Russia’s Krasnoyarsk region administration, Rusal and HydroOGK (subsidiary of RAO UES) have welcomed Russia Investment Fund announcement of project finance support for the Lower Angara region development project.

This entails completion of the 3,000MW Boguchanskaya Hydro Power Plant (HPP), construction of an aluminium smelter, launch of other industrial enterprises and the creation of infrastructure to support those projects.

The Russia Investment Fund announced results of project financing selection at the recent St Petersburg International Economic Forum and following the government commission session on the selection of investment projects. According to the commission decision the project will be financed by Russia Investment Fund to the amount of Rb34.41bn (US$1.3bn).

The Lower Angara region integrated development programme is a public/private partnership project to create a new industrial district in the Krasnoyarsk region on the basis of the power generated by the Boguchanskaya HPP and the region’s resource potential.

The development of the area infrastructure will be financed by the government through the resources of Russia’s Investment Fund. The programme coordinator is the Corporation of Development of Krasnoyarsk region which has been specifically formed by the Krasnoyarsk region administration and the investors engaged in the project.

Russia Investment Fund will finance works to create a necessary net infrastructure amounting to Rb34.41bn. The infrastructure construction includes the Boguchanskaya HPP power distribution scheme, the reconstruction and building of the Kansk-Aban-Boguchany-Kodinsk highway, the construction of a bridge across the Angara river with a section of the highway Boguchany-Angarsky, and the construction of a railway section between Karabula and Yarky.

In 2006 it is expected to spend no more than US$50-70mn. The rest of the funds will be spent in equal shares between 2007-09.

The first stage of the project includes the creation of the Boguchanskoye Energy and Metals Complex which involves the completion of a 3,000MW HPP on the Angara river and the construction of a 600,000 tones per year aluminium smelter.

The complex will create the basis for further development of different industries in the Nizhnie Priangarie region, first of all in the timber industry (through the construction of a paper and pulp mill).

The second stage will involve further developments in the oil and chemistry, cement and metallurgic industries. The Siberia energy deficit forecast has become the major reason behind completion of the construction of the Boguchanskaya HPS, the erection of which initially started in 1974 and then was stopped due to lack of financing.

In April 2005, the inter-departmental commission headed by the minister of economic development and trade provided its support to the joint initiative of Rusal and UES of Russia for the creation of the Boguchanskoye Complex, which is tasked to become an exemplary model for public/private partnership projects. The complex will become the largest hydro works in Russia and the biggest project in the world’s aluminium industry.

With direct Russia Investment Fund financing the following infrastructure will be created for the complex: bulk power supply network for Boguchanskaya HPP, and a section of motorway between the HPP and the aluminium smelter.

The remaining funds will be invested in further infrastructure developments necessary to launch other industrial projects in Nizhnee Priangarie.

Completion of the construction of Boguchanskaya HPP and the construction of the aluminium smelter will amount to US$$3.6bn and will be financed by Rusal and HydroOGK through internal funds, as well as debt capital.
Russia’s Investment Fund was set up in 2005 to provide state support to major nation-wide investment projects with joint public-private financing. In 2006 the fund totals US$2.6bn.

The fund received 46 applications from Russian companies with the total amount of US$17bn requested from the Investment Fund. Some 12 claims, meeting the requirements of the fund for the application content and comprehensiveness, were accepted for consideration by the Investment Fund.