SHCHEKINOAZOT, VEB.RF AND GAZPROMBANK SIGNED A CONTRACT FOR A SYNDICATED LOAN FOR THE METHANOL-500 PROJECT IMPLEMENTATION[15.02.2019]
Shchekinoazot, VEB.RF and Gazprombank signed a syndicated loan agreement for implementation of a project to construct a methanol production plant within the project financing factory. The signing ceremony took place during the Russian Investment Forum in Sochi.
On behalf of Shchekinoazot, Andrey Tokarev, Deputy General Director for Financial Resources, signed the document, on behalf of VEB.RF − Deputy Chairman Yury Korsun, and Deputy Chairman of the Board Alexey Belous on behalf of Gazprombank.
The project is the third phase of a comprehensive program to increase methanol production with a capacity of 500,000 tonnes per year at the Shchekinoazot industrial site, with the introduction of which the company will become one of the largest producers and exporters of methanol in Russia. The project is in line with the May presidential decree regarding the development of exports of non-commodity, non-energy goods.
The total cost of the project is 22 billion rubles, and the decision on the participation of VEB.RF was made by the supervisory board of the development corporation in December 2018. The planned financing period is 12 years. The syndicated loan from the financial partners will be used to pay for construction and installation work, to purchase equipment produced in Russia.
“This is one of the first contracts of a syndicated loan under the mechanism of the project financing factory. This instrument aims to provide additional benefits for both the project initiator and the participating bank. This, for example, is a subsidy aimed at reducing the risk of rising interest rates, as well as sharing the risks among all project participants. Stimulating project financing is one of the objectives of the institute of development, but at the same time the share of VEB.RF participation may be minimal. We provide all the advantages for banks and the initiator, in particular, in the Shchekinoazot project the participation of VEB.RF in the mandatory tranche will not exceed 10 percent of the total project cost. The rest of the financing is assumed by the partner bank and the initiator of the project," said Yury Korsun.
“The project implementation will have a positive impact on the development of the national chemical industry, creating conditions for high-tech methanol production in the Tula Region. We hope for further productive cooperation with partners in the framework of promising projects that allow the use of modern technological advances for the development of the economy," said Alexey Belous.
“On September 7, 2018, on the day of the launch of the second methanol plant M-450 / A-135, Shchekinoazot's new project, Methanol-500, was officially launched. The opening of the plant is planned for 2022," explained Andrey Tokarev. "Starting the M-500 plant will allow the Shchekinoazot company to produce half a million tonnes of methanol per year, and to become one of the largest producers of this product in Russia. Methanol is in demand in the global and domestic markets. Today, Russian industry's methanol production capacity is substantial.
The factory financing project is an effective mechanism to support manufacturers. A memorandum of intent on implementation of the M-500 project using the capabilities of the project financing factory was signed between Shchekinoazot JSC and VEB within the Russian Investment Forum in Sochi-2018. This year, together with VEB and our key financial partner Gazprombank, we entered into a syndicated loan agreement. I thank the partners for their cooperation and understanding on all issues.”
The main idea of the factory is syndicated crediting of projects with the attraction of state subsidization of interest rates and state guarantees on bonds. The legislative framework was formed in the first half of 2018. VEB.RF acts as the factory operator. The factory is interesting for project initiators with the proposed interest rate hedging mechanism. The main interest of commercial banks is to share the risks of project financing with VEB.RF. Large commercial and regional banks have already joined the project financing factory implemented by VEB.RF. Projects with an investment volume of more than 3 billion rubles and a payback period of up to 20 years are selected for participation in the factory. At the same time, the initiator must invest at least 20% of their own funds.