Project number:


Business sector:

Manufacturing and Services

Notice type:


Environmental category:


Approval date:

27 Mar 2001



PSD disclosed:

01 Mar 2001

Project Description

The EBRD proposes to provide financing for the construction and operation of a factory to manufacture and assemble up to 75,000 Niva vehicles in Togliatti, Russia.
Project objectives: The construction and operation of a factory to manufacture and assemble up to 75,000 Niva vehicles per annum in Togliatti, Russia.

Transition Impact

The transition impact potential of this transaction stems primarily from the demonstration effects associated with the entrance of a major Western strategic investor into the Russian automotive market. The fact that this investment has two well-known partners who are investing equally in the joint venture adds both to the visibility and the ptential of the project. This complex project is one of the largest examples of foreign direct investment in post-crisis Russia in a period when many foreign investors are still adopting a wait and see approach. The use of Russian design and engineering skills together with the introduction of Western technologies, methods and processes and the related development of skills are further key sources of positive demonstration effect, especially given the huge modernisation needs of the Russian automotive sector. Other suppliers and client companies will also benefit from technological links or training programmes with the joint venture.

The Client

General Motors - AvtoVAZ Joint Venture is a closed joint-stock company to be created under Russian law specifically for the purpose of carrying out the project. Once the investment is complete, AvtoVAZ (VAZ) and General Motors (GM) will hold an equal share in the venture. GM is currently the world’s top automotive manufacturer with production facilities in 50 countries and 388,000 employees world-wide. VAZ is the largest producer of vehicles in Russia, having sold approximately 705,500 (over 70 per cent of the Russian new car market) in 2000.

EBRD Finance

The EBRD proposes to provide up to 41 per cent of the financing of the venture in a combination of a loan of US$ 100 million (€108 million) and an equity investment of US$ 40 million (€43 million). The loan includes interest during the construction phase. Up to US$ 38 million of the loan may be syndicated after signing to reduce EBRD exposure.

Project Cost

US$ 338 million (€365 million)

Environmental Impact

The project was screened B/1, requiring an audit of the existing facility and an analysis of the impact associated with the joint venture (JV). While typical environmental issues associated with heavy manufacturing are present at the main AvtoVaz facility, there have been no prior operations at the site of the proposed JV. Potential liabilities arising from historic soil and ground water pollution were addressed as part of the due diligence, and no significant levels of contamination have been identified. According to the independent reports, there are no major liability issues associated with the shared services (power and energy systems, waste-water treatment, and solid waste disposal). New plant and equipment, produced to EU standards, will be commissioned under the supervision of the JV partners, and new passenger car production facilities will meet EU environment and health and safety standards regulations. The engine for the new Niva will meet Euro II (Russian market) and Euro IV (European market) standards for vehicle emissions. All vehicles will be fitted with catalytic converters. Safety standards for all vehicles, including impact tests and interior trim with respect to flammability and toxic fumes, will meet EU and GM standards in full. On formation, the JV will adopt GM management and operations systems and GM corporate practices for all aspects of environment, health and safety and will be in compliance with all applicable EU and best international environmental standards.

Technical Cooperation


Company Contact


Business opportunities

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