Russia agrees to provide Armenia with $400 million loan from anti-crisis fund: newspaper says
27.10.2011,
22:28
Russia agreed to provide Armenia with a $400 million loan from EurAsEC’s Anti-Crisis Fund, Russian daily Izvestia said citing a source in the Russian ministry of finance.
YEREVAN, October 27. / ARKA /. Russia agreed to provide Armenia with a $400 million loan from EurAsEC’s Anti-Crisis Fund, Russian daily Izvestia said citing a source in the Russian ministry of finance.
According to the source, the finance ministry finally approved the allocation of the loan for modernization of Nairit plant in Yerevan, which is the only producer of synthetic rubber across the former Soviet Union (its revenue in 2010 amounted to $11.5 million) and establishment of associated enterprises.
According to the source, Yerevan needs now to make a formal application, which, based on previous experience, is to be fulfilled within one to two months.
The daily says the negotiations were difficult and long, lasting for almost two years. In February 2010 Armenia filed an application for a one billion euro loan to finance two projects. The Russian side agreed to discuss only the second project - a loan of $400 million to modernize gas and chemical industry. The source told Izvestia that Moscow has set a tough and fundamental condition – the Armenian government must consolidate 100% of Nairit in its hands. It was this demand that slowed negotiations, the daily writes..
It says Nairit experienced severe financial problems. The Armenian press and independent experts had the strong opinion that the difficulties experienced by the plant were because of its owners. In 2006 some 90% of its shares were acquired by a British-registered Rhinoville Property Limited (established by the Polish company Samex, American Intertex and Russian Eurogas) and 10% remained in the ownership of the Armenian government.
The plant owes more than $100 million to the CIS Interstate Bank (the shares of the main owner are pledged with the bank). The Armenian government has to constantly retaliate to difficult questions, arguing that the plant is not used for private benefit, including by people close to government structures.
At that Nairit is one of the largest employers. It can produce enough rubber to meet the demand in CIS. The Armenian government announced a tender to find a private investor to solve the problems and upgrade the facility by investing $512 million. But only the German company CAC showed interest, but its application is not approved yet, according to Nairit officials. Perhaps it was the interest from foreign investor that pushed Russia to the approval of the loan, according to the daily. After all it will be provided under the guarantee of the government of Armenia. Officials in the Russian ministry of finance would not confirm the newspaper report.
"The work is under way but no decisions was taken", Andrei Bokarev, Director of International Financial Relations department, told Izvestia.
A senior manager of the Eurasian Development Bank declined to comment, while the ministry of finance of Armenia did not have time to prepare a prompt response.
The loan is provided under the lowest interest rates that are determined by the cost of funding at markets in Russia and Kazakhstan. According to the source, who spoke to Izvestia, the loan will be disbursed to Armenia in three tranches. The first $125 million tranche will go to pay the debt to CIS Interstate Bank The second and third tranches will be used to upgrade the plant.
EurAsEC Anti-Crisis Fund was established in 2009 to assist member countries in overcoming the global crisis, securer long-term sustainability of their economies and promote the integration processes in the region. The Fund is managed by the Eurasian Development Bank. -0-
According to the source, the finance ministry finally approved the allocation of the loan for modernization of Nairit plant in Yerevan, which is the only producer of synthetic rubber across the former Soviet Union (its revenue in 2010 amounted to $11.5 million) and establishment of associated enterprises.
According to the source, Yerevan needs now to make a formal application, which, based on previous experience, is to be fulfilled within one to two months.
The daily says the negotiations were difficult and long, lasting for almost two years. In February 2010 Armenia filed an application for a one billion euro loan to finance two projects. The Russian side agreed to discuss only the second project - a loan of $400 million to modernize gas and chemical industry. The source told Izvestia that Moscow has set a tough and fundamental condition – the Armenian government must consolidate 100% of Nairit in its hands. It was this demand that slowed negotiations, the daily writes..
It says Nairit experienced severe financial problems. The Armenian press and independent experts had the strong opinion that the difficulties experienced by the plant were because of its owners. In 2006 some 90% of its shares were acquired by a British-registered Rhinoville Property Limited (established by the Polish company Samex, American Intertex and Russian Eurogas) and 10% remained in the ownership of the Armenian government.
The plant owes more than $100 million to the CIS Interstate Bank (the shares of the main owner are pledged with the bank). The Armenian government has to constantly retaliate to difficult questions, arguing that the plant is not used for private benefit, including by people close to government structures.
At that Nairit is one of the largest employers. It can produce enough rubber to meet the demand in CIS. The Armenian government announced a tender to find a private investor to solve the problems and upgrade the facility by investing $512 million. But only the German company CAC showed interest, but its application is not approved yet, according to Nairit officials. Perhaps it was the interest from foreign investor that pushed Russia to the approval of the loan, according to the daily. After all it will be provided under the guarantee of the government of Armenia. Officials in the Russian ministry of finance would not confirm the newspaper report.
"The work is under way but no decisions was taken", Andrei Bokarev, Director of International Financial Relations department, told Izvestia.
A senior manager of the Eurasian Development Bank declined to comment, while the ministry of finance of Armenia did not have time to prepare a prompt response.
The loan is provided under the lowest interest rates that are determined by the cost of funding at markets in Russia and Kazakhstan. According to the source, who spoke to Izvestia, the loan will be disbursed to Armenia in three tranches. The first $125 million tranche will go to pay the debt to CIS Interstate Bank The second and third tranches will be used to upgrade the plant.
EurAsEC Anti-Crisis Fund was established in 2009 to assist member countries in overcoming the global crisis, securer long-term sustainability of their economies and promote the integration processes in the region. The Fund is managed by the Eurasian Development Bank. -0-
