme: direct lending to buyers, interbank lending to the buyer’s bank and post-financing for documentary export credits. The agent bank under the agreement is Bank BelVEB, VEB.RF’s Belarusian-based subsidiary.
“Bank BelVEB initiated changes to the programme specified in Decree 466. Signing the first agreement with VEB.RF was the logical thing to do. This is another important contribution of the VEB.RF Group to the Belarusian economy and the promotion of closer integration with the Russian Federation by developing a financial infrastructure for export support. That is why Bank BelVEB encourages Belarusian exporters to join this unique programme,” Bank BelVEB’s Chairman of the Board Vasily Matyushevsky said.
To receive financing from VEB.RF, Belarusian exporters should use at least 30% of Russian-made components. Financing is offered for up to 5 years.
The agreement will enable Russian and Belarusian exporters to take advantage of a new mechanism helping them to enter the potentially lucrative markets in Latin America, Africa and South-East Asia.