Translated material
There is no shortage of funds
Vnesheconombank approved projects worth $2 billion
Vladimir Putin yesterday held a regular meeting of the supervisory board of the state corporation Development Bank. Under the chairmanship of the prime minister, council members approved VEB's participation in several large-scale projects totaling about $2 billion. As VEB Chairman Vladimir Dmitriev said yesterday, there is enough money for everyone - the bank "does not experience a shortage of funds to implement its projects."First of all, the head of government, who, according to the law on the Development Bank, heads the supervisory board of the state corporation, singled out for discussion the program for the financial rehabilitation of the Sevmash shipbuilding plant - in the summer, the prime minister personally became acquainted with the problems of the enterprise. “VEB’s participation will help the plant get back on its feet and put its financial affairs in order, which means that opportunities will be created for sustainable development and updating the technological base of Sevmash,” the prime minister said yesterday. However, the cost of VEB’s participation in the Sevmash production program has not yet been determined, and therefore was not approved yesterday.
Everything is more certain with the rest of the applicants for the Development Bank's funds. The head of government proposed to make a decision on financing the investment plans of the largest Russian titanium producer VSMPO-Avisma, control of which belongs to the state corporation Russian Technologies - the funds should go to support the production of modern materials and alloys, the introduction of energy-saving equipment (as is known, the head of the government previously Russian Technologies Sergei Chemezov approached Vladimir Putin with the idea of supporting VSMPO with budget money worth $500 million). VEB's participation in financing the VSMPO-Avisma investment program will amount to RUB 9.388 billion. with a total volume of the five-year program of 26 billion rubles. Another source of financing for the investment program should be a syndicated loan from Western banks in the amount of about $400 million (its organizers will be Barclays, Calyon, Societe Generale and UniCredit).
Another item on the agenda was Vnesheconombank’s participation in the construction of Olympic facilities, namely the Rosa Khutor ski resort. “Our task is to create a world-class sports and tourism center in the Sochi region, which will be popular with both professional athletes and numerous winter recreation enthusiasts,” the Prime Minister urged, in which VEB should assist. For the implementation of the project for the construction and operation of the Rosa Khutor ski resort in Krasnaya Polyana, which provides for the creation of a year-round sports and tourist complex, the Development Bank will allocate up to $750 million for a period of 15 years. As part of the project, it is planned to build a number of Olympic facilities, including a ski center, a snowboard park, ski slopes for all ten types of Olympic ski disciplines, as well as hotel infrastructure facilities. The total cost of the project will be $1.375 billion.
The Supervisory Board also approved a project in the field of aircraft construction, and a very extraordinary one at that. We are talking about the production in Russia of ultralight jet aircraft Eclipse with a capacity of up to six people (the cost of one such aircraft is about $1.6 million). VEB will fully finance the project, the total cost of which is $330 million. It is expected that construction of a plant for the production of Eclipse 500 aircraft will begin in the spring in Ulyanovsk and the first 50 aircraft will be built next year.
Among other projects approved yesterday by VEB’s supervisory board is the bank’s participation in the project for the construction of a complex for the production of ammonia, methanol and granulated urea in the Republic of Tatarstan (up to $350 million) and the establishment of a target lending limit for Development Bank of Kazakhstan JSC for opening a credit lines in the amount of up to $300 million with a repayment period of up to 15 years (funds will be provided to support the export of industrial products and services of Russian enterprises to Kazakhstan).
“We are not heavily tied to the foreign market. We primarily use bilateral, club and closed-end transactions to finance projects. The same funds that we currently have on the interbank lending market will be released as needed and used for credit operations,” Vladimir Dmitriev explained the bank’s lending capabilities. He also said that VEB does not plan to make changes to its credit policy.
At the same time, VEB may have new powers. Last week, Minister of Regional Development Dmitry Kozak made a proposal to approve VEB as the only investment consultant, whose conclusions would be taken into account when making decisions on the allocation of financing from the Investment Fund. Such a procedure, according to Mr. Kozak, would reduce the costs of investors for preparing projects at the initial stage.
Vladimir Dmitriev confirmed his readiness to take on such a role yesterday, and VEB is also discussing the possibility of accumulating the Investment Fund's funds, which are currently stored in federal treasury accounts, in bank accounts. “It makes common sense for funds to be accumulated in VEB accounts, which will allow for control over their use in the current regime,” explained Mr. Dmitriev. Until such a decision has been made, the government does not rule out the possibility for VEB to participate in managing the funds of the National Welfare Fund. As Deputy Prime Minister and Minister of Finance Alexei Kudrin said yesterday, the transfer of part of the fund’s funds under the management of Vnesheconombank will “positively” affect the efficiency of the placement of funds.