VEB.RF Participates in Financing the Largest Gas Processing Facility in Ust-Luga
VEB.RF and RusKhimAlliance LLC signed a facility agreement to finance the initial phase of the project to build Russia's largest gas processing facility in the Leningrad Region near the sea port of Ust-Luga, including a gas processing plant with a capacity of 45 bcm per year and a LNG plant with a capacity of 13 mtpa.
VEB.RF loans totalling up to 55 billion roubles will cover design documentation, advance payments under license agreements and contract agreements, including long lead items, and other project related expenses.
The financing will be provided in tranches in line with the project's schedule.
"Ust-Luga’s project will have a significant impact on the socio-economic development of Russia, it will give a boost to long-term industrial economic growth in the North-Western Federal District, and it will make Russian products more competitive in the international market. The processing facility in Ust-Luga is an example of a project with a multiplying effect for the economy of the whole country," VEB.RF’s First Deputy Chairman and Member of the Management Board Nikolai Tsekhomsky said.
“Cooperation between RusKimAlliance and VEB.RF aims to create the most powerful Russian gas processing plant, which will also become the leading producer of liquefied natural gas in the North-Western region of Europe. Ust-Luga’s gas processing facility project has already signed long-term gas supply agreements, which guarantee, in particular, the annual supply of 45 billion cubic meters of feed gas to the facility and the sale of commercial gas in the amount of about 18 billion cubic meters per year. At the current stage, a number of engineering surveys have already been carried out and the main technical solutions for the project have been developed. Comprehensive measures are being implemented to systematically integrate the new high-tech plant into the socio-economic environment of the Russian North-West. We will be a partner for the Leningrad Region and a reliable employer for several thousand residents of the region,” RusKhimAlliance’s CEO Kirill Seleznev said.
VEB.RF takes part in financing the Facility for Processing Ethane-containing Gas in Ust-Luga. The project encompasses the construction of integrated gas processing and gas chemical facilities for deep processing of multicomponent natural gas.
Konstantin Vyshkovskiy is VEB.RF's New Debt Capital Markets Executive
As of this Monday, Konstantin Vyshkovskiy (born 17 November 1973) joined VEB.RF as a Senior Banker. He will oversee VEB.RF’s debt capital markets activities as part of the top management team.
Previously, he headed the Department of Sovereign Debt and National Financial Assets of the Ministry of Finance of the Russian Federation.
VEB.RF, together with Russian commercial banks, is ready to consider its participation in financing the construction of the Amur Gas Chemical Complex for the production of polymers with a capacity of up to 2.7 mtpa. The project was discussed at a meeting between Russian Prime Minister Mikhail Mishustin and the members of the Government Commission on Social and Economic Development of the Far East in Blagoveshchensk. The event was attended by VEB.RF’s Chairman Igor Shuvalov.
The Amur Gas Chemical Complex project was initiated by SIBUR. The project is aimed at expanding the export of non-primary non-energy goods, and contributes to the development of the advanced development zone of the Free Port of Vladivostok.
“SIBUR is a strategic partner of VEB.RF. The construction of the largest petrochemical facility ZapSibNeftekhim in Tobolsk was financed with our support. This project made the Tyumen Region a leader among the constituent entities of the Russian Federation in terms of the industrial production index in January-May 2020. ZapSibNeftekhim's products play an important role in substituting polymer imports and will allow creating Russian equivalents of foreign products,” Igor Shuvalov noted.
Igor Shuvalov also visited the construction site of the Amur Gas Processing Plant. At the end of 2019, VEB.RF signed an agreement to finance the project with a syndicate of Russian, European and Chinese lenders, totalling 11.4 billion euros. VEB.RF’s commitment played a significant role in financing the transaction and attracted offers from potential participants: a total of 21 banks are involved in financing the project. The approved VEB.RF's commitment to the project amounts to 500 million euros. The project is implemented by Gazprom Pererabotka Blagoveshchensk LLC (part of the Gazprom Group) on the territory of the advanced development zone of the Free Port of Vladivostok, the Amur Region. The plant is designed by NIPIGAS, a leading Russian EPC service centre (part of SIBUR). Engineering has begun in 2015. NIPIGAS provides a full range of services for the project: performs detailed design, supplies equipment and materials, performs construction and installation works, and ensures mechanical availability and handover of the plant to Gazprom Pererabotka Blagoveshchensk. It is expected that the Amur Gas Processing Plant will become one of the largest natural gas processing plants in the world. It will play a significant role in supplying natural gas to China through the Power of Siberia pipeline. The project will create up to 3 thousand new jobs.
