“Our Projects’ Implementation Will Make it Possible to Create up to 36 Thousand Jobs in Mono-Cities

- Will you tell us about Vnesheconombank’s role in modernizing mono-cities?

- As a state-run development institution VEB provides support for mono-cities along the two lines of activity. On the one hand it’s the activity undertaken by the Governmental Working Group on Modernizing Mono-Cities, which I am in charge of. This Group is responsible for selecting infrastructure projects for them to be funded from the budget. It is within this line of the Bank’s activity the Working Group worked out all the decisions on providing state support for mono-cities. In 2010-2011, about 25 billion rubles were made available under this program. A part of this amount was used to repair apartment buildings and relocate people from unfit for use housing stock. In addition, 2 billion rubles were allocated to provide support for small and medium-sized enterprises. And about 15 billon rubles were made available to fund the construction of infrastructure. Upon implementing each project there was a specific set of infrastructure in each city. By infrastructure here I mean power transmission lines, water pipe lines and sewage treatment plants.

The second line of activity: As a credit institution Vnesheconombank forms a prospective portfolio of investment projects scheduled to be implemented in mono-cities. We select projects that might radically influence development of territories and become points of industrial growth. As of today, we have 37 mono-city projects worth more than30 billion rubles in our portfolio. Their implementation will make it possible to create 36 thousand jobs.

- Could you tell us about these projects and their specifics in more detail? What are the criteria for selecting projects? Who can turn to the Bank for financing?

- Portfolio structure of mono-city projects is extremely diverse both in terms of sectors and priorities. In our Bank’s portfolio we have projects associated with financial rehabilitation, deep modernization of traditional city-forming production facilities and with boosting their competitive edge (OJSC KAMAZ, OJSC Helicopters of Russia). There aren’t many of them: only 9 out of 37. Most projects are aimed at creating alternative production facilities in mono-cities.

If we look at our portfolio’s regional structure we can see that the Volga Federal District is in the lead (63%), specifically, the Republic of Tatarstan. Tatarstan mono-cities have the best indicators of infrastructure facilities readiness. The facilities were created through using federal budgetary funds as part of supporting mono-cities.

It should be stressed that the Bank supports not only the infrastructure construction projects financed through using federal budgetary funds (for example the solar modules plant in the city of Novocheboksarsk) but also projects in other mono-cities. These include the project on the construction of an ammonia processing complex in Mendeleevsk of the Republic of Tatarstan and a project in power engineering in Tutaev of the Yaroslavl region.

I’d also like to tell you about industrial and techno parks as one of the most advanced forms of diversifying mono-cities’ economy.

Our experience in implementing the state program showed that out of the funds committed to mono-cities 30% was used to create industrial parks and often on a brownfield basis, that is, on the basis of abandoned areas of city-forming enterprises. This form of implementing projects proved to be less risky and more profitable, because here we have infrastructure in place and there are often companies responsible for servicing primary production facilities and there are no problems with electricity, gas and water.

Engaging an investor with an anchor project into an industrial park encourages the development of small and medium-sized enterprises. And this gives a significant impetus for increased business activity in the region.

For example, the Master Industrial Park in Naberezhnye Chelny in the Republic of Tatartstan. It is comprised of more than 180 residents including those from neighboring entities. More than 2 thousand jobs were created in this park. The budget effect from this park’s companies’ activities has already amounted to more than 3.5billion rubles. I’d like to cite you another example - the Sokol Park in the Vologda region. In 2010, under the state program of modernizing mono-cities, federal funds worth 109.2 million rubles were provided for the construction and reconstruction of this park’s engineering infrastructure facilities. At the same time, the construction of a biofuel production plant on its territory has already been completed. All in all, more than 20 residents are scheduled to be deployed in the park. In parallel to funding major anchor projects included in comprehensive plans for modernizing mono-cities, Vnesheconombank provides support for small and medium-sized enterprises through its subsidiaries, namely, Globexbank, Svyaz-Bank and SME Bank.

- Mono-Cities are factually an open niche for opening production facilities alternative to city-forming ones. To put it differently, this sector should be attractive for business and private investments. Nevertheless, VEB is actively participating in such projects. What’s the reason for this?

- I wouldn’t say that mono-cities are the most attractive places. Moreover, investors are often reluctant to put their money in them. What is a mono-city like? A mono-city is an old driving force of economy. They used to be the cities where such large sectors as defense industrial and research complexes developed. These are such cities as Togliatti, Naberezhnye Chelny, Zheleznogorsk, Sarov and former Arzamas-16. As a state development institution Vnesheconombank should do its best to engage investor in them.

Program “Development Projects” as of 16.06.2012