- The loans and guarantees given by VEB.RF in H1 2021 exceeded RUB172bn and RUB140bn respectively;
- VEB.RF’s primary investment focus was on industry, infrastructure, exports and SMEs.
In the first half of 2021, VEB.RF lent above RUB172bn, which is 1.8 times more than in 2020 (RUB95.4bn). VEB.RF’s guarantees issued within that period exceeded RUB140bn, more than two times more year-on-year (RUB66.4bn).
Key areas of VEB.RF’s investment in the first half of 2021 included industry, infrastructure, exports and SMEs.
Nikolay Tsekhomsky, VEB.RF First Deputy Chairman and Member of the Board:
“VEB.RF is active in investing in major national projects in partnership with commercial banks. Specifically, in the first half of 2021, we invested in the construction of Arctic LNG-2 plant and in partnership with our partner banks provided financing for Russia’s first green steel mill in Vyksa.
The total amount of financing provided by VEB.RF for industrial and infrastructure projects including urban economy was 178.2 billion roubles and 12.1 billion roubles respectively. More than17.7 billion roubles were allocated to finance Russian high-technology exports. In particular, we provided first rouble-denominated loans to our counterparties in the Republic of Uzbekistan. We launched financing for a whole range of transactions for the supply of Russian-made power and mining equipment, municipal vehicles and special equipment.
In addition, VEB.RF will financially support a comprehensive modernisation of the Taganrog tram system. The respective agreement was entered into between VEB.RF and Sinara - Urban Transport Solutions at the St. Petersburg International Economic Forum. The total project value is 11.8 billion roubles. We have recently signed a loan agreement to finance a strategically important infrastructure project for the construction of a new passenger terminal at the Tolmachevo airport in Novosibirsk. In partnership with Sberbank, we intend to invest 13.9 billion roubles in this project, with the first tranche to be provided as early as July”.
Under the new low-interest lending programme to provide businesses with 3% loans aimed at helping companies to retain their employees and recover businesses, VEB.RF issued surety bonds totalling RUB104.6bn to commercial banks.
According to the new strategy, VEB.RF’s key objective is to invest about RUB850bn in Russia’s economy in 2021 and assume obligations to finance new projects totalling RUB750bn.
The new strategy specifies six key areas of VEB.RF Group including major industrial projects, infrastructure, exports, small and medium-sized businesses, information technology and innovations, and urban economy.
VEB.RF Offers Russian Export Expansion Options at Innoprom’s Forum in Yekaterinburg
As stated by VEB.RF Deputy Chairman Daniil Algulian at Innoprom’s forum in Yekaterinburg, Russia has formed an export support system in recent years with VEB.RF Group being its integral part. “As late as 15-20 year ago, we discussed a lack of systemic government support for exports in Russia,” he said, speaking at the session entitled Government Support for the Industrial Sector 2.0. “Now, we may definitely state that such system has been created.” VEB.RF’s export support currently exceeds RUB330bn, with projects underway in more than 30 countries.
He came up with some ideas which VEB.RF considers potentially worthwhile for further expanding Russia’s non-resource non-energy exports. These include the establishment of Russian trade companies abroad. Russian Trade Company Hua No E San (华诺俄翔贸易有限公司) opened in China by VEB.RF and the Russian Export Centre (REC, part of VEB.RF Group) is a pioneer company established for such purposes. “The company’s function is to be an intermediary offering not only advisory services, but also financial instruments to support the efforts of Russian companies to enter international markets,” Daniil Algulian said. “I believe that such instruments are extremely important for the promotion of Russian-made products in key regions, especially in emerging markets.”
Other support measures mentioned by Daniil Algulian also include Russian industrial zones abroad. The creation of the Russian industrial zone in Egypt approved by the leaders of the two countries in 2018 will become a pilot project. About 40 Russian companies have already stated their intention to participate in the new project.
Promoting the development of competencies among Russian EPC-contractors is also viewed as an important measure. Such contracts are common for major investment projects where contractors are involved in the end-to-end project cycle and are responsible for construction risk management. This will help to engage Russian manufacturers of equipment in major industrial projects.
VEB.RF’s Green Finance Committee has recognised Atomenergoprom bonds as being compliant with VEB.RF’s Green Finance Guidelines. This is the third issue of green bonds evaluated as to compliance with the Green Finance Guidelines. As in two previous evaluations, Expert RA rating agency acted as an independent verifier.
The bonds are designed to refinance the issuer’s investments in previously incurred expenses of VetroOGK, a company managed by NovaVind (wind power division of Rosatom), under the project for the construction of a 660MW wind power station and a wind-driven powerplant as related to constructing 660MW wind power stations. The total issue value was RUB10bn.
