Dmitriev: VEB to get involvedin implementing a project “the Moscow Kazan high-speed railway (HSR)”

TV Channel Russia 24
LIVE BROADCAST
08.05.2015, 14:45

HOST: We are now in touch with Maria Bondareva from the Kremlin, she is interviewing live Vnesheconombank Chairman Vladimir Dmitriev. Only a short time ago talks and a news conference between President Vladimir Putin and PRC President Xi-Jinping ended.We’re listening, go ahead Maria.

CORR.: Vnesheconombank Chairman Vladimir is next to me now. Good afternoon Vladimir Alexandrovich.

Vladimir DMITRIEV, Vnesheconombank Chairman: Good afternoon.

CORR.: Vladimir Alexandrovich, let’s start with the contracts you have signed here today. One of the contracts was signed between Vnesheconombank and the China Development Bank for an amount of 8 billion dollars. Tell us about this agreement in more detail.

Vladimir DMITRIEV: First, it should be stressed that we have been fruitfully cooperating with the China Development Bank for a long time – this is our partner bank. It performs the same functions as Vnesheconombank. We signed and implemented a whole number of agreements on funding projects in such sectors as timber processing and power engineering; we also cooperate closely within SCO. Butthe said major agreement provides for cooperation in implementing projects in the Far East. They include projects in infrastructure, power engineering and agriculture. We also hope that the China Development Bank will get involved in cooperation between development banks of the Eurasian Economic Union in implementing a project “The New Silk Road” And we are holding a dialogue with the China Development Bank and our partners from Kazakhstan and Belarus on this issue. A relevant agreement is to be signed on the issue. We believe that this format will suit our Chinese partners well and we are going to jointly explore and in the long run implement projects that are of interest for our countries.

CORR.: When could you sign this sort of agreements? Is the statement on cooperation within EAEU and the Silk Road project a main document that has been signed today by President Putin and President Xi-Jinping?

Vladimir DMITRIEV: We believe that we’ll be able to reach more concrete arrangements by this September when we mark the end of the Second World War and when the head of our state visitsthe People’s Republic of China. This is a suitable format for us to sign relevant documents in the presence of heads of state. But it’s important that the China Development Bankis not the only partner for us. We have also signed an agreement in yuans today with EximBank of China. Sberbank also signed an agreement with the China Development Bank. Basically, these are breakthrough agreements in financial cooperation between banking institutions of our countries as they open up the way not only for trade but also for investment cooperation. In this sense, a lot has to be done. Last year they signed agreements at central banks’ level on currency swaps, they are still valid with regard to trade relations,credits are extended for a tenure of 1 year at most. Through intermediary of our partners from EximBank of Chinawith the National Bank of China and the Bank of Russia we are now holding talks about expanding the format of using national currencies with the help of swaps and apply them to investment transactions for a tenure of more than one year.

CORR.: Are you going to sign any other similar agreements on mutual payments?

Vladimir DMITRIEV: It is important that an agreement signed today is not a framework one. It is a concrete agreement and it is applicable to a credit transaction, which VEB is implementing in Khakassia. It’s a project on the construction of manganese plant on the basis of deposits in the Kemerovo region. We believe that our Chinese partners can fund a part of equipment, which will be imported fromChina and end products might be in demand in the People’s Republic of China. Another agreement we are considering with our partners among other things with EximBank of China is also tied to concrete projects. It’s not a framework agreement, these are concrete transactions to be funded in the regions.

CORR.: What kind of projects are they?

Vladimir Dmitriev: These are projects in small-scale power generationon the Kola Peninsula. Our Chinese companies are experienced enough in this field and they have pretty competitive equipment they are ready to supply and EximBank of China can fund this transaction. There is also a transaction in minerals production and primary processing. In this respect we have now a project we are considering together with Nornikel. So, there are a whole number of projects that can be funded by Chinese banks. Out of them,I’d like to highlight a project on providing affordable and comfortable housing which is very important in terms of socio-economic significance. We are implementing it with the China Development Bank and the said 8 billion dollars could be usedto fund the project in which capabilities of the Housing Mortgage Lending Agency and Vnesheconombank will be employed. Affordable and comfortable housing is a large –scale project. We’ll engage Chinese contracting companies in implementing it and ensure Chinese funding.

CORR.: An agreement on cooperation on the construction of the Moscow-Kazan high-speed railwayhas been signed. And VEB plans to somehow participate in this cooperation?

Vladimir DMITRIEV: We believe that this contract will be implementedincluding throughdebt financing. Chinese banks will fund supplies of Chinese advanced equipment and machinery to implement this mega project on the construction of a high-speed railway. So, Chinese banks need Russian partners which will raise financing to lend to Russian banks or to extend guaranteesagainst credit facilities to be raised by Russian companies. That is why we believe that there is a serious potential for cooperation between banks similar to the one we already have with Exim Bank of China and with the China Development Bank.

CORR.: How do you feel about attempts by the Russian Direct Investment Fund (RDIF) and the China Construction Bank to create a mechanism for raising Chinese investmentsfor Russian companies?

Vladimir DMITRIEV: In the current situation when our capabilities to raise foreign investments are limited, we rely on those countries that are ready to fund in national currencies and that did not join sectoral sanctions. This opens up additional opportunities for raising investments for projects ensured by debt financing. We have discussed this issue directly with the RDIF management and with the management of the Russian-Chinese Investment Fund. We can see opportunities for cooperating in implementing a whole number of projects where we provide a senior tranche to fund this debt financing project, with quasi-investment andquasi-equity financing being provided through using financial resources of the Russian-Chinese Investment Fund and the China Development Bank. I think that this scheme with mezzanine financing might be attractive – on the one hand it will reduce debt burden andon the other it will ensure pretty acceptable terms of funding these investmentprojects.

CORR.: My understanding is that it’sa matter of dozens of billion dollars?

Vladimir DMITRIEV: Given RDIF’s potential as well as capabilities of the Russian-Chinese Investment Fund and the China Development Bank with which we have signed this agreement today we can say that we deal with transaction worth about 10 and more billion dollars. Let’s show that this scheme works and that it can be used by Russian and Chinese banks to fund concrete projects where part of funding is carried out not only through debt but also through equity capital.

CORR.: Thank you very much.

Vladimir DMITRIEV: Thank you.