VEB.RF Involved in Ten Syndicates Totalling RUB1.5tn in Partnership with Commercial Banks
This was stated by VEB.RF Deputy Chairman Yuriy Korsun, speaking at a Cbonds conference on syndicated lending in Russia and the CIS.
“For a year and a half, VEB.RF has partnered up with other banks to conduct ten syndicated project financing transactions, including eight projects under the Project Financing Factory programme. The transactions total 1.5 trillion roubles. It’s a substantial joint contribution of VEB.RF and partner banks to the market, both in terms of funding and in terms of project quality. These figures are related to major projects in gas processing and petrochemicals, transport infrastructure, high value-added production, and the digital economy. VEB.RF’s partners, the lenders involved, are VTB Bank, Gazprombank, Otkritie Bank and Sberbank,” Yuriy Korsun said.
He mentioned the difficulty of raising long-term funds as one of the main characteristics of project financing. According to Yuriy Korsun, “new projects can be encouraged by the Project Financing Factory mechanism, a programme that allows private investors to participate comfortably in large-scale projects, as well as enabling borrowers to have easier access to project financing, a longer loan term and a lower effective cost of borrowing.”
“At present, all Project Financing Factory transactions involve only four partner banks. But we haven’t abandoned our plans to expand the pool of partners,” Yuriy Korsun said, replying to a question from the audience about the possible transfer of experience in project and syndicated lending.
“To date, VEB.RF has signed agreements for participation in the Project Financing Factory programme with 21 credit institutions, and this gives us solid grounds to believe the number of syndicate members working on new projects under the Project Financing Factory programme will increase,” Yuriy Korsun emphasised.
VEB.RF Presents its own Infrastructure Projects Quality Assessment System in Paris
VEB.RF’s Deputy Chairperson Svetlana Yachevskaya presented a new Russian Infrastructure Project Assessment and Certification System and the Rosinfra infrastructure platform to the French and international business communities. The system and the platform will enable Russian and foreign investors to assess risks and prospects of PPP infrastructure projects. The system was demoed on 5 October 2020, the first day of the Paris Infraweek organised under the aegis of the French Ministry of Economy and Finance.
According to Svetlana Yachevskaya, almost all the countries view infrastructure investment as one of the main growth and post-crisis economic recovery drivers. In 2019, Russia invested more than USD73bn in infrastructure construction, including USD37bn of private investments. Infrastructure investment took a serious blow from the pandemic: investors are reluctant to participate in new projects, risks are increasing, the governments find different investment avenues, for example, businesses and population support.
“This environment compels investors to impose new quality project requirements; economic, social, environmental project impact assessment becomes more important. VEB.RF, the National PPP Centre and AECOM developed the Infrastructure Project Assessment and Certification System following recommendations of the G20 Infrastructure Working Group and Quality Infrastructure Investments Principles (QII) to make assessment and certification more comfortable for Russian and international investors and improve projects assessment quality. This effort was joined by the OECD, the World Bank, the New Development Bank, and other organisations,” Svetlana Yachevskaya said.
Last September, VEB.RF published a draft of the Infrastructure Project Assessment and Certification System and invited Russian and international investors to test the system. First transactions assessed under the new methodology will be effected already in Q1 2021. The system is currently negotiated with the BRICS member countries for its adoption by BRICS.
According to VEB.RF’s Deputy Chairperson, the system was developed to assist investors, national and international banks in proper assessment of Russian infrastructural project risks. The system provides access to all particular features of a project, defines project strengths and weaknesses at an embryonic stage, gives recommendations to project initiators to improve the risk profile and bring it in line with the QII guidelines. “We would like to create an ecosystem to enable the government, investors, advisers, financial organisations and other stakeholders to collaborate to improve projects quality,” Svetlana Yachevskaya added.
Rosinfra platform features the largest Russian infrastructure projects database, which contains information on 3,894 ongoing projects, 1,166 project initiatives, and more than 5,400 market participants. A digital project office is under way to allow market participants to prepare projects online. This service is unique in the international market. International investors and financial organisations are invited to use the platform (en.rosinfra.ru) to discover the Russian PPP market and select potentially interesting investment projects.
The VEB.RF Group believes that the implementation of the Infrastructure Project Assessment and Certification System will attract circa USD13bn to the Russian infrastructure over five years, i.e. USD2.6bn per annum that represents 12% of the average annual volume of direct investment in Russia over the last five years.
During the Paris Infraweek, Svetlana Yachevskaya also had a meeting with the Managing Director of the French Infrastructure Agency, Fin Infra, Jean Bensaid. The parties discussed collaboration opportunities and the state of the public private partnership market.
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Russia is implementing a number of PPP infrastructure projects with participation of international investors and organisations. Such capital-intensive projects include the Western High-Speed Diameter, Pulkovo Airport in Saint Petersburg and Lavna Sea Port in Murmansk. Last year, the Asian Infrastructure Investment Bank approved USD500mn credit facility to upgrade Russian transport infrastructure. The first trench (USD96.7mn) will be invested in rehabilitation of R-21 Kola highway from Saint Petersburg to the Russia-Norway border via Petrozavodsk, Murmansk, and Pechenga.
Last year, a concession agreement was signed with foreign partners to create a MSW treatment and storage facility in the Kaliningrad Region. This year has not yet seen infrastructure transactions with international investors due to the overall economic slowdown caused by the pandemic.
On 29 June 2019, the G20 leaders signed the Osaka Declaration to approve the Quality Infrastructure Investments Principles (QII) for implementation at the national level by all the G20 countries. Russia is developing its National Infrastructure Project Assessment and Certification System to implement the QII principles using the best international practices. This effort initiated by the Russian Ministry of Finance is undertaken by VEB.RF jointly with the National PPP Centre and AECOM. The system sets quality infrastructure projects guidelines to ensure economic efficiency, safety, resilience to natural disasters, social outcomes, state-of-the-art innovative technologies and approaches, and better infrastructure management.