The proposed project is the construction and operation of a green field vehicle assembly facility in Shushary, St. Petersburg.
Production of SKD vehicles has already begun and the facility is scheduled to start production in November 2008. The output will be sold via the existing Sponsor’s distribution network in Russia.
The Bank will expand investment with a foreign sponsor that is demonstrating high standards of business conduct by pro-actively assisting the expansion of its investment into the Russian market. FDI inflows are a key channel to narrow the technological gap with the West and a source for transfer of know-how, managerial, marketing and other skills.
Transfer and dispersion of skills
GM is a quality player and has contributed enormously to developments within the auto sector through its operation in Togliatti with Avtovaz and EBRD and in setting up the first national sales company in 2000 which was followed by other OEMs. The Project will channel international best-practice techniques and know how as well as crucial managerial, organisational, financial, environmental protection and other skills into the Russian automotive sector well beyond the boundaries of the project entity itself. GM will employ and train 1,000 employees in St. Petersburg who will be skilled and available to skill up the Russian automotive industry.
Expansion of markets in other sectors
This Project will also provide linkages with suppliers and distribution and after-sales companies. A larger cluster of foreign OEM’s in St. Petersburg will also attract internationally qualified suppliers. The natural movement to reduce cost will be localising larger items with local suppliers. The Russian auto component manufacturing industry is highly concentrated and there has been little money available for R&D and upgrading production facilities. This situation is slowly changing as the proportion of components sourced locally is gradually increasing. The Russian Government seeks to motivate auto manufacturers to source domestically. The Project will channel otherwise inaccessible international best practice technologies and know-how as well as crucial managerial, organisational, marketing, financial, environmental protection and other skills into the Russian automotive sector beyond the boundaries of the Project. The recipients of this technology and skill transfer will be the Company and the existing and new suppliers and client companies of the Project who will benefit from new procurement standards set by the Company and from technological linkages including supplier tooling and training programmes.
LLC General Motors Auto (“Company”), a limited liability company organised in the Russian Federation, a 100% indirect subsidiary of General Motors Corporation, a company organised in Delaware, USA (“GM” or the “Sponsor”).
The Bank will arrange up to USD 150 million senior secured A/B loan (the “Loan”), of which up to USD 120 million will be syndicated to commercial bank(s).
USD 300 million.
The result of an Initial Environmental Examination (IEE) concluded that the proposed project is unlikely to be associated with significant environmental issues and the project was therefore screened B/0. An Environmental Analysis, including an environmental assessment by independent consultants; a site visit by the Bank’s Environmental Specialist along with relevant counterparts at GM, confirmed that all of the new production facilities will be constructed and operated to GM’s high environmental standards and will be in compliance with similar plants in Europe and best international environmental practice. New plant and equipment, produced to EU standards, will be commissioned under the supervision of GM and new passenger car production facilities will meet EU environment and health and safety regulations. All environment and safety standards for vehicles, including vehicle emissions and fuel efficiency will meet EU and GM standards. General Motors also sets very high environmental, health and safety standards for its suppliers. An environmental action plan (EAP) is being developed by GM and includes the implementation of an EMS (ISO 14001); design and implementation of VOC abatement and any other operations falling under EU IPPC requirements. The Environmental Impact Assessment (OVOS) process has been completed and the Company are currently awaiting the final approval from the City Environmental Authorities.
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