The project includes the construction and operation of five wind power stations in the Republic of Adygea, the Stavropol Territory and the Rostov Region. The CO2-equivalent emissions will be reduced by nearly 393 thousand tonnes per year.
According to Expert RA estimates, the activities of Rosatom as a whole and its bond issuing subsidiaries in particular comply with the UN Sustainable Development Goals Nos. 7, 8, 9, 12, 13 and 17.
“This project fully meets VEB.RF’s objectives of creating in Russia a fully-fledged green finance market,” First Deputy Chairman of VEB.RF Alexey Miroshnichenko said. “Wind power is one of the most indisputable sectors in terms of its environmental impact, and we hope for more wind power projects to be launched in Russia.”
The Green Finance Guidelines have been developed by VEB.RF for the Russian financial market and are currently being approved by the Russian Government. The Guidelines are aimed at defining a concept of the Russian green finance market and stimulating the green finance development. The Guidelines are available on VEB.RF’s official website, section Sustainable Development.
VEB.RF and Russian Trade Company in China (RTC, a subsidiary of VEB Asia Limited and Russian Export Center) organised a round-table discussion on 28 June about the prospects of increasing the Russian exports to China. The discussion was centered on the joint report by VEB and RTC entitled From Minor Flourishing to Economic Self-Sufficiency: Industrial Priorities of the 14th Five-Year Plan and Opportunities for Russia. The authors analysed the new five-year plan of China’s development adopted in March 2021 and specified high potential industries that may be worthwhile for Russian exporters.
According to the authors, the leitmotif of the new five-year plan is China’s commitment to economic self-sufficiency and import substitution in key industrial sectors and fundamental technology. “China’s striving for technological and economic self-sufficiency defined in the 14th five-year plan is directly attributable to the deteriorating political situation, enhanced range of China’s industry infrastructure, latest trade wars and the pandemic, along with China’s solid middle class with good purchasing power,” the report authors noted.
“Developing country expertise is critical for a company operating abroad and serving as ‘a window on the real world’ for a large number of exporters,” VEB.RF’s Deputy Chairman and Member of the Management Board Daniil Algulian noted in his opening remarks. “We highly appreciate RTC’s report. VEB.RF Group’s key goal is to increase Russian non-resource exports as instructed by the Russian Government and specified in VEB.RF’s strategy, and understanding the trends on the Chinese market most important for Russian exporters will help to achieve it”.
Most promising sectors specified in the report include manufacturing electric and self-driving cars, robotics, renewable energy, and production of new materials and composite materials. Russian traditional exports should be enhanced to include these areas apart from oil and gas, timber, agriculture and food production sectors where most significant progress has been made recently.
Among the speakers was Russian trade commissioner in China Alexey Dakhnovsky who confirmed the necessity of export diversification, while noting that trade ties between the two countries have been actively developing lately, especially during the pandemic. “According to Chinese customs statistics, the quarter-on-quarter growth rate was 23.6% in the first quarter of 2021, bilateral trade stood at 50.7 billion US dollars, while the Russian exports and imports reached 27.7 billion US dollars and 22.9 billion USD dollars respectively,” he said.
The participants also discussed the importance of encouraging payments in national currencies. According to the Russian embassy in China, payments in national currencies between the Russian Federation and PRC reached 25% in 2020. Chairman of RTC’s Board of Directors Artyom Sharov said that an increasing number of Chinese and Russian companies are switching over to settlements in national currencies. “We have opened an account with Shanghai branch of VTB Bank, accounts with Chinese banks, conducted several rouble-denominated transactions, and we intend to expand the settlement opportunities,” Artyom Sharov said.
The round table discussion also involved Chairman of the Management Board of Eximbank of Russia Azer Talybov, First Deputy Head of Russian Railways’ Centre for Corporate Transportation Services Alexander Khatianov, and Deputy Director of EEC’s Trade Policy Department Nurgul Aitbayeva. The event hosted more than 170 guests and was held at VEB.RF’s new venue Urban Laboratories.
VEB.RF Provides First Tranche to Finance Supply of Russian High-Technology Equipment to Uzbekistan
The first RUB330mn tranche was transferred to Almalyk MMC to finance export contracts with Mining Engineering, NPGM and Elektromash.
VEB.RF began financing the supply of Russian mining machinery to Uzbekistan under the large-scale programme to modernise one of Uzbekistan’s largest mining and smelting companies.
VEB.RF and Almalyk MMC signed a RUB1.8bn facility agreement in November 2020.
Daniil Algulyan, Deputy Chairman of VEB.RF:
“This is the second transaction financed by VEB.RF as part of a comprehensive modernisation of Almalyk MMC. VEB.RF had previously fully financed the supply of BelAZ 220-tonne haul trucks, with Russian components exceeding 30 percent.”