VNESHEKONOMBANK AND EURASIAN DEVELOPMENT BANK EXTENDED FACILITY FOR TIKHVIN WAGON WORKS TO $660 MILLION

The Eurasian Development Bank (EDB) and the State Corporation «Bank for Development and Foreign Economic Affairs (Vneshekonombank)» extended their facility for the construction of the Tikhvin Wagon Works (TVZ) in Leningrad Oblast from $430 million to $660 million. Thus, the commitments of each Vneshekonombank and EDB will amount to $330 million.

An agreement between Vneshekonombank, EDB and TVZ on a non-revolving credit line to finance a high-tech wagon works in Leningrad Oblast was signed in October 2008. The loan is being utilised to construct the works, purchase equipment, and commissioning the works.

The extension was necessitated by increased automation and capacity of the manufacture of new generation wagons and highly demanded car casting.

The total capital expenditure for the construction of TVZ exceeds $1 billion – this is the most sizable mechanical engineering facility now under construction in Europe. It will be commissioned in a phased manner during the next year.

The project is being implemented with support from the ICT investment and industrial group, and construction and equipment are the responsibility of ICM (a joint venture of ICT and BARAN Group of Israel). The company has a full production cycle and is capable of manufacturing modern, new generation freight cars with improved performance characteristics.

The demand for the new facility’s products will be driven by the need to renew the existing obsolete car fleet, a dramatic increase in demand for new generation freight cars and rail freight services, and the expansion of 1,520-mm gauge networks.

This project is fully in line with the mission and strategy of both banks, as it:

• will secure mass production of new freight cars and contribute to the development of the transport sector in Russia by enhancing the efficiency of railway transport and preventing accidents resulting from the use of obsolete cars;
• will allow 3,500 new jobs to be created, and generate tax revenue;
• has a high value added and belongs to one of the EDB’s priority sectors (mechanic engineering and transport);
• will contribute to Russia’s economic integration with EurAsEC and the CIS by strengthening the transport system of Russia and the common transport space of the CIS, and increasing export to the region’s countries.

The State Corporation «Bank for Development and Foreign Economic Affairs (Vneshekonombank)» was founded pursuant to the Russian Federal Law “On the Development Bank” by means of reorganisation of the former Soviet Vneshekonombank in 2007. Today Vneshekonombank is one of the development institutions aimed at eliminating infrastructural barriers to economic growth, enhancing the efficiency of natural resources, developing high-tech industries, realising the innovative production potential of small and medium-sized businesses, and supporting export of industrial products and services.

Detailed information about Vneshekonombank is available at: https://www.veb.ru