ANNOUNCEMENT 15 Feb 2019

In February 2019, the Russian state development bank underwrote a loan to a local company to finance the construction of a sulfuric acid and improved oleum facility. 

NUMBER OF INTERVENTIONS

2

  • 2 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

VEB.RF press-release dated 15 February 2019, https://veb.ru/press-tsentr/37369/

Inception date: 15 Feb 2019 | Removal date: open ended

State loan

On 15 February 2019, the Russian state development bank VEB.RF approved a loan to the Russian plant KuibyshevAzot. The loan is for the construction of K-grade sulfuric acid and improved oleum facility with a total capacity of 500 thousand tons per year.  Both are important inputs into the KuibyshevAzot productions, the most significant of which are nitrogen, caprolactam and polyamide. The facility is to be constructed in Tolyatti, Samara region and is seen by policymakers as a step in the Russian strategy for import substitution in chemical industries.

The total project cost is 6.3 billion rubles (USD 95 million), while the VEB.RF loan is 2.5 billion (USD 38 m). 

The project will be funded under the "project financing factory" program of the VEB.RF, which is a program of syndicated loans, where the seed funding comes from the VEB.RF and the rest from the private sector. For the KuibyshevAzot loan, the private sector partner is Gazprombank. One of the stated advantages of the VEB.RF loan program is a guarantee of interest rate stability throughout the loan period. 

In addition to a loan, KuibyshevAzot will benefit from an equity purchase by VEB.RF, in the amount of 1.3 billion rubles.

 

AFFECTED SECTORS

 
Inception date: 15 Feb 2019 | Removal date: open ended

Capital injection and equity stakes (including bailouts)

On 15 February 2019, the Russian state development bank VEB.RF approved an equity purchase deal with KuibyshevAzot.

The equity purchase is part of financing made available to KuibyshevAzot towards the construction of K-grade sulfuric acid and improved oleum facility with a total capacity of 500 thousand tons per year.  Both are important inputs into the KuibyshevAzot productions, the most significant of which are nitrogen, caprolactam and polyamide. The facility is to be constructed in Tolyatti, Samara region and is seen by policymakers as a step in the Russian strategy for import substitution in chemical industries.

The total project cost is 6.3 billion rubles (USD 95 million), while the VEB.RF capital injection is 1.3 billion (USD 20 m). 

In addition to buying equity from KuibyshevAzot the VEB.RF also issued it a loan, amounting to 2.5 billion rubles (USD 38 m).