VEB.RF and Gazprombank Support KuibyshevAzot’s New Production Facility
Work on building a nitric acid and ammonium nitrate solution production facility will be financed under the Project Financing Factory
The facility will be built using state-of-the-art energy efficiency and HSE technologies
The KuibyshevAzot production site in Tolyatti will implement a second project under the Project Financing Factory. With financial support from VEB.RF and Gazprombank, KuibyshevAzot will build a nitric acid and ammonium nitrate solution production facility (capacity: 1,575 and 2,000 tonnes per day respectively). The total project budget is RUB18.3bn (including CAPEX, VAT, investment OPEX, and contingency funds).
VEB.RF offered a comprehensive financing solution for the project, involving the acquisition of 49% of shares in the authorised capital of the borrower by VEB.RF, a syndicated loan, and letters of credit.
The RUB15.2bn syndicated loan agreement was signed by VEB.RF, Gazprombank, KuibyshevAzot (the project initiator), and Nitrocom (the borrower). VEB.RF takes on the roles of the arranger and the syndicate agent, Gazprombank acts as the collateral manager, and Bank GPB International S.A. (Gazprombank’s subsidiary) acts the foreign security agent. The project initiator will commit at least 20% to the project’s budget.
In addition, VEB.RF intends to issue uncovered letters of credit totalling EUR72.8mn for payments under the engineering and procurement agreement.
VEB.RF’s Deputy Chairman and Member of the Management Yuriy Korsun:
“Project initiators see the benefits of the Factory, and KuibyshevAzot has decided to embark upon the second project under the Factory. The project will contribute to Tolyatti’s social and economic development, first of all, by creating highly qualified jobs. The Factory has proved itself and is implementing 16 projects totalling about one trillion roubles. Four projects were put into operation, including KuibyshevAzot's sulphuric acid and refined oleum production facility (last December). Today, we have more than 30 projects with the largest Russian banks in the pipeline.”
The facility was approved by KuibyshevAzot's Board of Directors as a part of the strategic programme to boost high value-added nitrogen fertilisers production. The project is primarily designed to ensure continued supply of nitric acid and ammonium nitrate solution for KuibyshevAzot's needs which will boost domestic production and consumption of two of the most popular mineral fertilizers (ammonium nitrate and UAN solutions). The project selected the Casale Group as the general contractor.
KuibyshevAzot’s Director General Alexander Gerasimenko:
“KuibyshevAzot continues to implement investment projects to boost production and to reduce the negative impact on the environment. We are active in cooperating with Russian and foreign partners and we focus on introducing advanced technologies ensuring a high level of industrial and environmental safety. We have a good track record of efficient Project Financing Factory cooperation with professionals from VEB.RF and Gazprombank which gives us hope for successful implementation of the project with Casale. All the parties to this transaction are our reliable partners with whom we forged a constructive dialogue. Our partners bring new investment and production opportunities. KuibyshevAzot is gradually implementing its strategy to ensure efficient growth and development. We press on with expanding our product line-up of efficient compound fertilizers based on the latest international market trends and the needs of the Russian agribusiness. We find it especially important that the process solutions proposed by Casale meet the latest HSE requirements. The new production facility construction project will make it possible to upgrade our equipment in the future and to reduce adverse environmental impacts.”
Alexey Belous, Deputy Chairman of the Management Board, Gazprombank:
“To provide financing for investment projects in the chemical industry is one of the main areas of Gazprombank’s project financing, we have one of the best teams of experts in this area. We are pleased to promote our successful and reliable cooperation with our client, KuibyshevAzot. We generated synergy by bringing together highly skilled professional teams of the client and the lenders to scale up efficient financing arrangements. This is a high-value added project which is fully compliant with our investment strategy. This facility will increase tax revenues for budgets at all level thus improving quality of life in Russia.”
- The loans and guarantees given by VEB.RF in three quarters of 2021 have totalled about 535 billion roubles and 176.3 billion roubles respectively;
- VEB.RF’s primary investment focus was on industry, infrastructure, exports and SMEs.
VEB.RF lent about 535 billion roubles in the first nine months of 2021, which is 2.5 times more than in 2020 (215.1 billion roubles).
The total amount of financing provided by VEB.RF in nine months of 2021 for industrial and infrastructure projects including urban economy was 475.3 billion roubles and more than 24 billion roubles respectively. More than 26 billion roubles was allocated to finance Russia’s high-technology exports. Specifically, VEB.RF launched the financing of a whole range of transactions for the supply of Russian-made equipment to Uzbekistan and Kazakhstan.
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 104.6 billion roubles to commercial banks.
Nikolay Tsekhomsky, First Deputy Chairman and Member of the Management Board, VEB.RF:
“Since the beginning of 2021, VEB.RF has financed 28 new projects including the largest industrial facilities, such as the Kingisepp-based ammonia and carbamide production facility, the steel mill construction in Vyksa, liquefied natural gas production by Arctic LNG 2, the development project for the Korbalikhinskoye polymetal deposit in the Altai Territory, and infrastructure projects including the construction of airport terminals in Novy Urengoy and Novosibirsk, and the Ufa East Exit. VEB.RF is supporting renovation of the tram network in Taganrog, with first new trams already in operation. The construction of a tram depo has started for the Verkhniaya Pyshma-Yekaterinburg route.”
VEB.RF is focused on the socio-economic impact of financed projects. A very significant project is an ethane-containing gas processing plant in Ust-Luga. The project will be the largest gas-processing production facility in Russia bringing significant impetus to the development of the Leningrad Region and the neighbouring municipalities. With the participation of VEB.RF, a new comfortable housing estate will be built for the plant employees in close vicinity to the plant. The first tranche has already been allocated for the pre-investment phase of the project.”
According to the new strategy, VEB.RF Group’s five key focus areas include:
- Major industrial projects. Above all, this concerns export-oriented projects improving the competitiveness and expanding the use of breakthrough technology;
- Infrastructure and urban economy;
- Small and medium-sized businesses;
- Information technology and innovation.