Report on G20 PPP Development Published

20 january 2020 года
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The Group of Twenty (G20) has published a report on PPP development in the G20 countries, prepared jointly by VEB.RF, the Russian Ministry of Finance and the National PPP Development Center.

The initiative to prepare an analytical review of the PPP infrastructure practices currently in use in the G20 countries was proposed by the Russian Federation, as a member of the G20 Infrastructure Working Group. VEB.RF, jointly with the Russian Ministry of Finance and the National PPP Development Center, initiated a survey of the G20 countries about these aspects with the aim of obtaining information on the current status of the G20 infrastructure investment markets and related problems and opportunities.

“According to the survey, 18 countries have national infrastructure funds, 16 countries have special institutions for infrastructure development. And only seven countries have PPP-related special regulation. Views differ radically on private infrastructure initiatives within the G20: from complete aversion to incentives and support. Only three countries use minimum income guarantee mechanisms to provide additional guarantees for private investors,” Deputy Chairperson and Member of the Board Svetlana Yachevskaya said in a comment on the findings of the survey. “On the whole, the G20 countries make extensive use of two payment mechanisms for PPP projects, namely availability payments and user payments. Social infrastructure projects generally use availability payments.”

The purpose of the report is to give the countries a better understanding of potential strategies and approaches for PPP mechanisms under infrastructural projects and encourage the exchange of best practices, Svetlana Yachevskaya said. In addition to the survey’s findings, the analytical report contains recommendations for infrastructure development using PPP mechanisms that are based, inter alia, on international best practices and materials from the World Bank, the IMF and the OECD.

The report describes current management approaches for infrastructure development, including information about the authorities responsible for formulating and implementing national infrastructure policies, regulatory frameworks and tools for support for infrastructural projects (including PPP projects), and approaches currently used by the countries to promote green infrastructure investments and apply digital technology to improve the effectiveness of infrastructure-related policies.

The Group of Twenty (G20) is an informal forum for the world’s largest economies. Collectively, the G20 represent 90% of the gross world product and 80% of world trade. The Group of Twenty was formally established at the September 1999 meeting of the G7 Finance Ministers and Central Bank Governors in Washington. The G20 permanent members are currently 19 countries and the European Union (EU). Apart from Russia, the G20 also includes Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Saudi Arabia, South Africa, ​the Republic of Korea, Turkey, the United Kingdom and the United States.

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VEB.RF to Provide up to EUR500mn in Financing for Amur Gas Processing Plant Construction

24 december 2019 года
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VEB.RF, together with a syndicate of Russian, European and Chinese lenders, has signed agreements to finance the construction of Amur Gas Processing Plant. The project is carried out by Gazprom Pererabotka Blagoveshchensk (part of Gazprom) in the Svobodny advanced development zone, Amur Region.

Gazprom Pererabotka Blagoveshchensk is to raise 11.4 billion euros from Russian, European and Chinese banks, with VEB.RF’s commitment of up to 500 million euros.

“VEB.RF’s participation in financing the construction of Amur Gas Processing Plant had an important role in preparing the offers of potential lenders: foreign and Russian financial institutions,” Gazprom’s Deputy Chairman of the Management Committee Famil Sadygov emphasised.

“VEB.RF is involved in the country’s biggest gas-processing and gas-to-chemicals projects. The construction of Amur Gas Processing Plant will enable Russia to increase its export potential, including in the potentially lucrative Asian markets. Amur Gas Processing Plant will become a world leader in helium production,” VEB.RF’s First Deputy Chairman – Member of the Management Board Nikolay Tsekhomsky said.

Amur Gas Processing Plant will be one of the world’s largest gas-processing facilities. It will play a significant role in supplying natural gas to China via the Power of Siberia pipeline.

Amur Gas Processing Plant will be constructed near the town of Svobodny, Amur Region. Its design capacity is 42 billion cubic metres of natural gas per year. The facility will include the world’s largest helium production. The project consists of six process trains. Two of them are scheduled to begin operation in 2021. The others will be put into operation in phases by the end of 2024. Therefore, it is intended that the facility will work at full capacity in 2025. Apart from natural gas and helium, Amur Gas Processing Plant will also produce ethane, propane, butane and pentane-hexane fraction. Investor and project originator: Gazprom Pererabotka Blagoveshchensk (part of Gazprom). Project manager and general contractor: NIPIGAS (part of SIBUR).

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VEB.RF and Gazprombank to Provide Financing for Research Reactor Construction

24 december 2019 года
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VEB.RF, Gazprombank and the International Research Center based on the MBIR reactor (IRC MBIR) (part of ROSATOM) have agreed on the terms and conditions of financing for the project to construct a multipurpose research reactor (MBIR).

The project totalling almost 80 billion roubles is aimed at building a unique research facility with a fourth-generation fast-neutron reactor at Dimitrovgrad, Ulyanovsk Region. The MBIR reactor is designed to help Russia to preserve and develop its nuclear research capability. The research reactor will be used to create and test new materials and nuclear technologies. IRC MBIR will be contracted by Russian and international companies to carry out irradiation experiments and post-irradiation tests.

VEB.RF and Gazprombank will provide a total of over 20 billion roubles in project financing under the Project Financing Factory programme. In addition to debt financing, the MBIR project is to use equity financing. The transaction has already received approval from the Supervisory Board of VEB.RF.

“Nuclear power is an excellent example of high-technology industries where the Russian Federation can definitely be viewed as a world leader. The Project Financing Factory mechanism using long-term syndicated lending is ideally suited for such large-scale and capital-intensive initiatives,” VEB.RF’s Deputy Chairman Daniil Algulyan said.

“We will help to build a facility that is of not only scientific but also strategic importance for the country. I am confident that by financing the large-scale high-technology project, we help Russian science as a whole to increase its potential. Additionally, this transaction will allow us to raise to a new level our significant cooperation with VEB.RF and ROSATOM,” Gazprombank’s Executive Vice President Alexander Ushkov said.

“Signing the financing agreement for the project to construct the research facility with a multipurpose fast-neutron reactor is consistent with ROSATOM’s strategy to create the International Research Center based on the MBIR reactor. An important aspect is that ROSATOM’s largest scientific project is attractive to investors such as these leading Russian banks,” IRC MBIR’s CEO Sergey Pastukhov commented.

Launched under the federal targeted programme New Generation of Nuclear Power Technologies for 2010–2015 with Long-Term Plans Until 2020, the MBIR project is designed to renew ROSATOM’s research reactors and aimed at helping Russia to continue to be a leader in nuclear research.

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First Tranche Paid by VEB.RF to Finance LNG Carrier Construction at Zvezda

17 december 2019 года
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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.

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Financial Documents Signed for Central Ring Road Project Phase 4

13 december 2019 года
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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).

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