Russian Ministry of Industry and Trade, VEB.RF and Egyptian Partners Agree to Expand Opportunities for Suez Canal Economic Zone
A new industrial zone will be created in the Suez Canal area where Russian manufacturers can locate their production facilities.
VEB.RF is authorised to coordinate the Russian Industrial Zone project.
Chairman of the General Authority of Suez Canal Economic Zone and Head of Egyptian delegation Yehia Zaki discussed with VEB.RF during the visit to Moscow further steps to implement the project for establishing the Russian Industrial Zone in the Suez Canal Economic Zone. Access to the Zone will create totally new opportunities for Russian enterprises for marketing Russian goods, work and services in the Middle East and North Africa countries. For the Russian part, this project is an exciting pilot initiative which in the case of success could open up new horizons in terms of supporting and promoting Russian exports.
The Zone will cover about 50 hectares at the first stage, with the opportunity of further expanding to 100 hectares.
Daniil Algulyan, VEB.RF Deputy Chairman and Member of the Management Board:
“After paused activities during the pandemic and a diminution of international cooperation, our operations are steadily gaining momentum. During the visit of our Egyptian colleagues to Moscow, we prepared and agreed the potential amendments to the intergovernmental agreement governing the Zone’s activity, held more than ten meetings with potential resident companies, and are now negotiating the specific commercial terms and perspectives of specific land plots. The Russian delegation is planning to visit Egypt in the end of August to discuss and determine the local specifics. We expect highly dynamic implementation of the Russian Industrial Zone project. This is a very interesting and unique project in terms of supporting Russian exports.”
The parties also discussed the terms which the Russian Industrial Zone could offer to potential residents. Particular attention was paid to the supply of products to the Egyptian domestic market and a flexible approach to site selection in the Suez Canal zone.
The parties agreed to expand the intergovernmental agreement and include the following options:
- an opportunity to locate Russian resident companies at any sites of the Suez Canal Economic Zone;
- guaranteed access for the residents of the Russian Industrial Zone to the Egyptian domestic market;
- regulatory recognition of VEB.RF as an authorised institution.
The project will be launched in five months on the territory adjacent to Ain Sokhna Port having a well-developed infrastructure.
Igor Shuvalov was elected Chairman of Prosvescheniye’s Board of Directors
The first in-person meeting of Prosvescheniye’s Board of Directors was attended by representatives of Prosvescheniye, Sberbank, VEB.RF and RDIF. VEB.RF Chairman Igor Shuvalov was elected Chairman of the Board of Directors.
Sergei Kravtsov, Minister of Education of the Russian Federation, gave welcoming remarks to the attendees. During the official part of the meeting, Sergei Kravtsov presented the best employees of the Prosvescheniye publishing house with government awards in accordance with the Decree of the President of the Russian Federation dated 5 June 2021.
Members of the Board of Directors discussed the company’s development strategy, key areas of support for the educational system participants, and the company’s involvement in the Education national project aimed at promoting the global competitiveness of Russian education and enabling Russia to rank among the world’s top ten countries in terms of the quality of general education.
The Board of Directors also discussed Prosvescheniye’s involvement in the PPP programme for the construction of new schools on the basis of the Group’s subsidiary, ProSchool. The concession mechanism makes it possible to attract private investment and build new schools having state-of-the-art equipment. By the resolution of the Russian Government, ProSchool has been recently accorded the status of a concessionaire, with regional and municipal authorities entitled to enter into respective concession agreements without competitive bidding.
Igor Shuvalov, Chairman of Prosvescheniye’s Board of Directors:
“We have created a partnership on the basis of Prosvescheniye, which will allow us to implement an important project for the construction of new schools. The Ministry of Education have already selected the first 95 projects for the construction of new schools in 28 regions. The construction is scheduled to be completed in 2022. Now, the second pipeline of projects is under consideration, with commissioning scheduled for 2023. This ambitious programme can be realised only if all participants consolidate their resources and efforts, and if ProSchool implements projects based on standard solutions including the library of standard design and estimate documents, and banks’ reliable packaged solutions.”
In May 2021, Sberbank, VEB.RF and RDIF agreed to make a 25% equity investment each in Prosvescheniye. This transaction is a result of long-term joint efforts devoted to develop high quality modern Russian education. The parties joined their efforts to increase access for teachers, pupils and parents all across the country to Prosvescheniye’s proven educational content. State-of-the-art digital technology, services and competencies applied by the partners will make it possible to create a new generation of educational content, develop a personified approach to each pupil and new instruments for teachers to manage the educational process. Additionally, the partnership will create the required conditions for increasing the export potential of educational products and developing school infrastructure including on the basis of PPP models.
- 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.