RDIF to back $9.5bn petrochemical project, fund toll bridges

Infrastructure Investor, 21.06.2015

"The Russian sovereign wealth fund, which plans to use part of its funding quota from the country's National Welfare Fund to raise debt, will also provide $3.3bn along with banks and international co-investors.

The Russian Direct Investment Fund (RDIF) has teamed up with international investors to finance the construction of a $9.5 billion integrated petrochemical facility in Tobolsk, in Russia's Tyumen region.

ZapSibNeftekhim, as the facility is dubbed, was described by the Russian sovereign wealth fund in a statement as the largest infrastructure project ever undertaken by SIBUR, a gas processing and petrochemicals business based in Moscow.

RDIF expects to use part of its funding quota from the country's National Welfare Fund to raise up to $1.75 billion through secured debt financing, a procedure that was approved by the institution's supervisory board during the St Petersburg International Economic Forum last week.

A further $3.3 billion is to be provided by RDIF, international co-investors and commercial banks, according to the statement. The balance will be funded by SIBUR through its own reserves.

"Constructing the petrochemical facility will be RDIF's largest infrastructure project, and is focused on import substitution and developing Russian exports. The new facility will lead to a considerable reduction in the high proportion of imports of value-added petrochemical products in Russia," said Kirill Dmitriev, chief executive of RDIF.

ZapSibNeftekhim is projected to become Russia's largest modern petrochemical facility. Its aim is to equip the country with deep processing capacity of significant volumes of by-products of oil and gas extraction in Western Siberia, including associated petroleum gas and import substitution of polymers in high demand on the Russian market.

The deal came as RDIF signed a separate agreement with Italian developer Pizzaroti that will see it invest in building toll bridges over railway crossings in the Moscow region. The initial pilot project involves the financing, design, construction and toll operation of four motorway overpasses.

If successful, further such projects backed by the Moscow Region government, RDIF and Pizzarotti will be considered, the Russian sovereign said in a statement.