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EBRD supports logging operations in Russian, Lithuanian, Latvian and Estonian forests with innovative financing structure
An agreement to set up a new financial vehicle which will support the development of environmentally responsible forestry operations in the Russian Federation, Lithuania, Latvia and Estonia, was signed yesterday by the European Bank for Reconstruction and Development. Thomleaseco AB, the new joint venture leasing company, which is owned by Thomesto Trading Companies of Finland, and Finnfund, the Finnish Fund for Industrial Co-operation Ltd, will lease urgently needed logging equipment, such as harvesters, trucks and chain-saws, to six private logging companies in the region.
The project is unique, not only for the EBRD but also for the region, because it is the first time that a leasing company has been used to finance small-sized logging companies, that otherwise may not have been able to attract international financing. The project will also directly create up to 670 new jobs in the region.
Ron Freeman, First Vice-President of the EBRD, said: "The innovative lease-financing structure of this project is the first of its kind to benefit the forestry industry in the Russian Federation, Lithuania, Latvia and Estonia, and will permit the development of a key sector in the region. The project will improve the management of forest resources by introducing Scandinavian logging techniques which are widely recognised as the most environmentally responsible available and with the involvement of an experienced industrial partner, will generate critical hard currency revenues for the countries".
Mr L.J. Jouhki, President and CEO of Thomesto Trading Companies, said: "This is only the first phase in our cooperation with the EBRD. Both parties have worked very hard in every detail to get this deal through. It has taken time and energy, but now we are extremely delighted with the EBRD's participation and support to our project".
Thomesto Trading Companies has extensive experience in the forestry business in the former Soviet Union, and accounts for more than 40% of the volume of wood imported from the former Soviet Union into Scandinavia.
The total cost of the project is ECU 10 million, including a loan from the EBRD of ECU 3.5 million.
In a recent report, the World Wildlife Foundation of Switzerland notes that the Scandinavian input is "an interesting example of Western participation in forestry ventures in Russia" and that "western companies could serve as instruments for an introduction of a use of the natural resources that is less wasteful than at present".
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