Support for Single Industry Towns

Annual Report 2013
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# Support for Single Industry Towns

In the year under report, Vnesheconombank continued to develop its activities aimed at the support for and diversification of the economy in single industry towns.

Vnesheconombank participates in financing projects designed to ensure the stable operation and modernization of the existing backbone enterprises, projects on the construction and reconstruction of critical infrastructure, as well as projects on the setting-up of new manufacturing facilities.

In 2013, Vnesheconombank proceeded to finance 6 of such projects for the total amount of RUB 110.8 bn, with Vnesheconombank’s commitment standing at RUB 67.7 bn.

The amount of loans extended by Vnesheconombank to deliver projects in single industry towns increased over the year by almost 61% to reach RUB 97.8 bn as at 01.01.2014 (against RUB 60.7 bn as at the beginning of 20135). As at the reporting date, Vnesheconombank took part in the financing of 16 of such projects. In 2013, Vnesheconombank extended RUB 42.7 bn to finance projects in single industry towns.

Furthermore, one more project totaling RUB 16.5 bn was approved for financing, with Vnesheconombank’s commitment standing at RUB 6.8 bn.

Overall, since its inception as a development bank till the end of 2013, Vnesheconombank rendered financial support to 24 projects delivered in municipalities that enjoy, since 2010, the single industry town status. The financing of 8 projects totaling RUB 27.3 bn is completed, with more than RUB 19.3 bn worth of loans extended by Vnesheconombank for their delivery having been fully repaid.

Still another 8 projects totaling RUB 38.9 bn are at different stages of consideration by Vnesheconombank. Vnesheconombank’s intended commitment approximates to RUB 31.0 bn.

Delivery of the projects, whose financing by Vnesheconombank is completed, underway or intended, would help create some 6000 jobs.

At the end of 2013, in compliance with the Russian Government’s Instruction dated 12.11.2013 No. DM-P12-84pr, paragraph 9, and in order to step up its efforts to launch investment projects in single industry towns, Vnesheconombank took a decision to establish a project office (the Project Office) based on its subsidiary to procure single industry town development projects.

The Project Office would focus on the search for and selection of investment projects in single industry towns, preparation of pre-procurement and project documentation and fundraising, as well as on information support to their delivery.

Following an easing in requirements to the total value of investment projects on single industry town development eligible for financing by Vnesheconombank (to RUB 1 bn), and to the minimum amount of such financing (to RUB 0.5 bn)6 Vnesheconombank in 2013 took measures to select the respective projects and built a pipeline of 38 projects for further consideration.

5 Due to adjustments in approaches to the categorization of loans extended to finance single industry town projects, the respective changes were made to the amount of the respective loan portfolio as at 01.01.2013.

6 In compliance with the amendments made to Vnesheconombank’s Memorandum on Financial Policies in December 2012 (Resolution by the Russian Federation Government No. 2311-r dated 10.12.2012).

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