The Russian government has for the first time created a special fund that will provide EUR 40 million over the next five years, mainly to help underpin the preparation of EBRD projects in Russia and thus support the development of the Bank’s business in its largest country of operation.
The EBRD has invested over EUR 23 billion in Russia since its creation in 1991.
Russia, a founding member of the Bank in 1991, has in general long been an important contributor of so-called Technical Cooperation (TC) funds which mainly provide vital financial support at the early stages of projects. However, this is the first time it setting up a dedicated fund to back EBRD investments in Russia.
An agreement setting up the new fund was signed on the 21 June 2013 on the sidelines of the St. Petersburg Economic Forum by the President of the EBRD Sir Suma Chakrabarti and Russia’s Minister of Economic Development, Andrei Belousov.
Not too many people outside development banks are familiar with the concept of Technical Cooperation funding, but this type of donor financing is crucial to the success of a lot of EBRD projects, Sir Suma said.
They finance the preparations needed to underpin any project and without such support, many of them would simply not happen. No durable house can be built without a proper design. The same goes for any project and it is precisely thanks to these grants that our projects rest on sound foundations, the EBRD President added.
Donor funding can used for many different purposes including helping to prepare Public Private Partnerships (PPP’s) carrying out environmental and social due diligence at early stages of applicable projects, as well as energy audits, streamlining corporate structures or assisting clients in improving financial reporting.
Half of the new donor funds being provided by Russia will be earmarked for supporting the development of projects in transport and infrastructure – with the rest split between projects involving energy efficiency, agribusiness and small businesses as well as assisting the corporate sector to qualify for EBRD loans.
Russia has to date provided EUR 105 million in non-refundable grants to the EU-Russia Cross Border Co-operation Programme and in 2011, it pledged a new contribution of EUR 20 million to the Northern Dimension Environmental Partnership (NDEP) Fund which finances ecological projects in the Baltic and Barents Sea areas.
EBRD projects in Russia are among those which have benefitted from this funding.
In 2012, various donor countries and institutions provided about EUR 178 million to the EBRD, enabling the Bank to implement 562 Technical Cooperation projects totalling EUR 129 million to support the preparation of planned investments.
Donor funding totalling EUR 8.8 million was raised for EBRD projects in Russia last year. The establishment of this new fund by the Russian government will help create opportunities for more EBRD projects to be implemented in Russia.