Volkswagen Group Rus

Location:

Russia

Project number:

37105

Business sector:

Manufacturing and Services

Notice type:

Private

Environmental category:

B

Approval date:

05 Dec 2006

Status:

Completed

PSD disclosed:

30 Oct 2006

Project Description

Volkswagen will construct (2007-09) and operate a greenfield automobile assembly plant (the “Project”) in the Russian Federation for a total investment of approx EUR 425 million. The new Russian entity, “Volkswagen Rus”, will begin production in late 2007.

Transition Impact

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 insures 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.

 

The Client

Volkswagen Rus will operate a greenfield automotive assembly plant near Kaluga City (Kaluga Oblast), Russia. The Project Sponsor will be Volkswagen AG, the largest auto manufacturer in Europe.

EBRD Finance

The EBRD will provide EUR 30 million to the Project in the form of an equity investment in Volkswagen Rus.

Project Cost

Total project will cost approx EUR 425 million, of which EUR 150 million will be in the form of equity, the remainder will be in the form of a syndicated loan. The EBRD’s portion will be EUR 30 in equity. Separate discussions on a potential loan are continuing.

Environmental Impact

Construction of new facility on an 800 hectares greenfield site is likely to be significant therefore an Initial Environmental Examination (IEE) will be carried out to determine the environmental category and the environmental due diligence requirements. Other issues associated with EU vehicle standards (fuel quality, emission standards, recycling, etc.) will also be addressed. Specific attention will be placed any operations that would fall under EU IPPC requirements, such as the use of solvents (eg volatile organic compounds “VOC”) in the painting process. Preliminary information and discussions with VW’s environmental staff confirmed that the site selection, OVOS (EIA) and some public consultation has recently taken place. This will be reviewed as part of the IEE, and terms of reference for any further environmental due diligence that may be necessary will be developed.

Technical Cooperation

None.

Company Contact

M. Kleimann, Volkswagen AG

Tel: +49-5361-941767

 

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out how to submit a Request for review through our confidential online form, by email, mail or telephone. IPAM is available to discuss your concerns and answer any questions you may have about the submission or handling of Requests, which follow the Project Accountability Policy and Guidance. Requestors’ identities may be kept confidential, upon request.

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