Government and VEB.RF to Develop Mechanism for Participation in PPP Projects

The Russian Government and VEB.RF will develop a mechanism for VEB.RF’s participation in public-private partnership (PPP) projects and establish the criteria for projects that will require a development institution’s participation. The main goal is to distribute risks and attract investment. These measures are specified in the instructions given by Russian President Vladimir Putin following the plenary session of the Eastern Economic Forum.

The instructions say, “In order to control the economic feasibility of risk distribution between the public-sector and private-sector parties to public-private partnership agreements and stimulate private investment in the economy of the Russian Federation, the parameters and mechanism shall be determined for the mandatory participation of State Development Corporation VEB.RF in public-private partnership projects.” Russian Prime Minister Mikhail Mishustin and VEB.RF Chairman Igor Shuvalov are to submit a report by February 15.

The new rules will take effect next year, since changes must be made to regulations before 1 March 2025. According to VEB.RF’s Chairman, the changes will bring added impetus to the Russian public-private partnership market.

“In the near future, we will jointly determine the parameters and mechanism for VEB.RF’s mandatory participation in projects that are high on the government’s list of priorities,” said Igor Shuvalov.

According to Igor Shuvalov, the public-private partnership agenda is traditionally among the main priorities of development banks worldwide, and “VEB.RF has all the necessary competencies and expertise.”

VEB.RF can control risk distribution in PPP projects, which will also help to attract private investment in the country’s economy. “In the new configuration, it is intended that VEB.RF will have a special role as the president said. It is important to make sure that a balance of interests of the public-sector and private-sector parties is achieved and that project risks are distributed equitably,” said Igor Shuvalov.

“We have a lot to do as per the president’s instructions: improving the legal framework, introducing a modern system to analyse risks and obligations of the parties, constantly monitoring projects and comprehensively assessing their outcomes,” said Andrey Samokhin, Chief Managing Director, VEB.RF, and General Director, National PPP Development Center. According to Andrey Samokhin, the National PPP Development Center is in contact with Russian regions and cities about PPPs. It monitors projects, trains teams, and ranks cities by PPP maturity. “I am confident that given the large scale of VEB.RF’s objectives of promoting PPPs, the National PPP Development Center will be able to act as a single methodological centre in several areas. We expect that this work will result in PPPs taking a more active role in the economy and in improving quality of life,” said Andrey Samokhin.

Russian public-private partnerships modernise public utility facilities, renew transport infrastructure, build schools, bridges, airports etc. As Vladimir Putin said at the Eastern Economic Forum, these projects currently account for less than 3 per cent of GDP, or 4.4 trillion roubles. He proposed that VEB.RF should always be involved in PPP projects “due to its experience and expertise in technological sovereignty projects.”

VEB.RF and Sber Jointly Begin to Finance Vegetable Oil Extraction Factory Construction in Altai

An amount of over 1.26 billion roubles was allocated to finance construction, as well as purchasing process equipment and steam boilers, including those for the construction of an in-house cogeneration station.

A syndicate of VEB.RF and Sberbank provides financing under the Project Financing Factory programme for the construction of Sigma Group’s new factory with a capacity of 1,200 tonnes of processed oilseeds per day. The new facility is designed to make high value-added products. The total project value exceeds 17 billion roubles, including 14.9 billion roubles lent by the syndicate for a term of 12 years.

The project financing decision using the Project Financing Factory mechanism received approval in December 2023, and the syndicated loan agreement was signed in July 2024.

The project consists of two phases: the construction of oil pressing and extraction shops with an in-house cogeneration station as well as refining and packaging shops. The export potential of the project is estimated at up to 200,000 tonnes of sunflower oil and press cakes per year, or over 9.5 billion roubles. The main export destination is Asian countries. Phase 1 is scheduled for completion in mid-2027. Russian-made equipment, including a turbine, will represent up to 80 per cent of total purchases for the construction of the factory, which will reduce the risks of pressure from sanctions and delays in putting the facility into operation.

The project will improve the socio-economic situation in the Altai Territory. The two phases are expected to create up to 400 new jobs with an average monthly wage of more than 68,000 roubles indexed to prices.