Money in the water

Vnesheconombank issued the first large loan for a housing and communal project

The State Corporation Bank for Development and Foreign Economic Affairs yesterday allocated a loan for its first project in the housing and communal services sector . Funds in the amount of 4.5 billion rubles. will be sent to the Rostov Water company, which is engaged in the construction and reconstruction of water supply and sanitation facilities in Rostov-on-Don and the southwestern regions of the Rostov region. Voda Rostov is a 100 percent subsidiary of Eurasian JSC, in which VEB owns a blocking stake. The loan was issued for a period of 14 years, while in the first five years the rate will be 9% per annum (the loan itself will not be repaid during this period, only interest will be paid), in subsequent years it will be calculated depending on the situation in the financial market, from the degree of implementation of the project and its “financial sensitivity,” the head of the bank, Vladimir Dmitriev, said yesterday.

The project for which the Rostov Water company was created was developed more than three years ago. Its total cost at the moment is 42.9 billion rubles. Last year, its first stage, designed for five years, was approved by a government commission and was recommended for co-financing from the investment fund in the amount of 7.2 billion rubles. Private investors (that is, Eurasian structures) must invest 4.9 billion rubles in the first five years. (taking into account funds already invested in the project), another 3.1 billion rubles. -- contribution of the city and region. This money will primarily be used to build infrastructure for new microdistricts of Rostov-on-Don, which are being built as part of the national project “Affordable Housing”. In five years, as Sergei Yashechkin, chairman of the board of directors of Eurasian, said yesterday, the project will become completely private and reach self-sufficiency - the Rostov Water company will be able to repay the Vnesheconombank loan.

Sergei Yashechkin names the attractive interest rate on the VEB loan as one of the reasons for the fairly rapid financial development of the project. At the same time, Mr. Dmitriev, answering the question about how much this is a market rate, explained: “We, naturally, when issuing credit resources, proceed from the basic principles of lending - urgency, payment and repayment. Of course, this bet was not formed out of nowhere. The bank's supervisory board approved the credit policy, and it contains the basic principles for the formation of interest rates. This interest rate was formed on the basis that this project is considered as a project of national importance. At the end of last year, the bank formed an authorized capital of 180 billion rubles. We consider this money, of course, as free. But if the principles of repayment and payment are observed, then for such projects the main component of the interest rate is the linking of budget funds, which are implemented in the authorized capital of the bank, with government instruments of similar duration, that is, OFZ bonds. Another component is the required margin to cover the bank’s administrative and business expenses. This is how this rate was formed.”

In addition, as Mr. Yashechkin noted, Rostov Water has agreements with the regional authorities on the principles for setting tariffs for the next five years. And now negotiations are underway on a period of 14 years - in order to further reduce the risks of the Development Bank. Deputy Minister of Economic Development Maxim Bystrov noted yesterday on this occasion that the Rostov region is perhaps the only region in Russia that is engaged in long-term planning of tariff policy, taking into account the interests of both residents and businesses, and therefore it was there that the first housing construction project was implemented -municipal infrastructure with the participation of private companies and the state.

However, as Mr. Dmitriev stated, VEB is not going to stop investing in housing and communal services at one Rostov project. Firstly, Eurasian has plans for expansion into other regions and even CIS countries (Ukraine and Kazakhstan), and the bank, as a shareholder of the company, intends to participate in them. And secondly, VEB is working on projects in the housing and communal services sector, which are going to be implemented by private companies in the Kurgan and Tver regions, and not only in the field of water supply and sanitation.

Ivan GORDEEV