RDIF in three infra initiatives

Infrastructure Investor, 27.05.2014

"The Russian Direct Investment Fund has struck three fresh deals just days after it announced two transactions in partnership with China's CIC.

The Russian Direct Investment Fund (RDIF) has struck three deals in the power, telecoms and oil and gas sectors, just a few days after it announced two similar infrastructure investments with China’s sovereign wealth fund.

The Russian fund has signed a Memorandum of Understanding with Macquarie Russia & CIS Infrastructure Fund (MRIF) to develop a smart grid programme alongside JSC Russian Grids, with the aim of reducing electricity leakage.

This programme will be the first RDIF project partially funded by the National Welfare Fund (NWF).

The initial rollout will likely be piloted across the Kaliningrad, Yaroslavl and Tula regions, and if successful, the trial may be replicated in other regions in Russia, RDIF said.

Along with some international infrastructure investors, RDIF will also partner with Rostelecom in a $1.956 billion (€1.43 billion) project to provide access to the Internet and improve telecom services in Russia’s sparsely populated communities.

RDIF will create an SVP (Special Vehicle Programme) to finance the project, while funds for the SVP will be raised in the form of equity and debt, including debt financing from the National Welfare Fund.

The parties, including RDIF and Rostelecom, will collaborate on constructing a telecommunications network and installing access points and fiber-optic lines. Construction is expected to be completed in the next five years, according to RDIF’s statement.

Separately, RDIF is joined by Gazprombank and a group of foreign investors in a consortium to invest $700 million (€513 million) in a liquefied petroleum gas (LPG) and light oil products trans-shipment terminal.

Under the deal, the consortium will gain 100 percent control over the terminal, which is owned by the Russian petrochemical holding company, SIBUR, in the sea port of Ust-Luga. Construction of the terminal and the necessary rail and port infrastructure in Ust- Luga was completed by SIBUR in 2013.

The terminal is a project of national importance and was constructed as part of the federal programme for development of port capacities in the Russian North-West.

The consortium’s investment will allow the terminal to optimise its capital structure and expand its capacity for both LPG and the wide range of light oil products it processes.

According to the agreement, SIBUR will have exclusive rights to utilise 100 percent of the LPG trans-shipment capacity on pre-agreed terms. A joint venture between the investment consortium and SIBUR will comprise the operational management of the complex, which will retain all current staff.

Currently the terminal operates at a nominal trans-shipment capacity of 1.5Mtpa (million tonnes per annum) of LPG and 2.5Mtpa of light oil products.