During his visit to Blagoveshchensk, Igor Shuvalov saw the key infrastructure projects of the city, discussed the development plan for the area of the Blagoveshchensk-Heihe road bridge, and got acquainted with the urban development of the urban environment Golden Mile tourism cluster.
Currently, VEB.RF is considering participation in the financing of 20 projects in the Far Eastern Federal District totalling 1.6 trillion roubles; the estimated amount of funding from VEB.RF exceeds 280 billion roubles.
With financial support from VEB.RF, 12 projects are already being implemented in the district with a total cost of 2.5 trillion roubles. The volume of investments of the development institution in projects in the district exceeds 600 billion roubles, of which 41.6 billion is the volume of VEB.RF investments in the Amur Region.
“In the Far Eastern Federal District, VEB.RF is supporting Russia’ major projects to create large-scale state-of-the-art production facilities. It is important for these facilities to be built in a comfortable urban environment, and every citizen should feel a change in the quality of life as a result of our joint work,” Igor Shuvalov pointed out in Blagoveshchensk.
VEB.RF pays great attention to the development of infrastructure in the regions of Russia, especially in the Far East, where projects related to the development of transport hubs are in high demand. VEB.RF has already lent a helping hand to build and rehabilitate airports in Khabarovsk and Vladivostok. Kamchatka Airport reconstruction project is currently under review and structuring. Currently, a tender is being held for the conclusion of a concession agreement on the reconstruction of Blagoveshchensk International Airport. VEB.RF and the Far East and Arctic Development Fund (VEB.RF Group) are interested in considering the possibility of providing financing to the winning investor. The reconstruction of the airport will improve the quality of passenger service and increase its capacity. Financing the infrastructure, including the modernisation of major airport hubs, including the construction and reconstruction of terminals, is one of the key tasks of the development institution. This includes developing the infrastructure, improving the quality of people’s life, and developing agglomeration and regional ties.
VEB.RF also participates in financing the construction of tankers at the Zvezda shipyard, a gas-to-chemicals methanol facility in Nakhodka (Primorie Territory), mining projects (development of the Udokan deposit), port infrastructure, and urban economy projects.
The Far East and Arctic Development Fund supports 19 ongoing investment projects in the Far East with a total volume of 541.1 billion roubles, of which the FEDF's investments amount to 68.7 billion roubles. In the Amur Region, the first and so far the only Russian soy isolate and dietary fibre plant was built with the support of the FEDF. This year, the plant shipped its first products. The total investment in the project amounted to 5.4 billion roubles, including FEDF’s commitment of 1.7 billion roubles.
VEB.RF Chairman Igor Shuvalov Joins the Pan-European Commission on Health and Sustainable Development
VEB.RF’s Chairman Igor Shuvalov has joined WHO’s Pan-European Commission on Health and Sustainable Development (see press release on WHO's website).
The Commission will draw lessons from the ways in which different countries’ health systems have responded to the COVID-19 pandemic and will make recommendations on investments and reforms to improve the resilience of health and social care systems. The Commission will also seek to build consensus on these recommendations and to elevate health and social care as societal and political priorities, recognised as being critical to both sustainable development and social cohesion.
The Commission will be chaired by Professor Mario Monti, President of Bocconi University and former Prime Minister of Italy and former European Commissioner. The Commission will be composed of former heads of states and governments, distinguished life scientists and economists, heads of health and social care institutions, and leaders of the business community and financial institutions. The inaugural meeting of the Commission is scheduled for 26 August 2020.
In addition to Igor Shuvalov, the Commission will include former Finnish President Tarja Halonen, former Estonian President Toomas Hendrik Ilves, former Kyrgyz President Roza Otunbayeva, former French Minister of Defence Sylvie Goulard and others.
WHO is the United Nations Agency responsible for public health. The WHO Regional Office for Europe (WHO/Europe) is one of six WHO’s regional offices. WHO/Europe serves the WHO European region, which includes 53 countries, and is a team of scientific and technical specialists in various aspects of public health, based at the head office in Copenhagen (Denmark), in 4 branch centres, as well as in country offices located in 30 Member States.
