VEB.RF Invests RUB378.40bn in the Russian Economy during the COVID-19 Lockdown
In the first two months of lockdown, VEB.RF invested 378.40 billion roubles in the Russian economy. This facilitated the continued realisation of priority projects in industries such as pharmaceuticals, gas-to-chemicals, infrastructure, municipal solid waste processing, and digital economy.
“While restrictions were imposed, VEB.RF did not stop financing a single project. The work of the Project Financing Factory also continued. In partnership with commercial banks, VEB.RF provided an inflow of investments to the economy, fulfilling its commitments to partners and clients. We are also actively putting into place governmental measures to support enterprises, providing surety bonds to guarantee soft loans to retain jobs and resume activity. As a development institution, it is important for us to help enterprises navigate the most acute phase of reduced demand, and quickly reach a stage of recovery and development,” said VEB.RF Chairman Igor Shuvalov.
Among the projects that VEB.RF financed during the lockdown are:
- The construction of four plants for the processing of municipal solid waste (Energy from Waste) in line with the completion of a comprehensive waste treatment system in the Moscow region. During the period in question, VEB.RF provided 11 billion roubles. A banking syndicate involving VEB.RF minimalised risks for the investment stage of the project, providing credit facilities for conversion into hard currency to pay for foreign long-lead technological equipment, which will prevent cost overrun in case of future exchange-rate changes.
- The provision of over 6.4 billion roubles to finance a project to obtain and lease out modern “Moscow” trains (produced by CJSC Transmashholding) for the Moscow Metro. This is VEB.RF’s second project, supplying 768 carriages, and VEB.RF’s commitment amounts to 38.30 billion roubles, of an overall project cost estimated at 63.50 billion roubles. Previously VEB.RF had financed the supply of 664 carriages for the Moscow Metro.
The first such trains were rolled out just over three years ago, in April 2017, when a gradual replacement of old trains with modern trains began. In June of this year, renewal of the fleet of trains on the Tagansko-Krasnopresnenkaya line of the Moscow Metro was completed, and now only “Moscow” trains run on the purple line.
The “Moscow” series carriage design was customised to meet the Moscow Metro needs. The new carriages are noticeably different from their predecessors, having a walk-through connecting all the cars, improved soundproofing, interactive metro maps to plan routes, and USB-ports to charge gadgets. Each carriage has two climate-control systems with an ultraviolet air-sanitising function.
- Financing of a large project, the construction of the Amur Gas Processing Plant, totalling 2 billion roubles has begun. VEB.RF, in collaboration with a syndicate of Russian, European and Chinese creditors, signed an agreement to finance the project. VEB.RF’s commitment in the Amur GPP project has played an important role in the formation of proposals from Russian and foreign financial institutions participating in the syndicate.
Cesare Ragaglini Tells EC Representatives and Businessmen About the Development of Green Economy in Russia
On 18 June VEB.RF’s Deputy Chairman Cesare Ragaglini participated as a speaker in a round table discussion ‘European Green Deal and the EU’s Recovery Strategy: What Do They Mean for Russia?’ organised by the EU Representative Office in Russia.
Cesare Ragaglini said that the European Union and Russia had always been close and reliable partners. “Undoubtedly, the European Green Deal aimed at full decarbonisation of Europe by 2050 will also have important consequences for Russia. Russia’s and EU’s economies are interdependent, especially in the energy field, and it would be wrong trying to diminish or eliminate such interdependence, since it can adversely affect the stability in the region,” he emphasised. According to Mr. Ragaglini, strategic dialogue between Europe and Russia may include a new important area, promoting clean renewable energy, which implies good prospects for financial and technological dialogue.
Cesare Ragaglini additionally noted that businesses both in European countries and in Russia are becoming increasingly aware that investments in sustainability not only have a positive impact on the environment, but may also generate high income. Green financial instruments, especially bonds, become the main driver of the green project development agenda. In Russia, the green market is only just emerging, and it is VEB.RF which is preparing, in collaboration with public authorities, businesses and export community, Russian methodological recommendations for green projects based on the globally accepted standards. This methodology will help to develop the green market pattern in Russia and lay the groundwork for implementing environmental projects including by additional domestic and international fundraising.
Cesare Ragaglini also noted that in 2019 Russia had ratified the Paris Agreement, thus assuming obligations to tackle climate change. “However, climate change is global in scale and cannot be prevented by local efforts. It is essential that global endeavours be coordinated. The green financial market may become a key driver of the process, as long as all participants have access to it,” he said. According to Mr. Ragaglini, a dialogue on climate change must bring together all parties rather than dividing them. “Despite all political complications, coordinated action against climate change should continue,” he stressed.
Deputy Director-General in the Directorate-General for Climate Action Clara de la Torre, Deputy Head of Delegation of the European Commission to Russia Aleska Simkic, General Director of Rusal Evgeny Nikitin, President of Schneider Electric and Chairman of the AEB in Russia Johan Vanderplaetse, and Director of the Climate and Energy Programme at WWF Russia Alexey Kokorin also participated in the discussion. All the round table participants emphasised the necessity to support sustainable green development including more environmentally friendly manufacturing processes, reducing environmental pollution, developing clean transport and clean energy, improving waste management quality, developing more sustainable practices in agriculture, and preserving biodiversity of forests, the Northern Landscape and aquatic resources.
The European Green Deal is a strategic initiative adopted in December 2019 by the European Commission and involving zero-carbon energy sources and zero greenhouse gas emissions in the region by 2050. The implementation of this strategy requires EUR1tn of public and private investment in the coming ten years.