President of Russia Vladimir Putin’s meeting with Russian Direct Investment Fund CEO Kirill Dmitriev
On March 30, 2015, Vladimir Putin met at the Kremlin with Russian Direct Investment Fund (RDIF) CEO Kirill Dmitriev, who briefed the President on the Fund’s work.
Mr. Dmitriev said that the Russian DIF continues to work with successful results on a number of projects in Russia and abroad, despite the current economic difficulties.
The RDIF was established in 2011 by decision of the President and Prime Minister to attract foreign investment into leading companies in the Russian economy’s fastest-growing sectors.
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President of Russia Vladimir Putin: How is the Fund’s work going, Mr Dmitriev?
Russian Direct Investment Fund CEO Kirill Dmitriev: Mr President, together with our partners, we invested 180 billion rubles last year, of which 20 billion was RDIF investment and 160 billion was invested by our partners.
Vladimir Putin: This was investment you attracted?
Kirill Dmitriev: Yes, we attracted it. Overall, since the RDIF began work, our partners and we have already invested 400 billion rubles, of which 50 billion was RDIF money and 350 billion comes from our partners.
Vladimir Putin: Where is the investment going primarily, into which sectors?
Kirill Dmitriev: We invested 165 billion in high-tech sectors and infrastructure projects, more than 40 billion in the Far East, and over 25 billion in export-focused sectors. One example of our projects is the Vladivostok Airport, in which we have invested together with the companies Changi and Basic Element. Changi is the company that is the main operator of Singapore’s airport. We think that Vladivostok could really become one of the Asia-Pacific region’s air transport hubs.
Vladimir Putin: It could be developed into a good transport hub?
Kirill Dmitriev: Yes. Changi operates what is essentially the world’s most successful airport. They just won an award for being the most successful airport operating company.
We also have a project with the company Rosseti. We received funds from the National Welfare Fund for this project and have invested together with investors from Arab countries. We expect this project to reduce electricity losses by 15 percent and save up to 55 billion rubles a year around the country as a whole.
Vladimir Putin: You will achieve this through using new equipment?
Kirill Dmitriev: Yes, through the meters that will be installed, and through use of the right energy accounting system.
In Leningrad Region, for example, we have invested in a liquefied natural gas plant and in LNG transportation. We are actively investing in this project together with our Arab partners.
We are working very actively with our Arab and Chinese partners. Forty percent of the total funds invested by the RDIF are automatically invested by the Arab countries’ leading sovereign funds. Our Chinese partners, the Russia-China Investment Fund (RCIF), have already invested 130 billion rubles, and this year, we are planning for more than 200 billion rubles in investment from the Russia-China Fund and other partners.
What is important is that we are working on projects of great interest and importance. We have approved, for example, investment in the Central Ring Road project together with our Arab partners and Russia’s leading pension fund. We hope to take part in the tender and we have all the necessary resources to carry out this project.
Vladimir Putin: As one of the project participants?
Kirill Dmitriev: Yes, but we plan to submit bids for the third and fourth stages of the project.
Vladimir Putin: What will be the financing involved?
Kirill Dmitriev: We need around $2 billion. Together with our Arab partners and the pension fund (Non-State Pension Fund Gazfond), we have this money.
We have also approved investment in the ZapSib-2 project. This is essentially the world’s biggest petrochemicals project, which is being carried out by SIBUR. We think this is a very promising project.
Vladimir Putin: They want to build another plant?
Kirill Dmitriev: Yes, a facility that will create up to 15,000 new jobs and will process a lot more raw materials. This is a project with excellent prospects. Through our work with the RCIF, we are also getting Chinese banks involved in this project.
Vladimir Putin: I recall that our Chinese partners were also planning to work with SIBUR.
Kirill Dmitriev: That’s right. We also plan to invest in SIBUR and are currently analysing the proposals for work with the RCIF. The Chinese banks are ready to lend actively to companies such as SIBUR. We expect to raise up to $4 billion this year from the Chinese banks and not just from Chinese investors.
Vladimir Putin: They plan to take the goods produced to their own market?
Kirill Dmitriev: Yes, of course. The Asia-Pacific market is growing and Chinese investors are showing a lot of interest in Russia. We are currently looking at around 45 projects in various economic sectors.
There are two other very important areas of work for us: the Investlift programme, which we are working on together with the Agency for Strategic Initiatives and Vnesheconombank, and which provides support for companies with export potential. We think that the instruments we are in the process of developing will help medium-sized companies to grow a lot bigger.
The other area is export-oriented invested and import replacement. We identify the companies that have good demand and are competitive globally, businesses such as data processing centres, oil and gas sector equipment, and agribusiness. We have a very active programme in import replacement.
Vladimir Putin: Is the Fund getting any capital top-ups?
Kirill Dmitriev: We hope to. We have been included in the budget for 2016–17, and we hope to get a capital injection given that we are working actively and the world has recognised our model as a success. The European Union, for example, is now setting up its version of the RDIF in Europe, called the European Strategic Initiatives Fund. Italy and France have established similar funds. Egypt and India have asked for our help in setting up funds of their own, and so we certainly hope for a capital top-up. We are included in the budget and we are very grateful for your support, Mr President.
We are in frequent contact with our foreign partners and they all oppose sanctions. We were in Germany and Italy just recently and we see that turnover at many companies is down by 20 percent, and this is why they are against sanctions. We hope to conclude some major deals with the Italians and the French this year, working through the Russian-French and Russian-Italian funds.
Vladimir Putin: Our partners face problems not only in that some of our markets are now closed, in particular the produce markets, but also because of financing problems, including in areas that our European partners also want to develop, and this is a source of discontent, of course. We will work together on overcoming these problems. I think that this is in everyone’s interest.
Kirill Dmitriev: Yes, of course. They are also working with their governments to bring to their notice the damage that sanctions are causing for German, Italian and French business.