SCO Banks: Regional Economic Recovery Based on Digital Solutions, Trade Cooperation, and Energy
The state of the world economy, lessons learned and ways out of the economic crisis caused by the pandemic were discussed today at the SKOLKOVO Moscow School of Management by representatives of state agencies and member banks of the Interbank Consortium of the Shanghai Cooperation Organization (SCO IBC), which this year is chaired by State Development Corporation VEB.RF. The event has become the first step in implementing the anti-crisis roadmap of the SCO IBC.
Vladimir Mau, economist and Rector of RANEPA, opened the event by giving an analysis of the macroeconomic situation in which the SCO countries are compelled to act.
“Despite the differences in our economies, we face common problems: rising unemployment, falling industrial production, growing budget deficits, closing of export channels, and much more. Cooperation within the SCO should be based on the sustainable development agenda, the digital economy, and expanding cooperation in trade and energy. The volume of trade between the SCO countries is still quite low, and there is potential for growth here,” he said.
According to Vladimir Mau, Russia is doing well from a macroeconomic point of view. “This crisis is not a structural one and does not develop into a banking one. It can rather be compared to the post-war situation, that is, we are dealing with the economic consequences of events that are not economic in nature. A key challenge of post-crisis recovery of the SCO should be human and sustainable economic development within the SCO. The welfare of specific people is much more important than gross growth figures,” Vladimir Mau summed up.
VEB.RF’s Deputy Chairman Daniil Algulyan spoke about the strategy employed by VEB.RF to combat the crisis. “VEB.RF issued guarantees to 15 banks, owing to which about 30 thousand enterprises raised loans at 0%. Also, our guarantees, this time under the employment support programme, provided almost 150 thousand loans to enterprises at 2%. 38 banks have joined this programme.” According to Daniil Algulyan, in a crisis, the interest of commercial banks in cross-border transactions is falling, and it is up to the development institutions to support export-import operations. VEB.RF is actively working in this direction and is doing everything to ensure that trade flows are not affected.
VEB.RF's Deputy Chairman has named the development of infrastructure for payments in national currencies as one of the most effective measures in this direction. “In recent years, we have made great progress in trading in national currencies, and the use of yuan and rouble is growing. The Bank of Russia has developed and is actively implementing the Financial Messaging System (FMS), which our colleagues from the Uzbekistan National Bank will soon join. We are open to any suggestions in this area,” he said.
VEB.RF’s Deputy Chairperson Svetlana Yachevskaya noted that the state corporation plays an important role in the implementation of public anti-crisis measures. “Participation of VEB.RF as an agent in providing subsidies allowed us to provide timely, operational support to systemically important organisations, while VEB.RF’s analytics and monitoring made it possible to make the subsidy mechanism flexible and adapted to the needs of organisations. The mechanism for subsidising the interest rate made it possible to provide 200 billion roubles of preferential loans to organisations to replenish working capital”, VEB.RF’s Deputy Chairperson said. In addition, according to her, VEB.RF and the National PPP Development Centre have launched an anti-crisis programme to assist regions in bringing about PPP projects, which is currently in high demand among regional authorities. The programme has already received circa 270 initiatives for a total amount of 791.4 billion roubles.
Deputy Chairman of the Board of the Kazakhstan Development Bank (KDB) Duman Abubakirov said that the bank's anti-crisis strategy was based on the experience gained in 2008 and 2014-15. The crisis brought many problems: many projects that required foreign specialists onsite have been mothballed. The cost of borrowed capital has increased with high capital intensity of projects. Nevertheless, the Government of Kazakhstan and the KDB managed to save about 25 thousand jobs thanks to the timely measures taken. The bank switched to teleworking, but its performance, according to Duman Abubakirov, did not suffer.
Representative of the China Development Bank (CDB) Pan Dunmei noted that measures to support the economy in their case were concentrated around four key areas. First, countering the negative consequences of the coronavirus, including emergency financing of production and the procurement of protective equipment and medicine. Second, providing assistance to affected businesses. Third, helping companies restart after the pandemic; and fourth, protecting employees who have returned to their jobs. As part of these tasks, in 1H2020, the CDB employed various lending opportunities totalling 1.8 trillion yuan.
The conference was also attended by Director of the Strategic Development and Corporate Policy Department of the Russian Ministry of Industry and Trade Aleksey Uchenov, Director for Strategic Development of the Eurasian Development Bank Tatyana Chernikova, Deputy Head of the Eurasian Affairs Department of the PRC’s Ministry of Commerce Zhang Dong. The meeting was moderated by VEB.RF’s Chief Strategy Officer Aleksey Kechko.