V.V. Putin’s opening address:
Some of you attended the United Russia’s conference in Khabarovsk yesterday, where we discussed plans for the Far East. Specifically, we discussed Vnesheconombank’s and other development institutions’ involvement in implementing investment projects in the region.
There are many interesting business ideas for the Far East, in particular for its fuel and energy sector, steelmaking, forestry and fishing industries. As I have already said, we plan to establish a Direct Investments Fund in the Far Eastern Federal District and the Baikal Region.
VEB’s participation in this Fund will make it possible to engage major financial institutions, funds and investment companies in cooperation. Today, we’ll discuss the Fund’s concept and proposals for its organizational structure. I would also like to note that yesterday Vnesheconombank signed an agreement on extending a three billion ruble loan to Dallesprom for building a deep timber-processing integrated plant in the city of Amursk in the Khabarovsk Territory.
We’ll also consider another project that is critical for the Far East, the reconstruction of the Knevichi airport. This project will be implemented as part of preparations for the APEC summit and the program to remake the image of Vladivostok.
A new modern passenger terminal’s commissioning would increase the airport’s capacity to four million people per year. After reconstruction, the airport’s runway will be able to operate almost all types of aircraft, both Russian and international. Vnesheconombank’s investment in the project will total four billion rubles, of which it has already provided 2.3 billion rubles in loans.
Today we’ll also hear out a report on the progress the Bank has made on its mortgage lending program. I’d like to emphasize that the program began nearly a year ago, and Vnesheconombank has already extended more than 4,000 mortgage credits worth some seven billion rubles, which account for about 30% of the credits received by Russian citizens to buy new housing.
I’d like to stress that as we expected the average interest rate – stands at 11% per annum. Moreover, the banks that obtained VEB’s credits have cancelled commissions for issuing credits. There are mortgage credits extended at lower interest rates. For example, Sberbank extends mortgage credits for several categories of employees at 9.5% per annum. There are also higher interest rates of 11%, 12% and even a bit higher. But the average interest rate stands between 11% and 11.5% per annum across the country. These are the target figures we set for this year. Not bad for a start. We can expect the amount of loans to increase significantly in 2011.
There are also proposals to expand Vnesheconombank’s involvement in housing program for the Bank to encourages not only mortgage lending but also accomplish a task of increasing housing construction.
To this end, Vnesheconombank could lend to commercial banks for them to fund projects aimed at building affordable economy-class housing. As we agreed before, this investment is to amount to 50 billion rubles, and the funding source is to be Vnesheconombank’s profits from transactions in financial markets. I’d like to remind you that the Bank generated significant profits from the increased value of Russian companies’ shares, which it bought during the crisis. And it makes sense to invest these profits in implementing housing programs. Credits will be extended at only 3%, which will allow banks to reduce interest rates for end borrowers, that is, natural persons. VEB will soon begin to finance regional and municipal projects to upgrade utilities infrastructure. The Bank will use public-private partnership mechanisms to modernize water and heat supply systems, municipal transport and other facilities. The Bank will commit two billion rubles for these purposes annually. And one more point: this year Vnesheconombank has raised more than $5 billion for a period of up to 15 years in the international market. It is the first time that a Russian lending institution has raised funds on such favorable terms. The Bank has also successfully placed ruble-denominated bonds worth 25 billion rubles. This testifies to the increased trust in Russian banks and shows that Vnesheconombank’s team is comprised of real professionals.
Let’s start our discussion.
On Financing the Far Eastern Deep Timber Processing Integrated Facility Construction Project
In the course of the United Russia Party’s Interregional Conference “Development of the Far East 2010-2012” State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ entered into an Agreement on providing credit resources worth 97.3 million US dollars to OJSC Dallesprom (incorporated in the Evraz Group S.A.).
Credit resources are intended for financing the first stage of the Far Eastern Deep Timber Processing Integrated Facility Construction Project. The Project provides for the construction of a sliced veneer production facility with an annual capacity of 300 thousand cubic meters in the city of Amursk (the Khabarovsk Territory). The total value of the production facility’s first stage is 139 million US dollars.
The Concept for Constructing a Far Eastern Deep Timber Processing Integrated Facility in the Khabarovsk Territory provides for building a complex complementary timber processing production facilities ensuring a non-waste use of timber logged by OJSC Dallesprom. The Project is to be implemented in two stages.
The first stage of the Project aimed at constructing an integrated facility is included in the list of top-priority timber development projects. The project’s implementation would create 232 new jobs in the city of Amursk, annual budget revenues in budgets of all levels are expected to amount to 253 million rubles.
The second stage of constructing a Far Eastern deep timber processing integrated facility provides for increasing industrial output volumes of sliced veneer, dried sawn timber, creating pulp chips and MDF plates production facilities as well as for launching production facilities to manufacture pulp in the amount of 700 thousand tons per year.
Vnesheconombank’s corporate governance bodies approved the Bank’s participation in ten projects implemented on the territory of the Far Eastern Federal District. The total value of these projects is more than 144 billion rubles, with Vnesheconombank’s participation share being more than 68 billion rubles.
The projects financed with Vnesheconombank’s participation include: the project to construct a timber processing complex to manufacture chipboards and sawn timber in the Vanino district (the Khabarovsk Territory), the project to build a family of Russian Sukhoi Superjet 100 regional aircraft, the project to reconstruct and upgrade the Khabarovsk oil refinery, the project to build a new passenger terminal in the Vladivostok International Airport, the project to build an automobile and auto components production facilities in the Primorsky Territory and others.
Press Office of Vnesheconombank
Contact person: Ekaterina Karasina
Phone: +7 (495) 608-46-93, Fax: +7 (499) 975-21-34