|
EBRD lends 5 billion roubles to Russia’s Federal Grid Company
8-year loan brings EBRD support to Russian power sector to over €500 million since start of reform process
The European Bank for Reconstruction and Development has agreed to lend 5
billion roubles (the equivalent of €144 million) to Russia’s electricity
transmission monopoly, the Federal Grid Company, to fund the modernization of
infrastructure.
The eight-year unsecured loan is the largest the EBRD has made in roubles and
is the latest in a series of efforts by the Bank to provide financial backing
for the wide-ranging reform of the power sector launched by the Russian
government in 2001.Including this loan, the EBRD has advanced over €500
million to the Russian power sector in the last four years
The project funded by this EBRD loan is due to lead to a significant increase
in electricity flows from the east of the country, Siberia and the Urals,
towards central Russia, as well as greater power supplies for the Caucasus
region.
The EBRD funding is earmarked for the upgrading of two key high voltage
sub-stations, Arzamasskaya and Tsentralnaya. A Moscow blackout last May
highlighted the urgent need to rehabilitate Russia’s ageing power grid
infrastructure and particularly its substations where some 65 percent of the
equipment is estimated to be obsolete.
This modernization programme is a top priority for the Russian power sector as
a stable and reliable power supply holds the key to the efficient functioning
of the emerging competitive wholesale market. Under the first stage of the
sector’s reform, this market is allowed to account for up to 15 percent of
electricity sales.
The Federal Grid Operator was established in 2002 as part of the restructuring
of the Russian power giant RAO UES to operate the national high voltage
transmission grid. It is wholly owned by RAO UES. The Russian grid is
connected to the CIS countries, the Baltics, China, Mongolia and the Nordic
countries.
The interest rate on the Federal Grid Company loan is based on the 3-month
MosPrime rate. This reference rate was used by the EBRD when it last May
became the first International Financial Institution to tap Russia’s domestic
bond market, launching a landmark five-year Floating Rate issue to raise five
billion roubles.
Due to its rouble revenue base, OAO The Federal Grid Company UES has the
typical profile of a Russian client preferring to borrow in local currency.
The EBRD is working on a separate project involving a proposed 7.2 billion
(equivalent to €178 milion) 12-year post-restructuring loan for Mosenergo
aimed at providing finance for priority investments including the
refurbishment of several combined heat and power plants.
|
