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GAZ and KAMAZ: two Russian vehicle manufacturers benefit from EBRD loans
One of Russia’s major car and truck manufacturers, GAZ (an open joint-stock company), is to receive a US$ 20 million (ECU 15.6 million) loan from the European Bank for Reconstruction and Development (EBRD) to finance the purchase and installation of a new painting facility. The loan agreement was signed in the presence of the Russian Prime Minister, Victor Chernomyrdin, and Nizhny Novgorod’s Governor, Boris Nemtsov, by the EBRD’s First Vice President, Ron Freeman, and by GAZ President and Chairman, Nikolay Pugin, at the company’s premises in Nizhny Novgorod. The EBRD also made the first disbursement under its US$ 100 million loan to KAMAZ.
“GAZ has embarked on a broad modernisation programme which will determine its ability to survive,” Mr Freeman said. “The EBRD loan will enable GAZ to fund a crucial part of its new light truck production line. The new painting facility will enable GAZ to expand production of light trucks, an integral part of its corporate strategy for the changing domestic vehicle market, and to meet the needs of small and medium-sized private sector businesses emerging in the region.”
Facilities for manufacturing one-piece bodies for the new GAZelle, the brand name of the light truck, have already been completed by the company. However, as the existing paint facility could not take the large one-piece bodies, a new facility had to be constructed with support from the EBRD.
The Russian AvtoBank is providing US$ 5 million (ECU 3.9 million) to GAZ, as part of a parallel financing facility with the EBRD, to cover expenses incurred in the purchase of the paint facility.
GAZ currently produces the Volga passenger car, the largest family saloon car produced in Russia, and a series of trucks, with a regular annual output of 120,000 passenger cars, 70,000 light (1.5 tonne) trucks and 35,000 medium (2.5-5 tonne) trucks. It employs over 100,000 workers in Nizhny Novgorod.
The first disbursement today under the US$ 100 million loan to KAMAZ will enable the company to reduce its arrears to suppliers and employees and begin to restock its inventory. KAMAZ, which manufactures heavy duty trucks, received the loan in November this year to assist the restructuring of its truck production following a disastrous fire at its engines plant. The US$ 100 million loan is the first element in a programme by KAMAZ to raise significant additional investment. EBRD is reviewing projects for upgrades to KAMAZ’s axles, gearboxes and engines.
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