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Russia's RAO Gazprom receives EBRD loan to upgrade gas supply system
To finance high-priority reconstruction investments in Russia's gas supply system, the European Bank for Reconstruction and Development (EBRD) is extending a US$ 225 million corporate loan to RAO Gazprom, of which US$ 125 million (ECU 100 million) will be syndicated with commercial banks.
Jacques de Larosière, President of the EBRD, said: "Even though RAO Gazprom has recently gained wide access to the international loan and equity markets, the EBRD's loan is novel in the sense that it will be the first syndicated loan facility to Gazprom without recourse to its long-term export contracts or other guarantees. The EBRD has taken a highly catalytic role in order to help the company establish itself as an unsecured corporate borrower in the market."
Deputy Chairman of Gazprom, Vyacheslav Sheremet, said: "The EBRD's loan represents another fruitful outcome of three years of cooperation between our institutions, following on from the two-year extensive study on the reconstruction of the gas supply system. The EBRD's financing will allow Gazprom to increase the reliability of its gas supply and the efficiency of the system as well as improving environmental performance."
By working with the EBRD, Gazprom is committed to increasing its financial transparency. Under the terms of the loan, Gazprom is also applying the EBRD's procurement policies and rules, further enhancing its competitive tendering practices.
The US$ 225 million (ECU 180 million) loan carries a five-year term while the syndicated portion is for four years. The total cost of the investment programme is US$ 300 million (ECU 240 million).
The proceeds will be used to finance investments to improve pipeline inspection, metering, introducing mobile compressor stations and replacing valves. The loan also encompasses finance for feasibility studies to prepare for high priority reconstruction investments and to address environmental issues. These investments have been carefully chosen because of their critical importance to the efficiency of the overall pipeline operations.
Gazprom has already committed itself to improving its environmental and health and safety performance. It has developed environmental management procedures based on best international practices (ISO 14000). Further improvement and implementation of these procedures will be part of the environmental component of the EBRD's project.
Gazprom is the world's largest producer, processor and transporter of natural gas. It owns and operates a network of 140,400 km of large-diameter high-pressure pipeline, several gas processing plants, 245 compressor stations and 18 underground storage facilities. One-fifth of production is sold to western Europe, bringing in US$ 8 billion of export income annually.
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