OREANDA-NEWS. February 25, 2009. Vnesheconombank is to extend a credit of up to USD 3 billion to the Kazakh National Wealth Fund for implementing major investment projects.

Russia’s Vnesheconombank is to extend a credit of up to USD 3 billion to the Kazakh National Wealth Fund “Samruk-Kazyna” for implementing a number of major investment projects in the Republic, Vnesheconombank Chairman Vladimir Dmitriev told Interfax-Kazakhstan Agency on Monday.

The credit to be extended by Vnesheconombank will be used to secure the supplies of Russian equipment and exportation of metals, chemical and energy products from Russia “for upgrading and expanding production capacities of some Kazakh enterprises”, Dmitriev said.

Specifically, according to him, the said funds will be invested in the project to increase the capacity of the Ekibastuz Hydropower Station-2 (in the Pavlodar region), mineral fertilizers manufacturing, infrastructure development including pipe-line transport and a number of other projects.

“It is safe to say now that Russian equipment suppliers (under the project to upgrade the Ekibastuz Hydrpower Station-2 – IF) will include such power engineering enterprises as “Silovye Machiny” (Power Machines) and the project’s operator is sure to be the Russian company Inter-RAO”, added V. Dmitriev.

Furthermore, Vnesheconombank Chairman V. Dmitriev said: “we are not discussing specific amounts and terms because we are going to enter into individual credit agreements within each specific project”.

“Our task now is to undertake technical economic and financial feasibility study on each project, so to say, to develop a project, prepare project budget documentation, which will form the basis for identifying the total amount of investments and the project’s value”, he said.

VEB’s Chairman stressed that Kazakh President Nursultan Nazarbaev had backed conceptual approaches to implementing the above-mentioned project.

‘I brought up this issue at my brief meeting with Nursultan Nazarbaev at the World Economic Forum in Davos. He elaborated on the issue, voiced a number of other ideas and invited me to come to Astana to discuss specifics of the issue and outline ways of expanding trade-economic and financial ties between Russia and Kazakhstan”, said Vnesheconombank’s Chairman.

V. Dmitriev was reported to have met with N. Nazarbaev in Ak-Orda Presidential Palace in Astana.

The Memorandum on Vnesheconombank’s participation in financing foreign-trade contracts under Kazakh-Russian investment projects on the territory of the Republic was signed in early February. Reportedly, the total amount of credit funds to be extended by Vnesheconombank to implement this agreement would reach up to USD 3 billion for a period of 10 years.

V. Dmitriev told the Agency that at his meeting with N. Nazarbaev they discussed Vnesheconombank’s potential participation in measures carried out by Kazakhstan’s authorities to rescue BTA-Bank and Kazakh Alliance Bank.

According to VEB’s Chairman they discussed this issue in terms of boosting sustainability of Kazakhstan’s banking system through participation of development institutions including Russian ones and the issue was also discussed in the context of implementing the agreement on opening a credit line worth USD 3 billion (by Vnesheconombank to the State Fund Samruk-Kazyna – IF).

“It goes without saying that in implementing such large-scale projects we need reliable operators. So, for a project to be successful we should exercise control over the target use of funds through the banks accountable to national development institutions and in which national development institutions participate as shareholders”, said V. Dmitriev.

Nevertheless, he stressed that no concrete decisions on that issue had been taken so far.

“Any Participation of our Bank in financial and non-financial organizations should go through a decision-making procedure at a meeting of Vnesheconombank’s Supervisory Board”, added V. Dmitriev.

“ As it’s not typical for Vnesheconombank to enter into commercial banks with great potential in retail banking and providing cash and settlement services we are still reluctant to change our approach on that matter. But I’d like to say it once more that life may force us into changing our stance”, VEB’s Chairman added.

“We gave Ukraine’s Prominvestbank a hand by providing it with credit resources thus securing its financial sustainability, reliability of payments and trade-economic ties between Russian and Ukrainian enterprises. I do not rule out the possibility that we would also give a hand to Kazakh BTA Bank, provide support for Kazakhstan’s banking system on the one hand and finance the credit line of USD 3 billion under the Agreement we signed with the State Wealth Fund Samruk-Kazyna”, said V. Dmitriev.

JSC Ekibastuz Hydropower Station-2 – the Kazakh-Russian joint power engineering venture (it was established on a parity basis by INTER RAO EES and JSC Samruk-Energo. The hydropower station’s installed capacity is 1000MWt. The Station Modernization Project provides for increasing its capacity by way of building a new, third power-generating unit up to 2012. The project’s value was reported to have been estimated at 68414.33million tenges, with the value of equipment 39093.37 being million tenges (the current exchange rate – 149.36tenges / USD 1).

The National Wealth Fund Samruk-Kazyna was established last October through merging Kazakhstan’s Holding for State Assets Management “Samruk” with the Kazyna Sustainable Development State Fund.