Project description
and objectives:
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Volkswagen AG is constructing (2007-09) a greenfield automobile assembly plant (the “Project”) in the Russian Federation for a total equity and debt investment of approx EUR 1,042 million. The Russian entity, “OOO Volkswagen Rus”, will begin production of “semi-knocked down” cars in October 2007. The production of “completely-knocked down” cars will begin in early 2009.
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Transition impact:
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The transition impact potential of the Project is derived primarily from the positive influence of a reputable foreign strategic investor on the restructuring and modernisation of the Russian automotive industry. The popularity of Volkswagen cars in Russia ensures the Company a strong position on the domestic market. Volkswagen is world-renowned for its quality, efficiency, and engineering achievements. Local production will enable the Company to demonstrate these attributes in the Russian automotive industry, thereby influencing local producers and improving industry standards. Strengthening competition within the sector as well as setting product quality, technological and business standards will be major contributions to this process.
Strengthening of market interactions and linkages in other related sub-sectors is another potential transition merit of the Project. VW Rus will be working together in a quasi-vertically integrated structure with local supply companies and service providers. This is likely to have a two-fold impact – drawing FDI parts suppliers into Russia and providing a new but demanding market for domestic parts suppliers. This should lead to increased competitiveness and quality of domestically manufactured Russian motor vehicles, as well as set higher standards in the Russian automotive production industry.
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The client:
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OOO Volkswagen Rus will operate the greenfield automotive assembly plant near Kaluga City (Kaluga Oblast), Russia. The Project Sponsor will be Volkswagen AG, the largest auto manufacturer in Europe.
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EBRD finance:
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In addition to the equity contribution already signed by the EBRD for this Project in December 2006, an additional syndicated loan facility of EUR 750 million (ruble equivalent) will be provided to Volkswagen Rus. The EBRD’s portion of the total Project comprises EUR 30 million in equity and up to EUR 250 million of the syndicated loan.
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Total project cost:
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Up to EUR 1,042 million: EUR 292 million as equity and EUR 750 million as syndicated debt (ruble equivalent).
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Environmental impact:
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An Environmental Analysis, including a site visit by the Bank’s Environmental Specialist was undertaken as part of the Bank’s initial equity transaction. The environmental investigations confirmed that all of the new production facilities will be constructed and operated to VW’s high environmental standards and will be in compliance with similar plants in Europe and best international environmental practice. An environmental action plan (EAP) has been developed and includes the implementation of an EMS (ISO 14001), design and implementation of VOC abatement, and any other operations falling under EU IPPC requirements. As part of the current transaction, further environmental due diligence will be undertaken to assess the status of implementation of the EAP and to address any other environmental and social issues that may have arisen since the initial due diligence.
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Technical
cooperation:
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None.
For consultant opportunities for projects financed by technical cooperation
funds, visit procurement
of consultants.
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Company contact:
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Mr. Volker Riemann, Managing Director
OOO Volkswagen Rus
Telephone: +7-4842-718-051
Email: volker.riemann@volkwagen-rus.ru
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EBRD contact:
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Alexei Sheloukhin, Operation Leader: shelouka@ebrd.com
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Business opportunities:
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For business opportunities or procurement, contact the client company.
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General enquiries:
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EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168; Fax: +44 20 7338 7380
Email: projectenquiries@ebrd.com
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