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| Republic of Mariy El |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 27781 |
| Company name | Republic of Maryi El |
| Country | Russian Federation |
| Sector | Other (For Non-Investment Projects) |
| Environmental category | B |
| Department | Sub-National Finance |
| Status | Active |
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| Date SPI disclosed | January 23, 2009 |
| Projected board date | March 5, 2009 |
| Previous Events | Invested: May 8, 2009
Signed: April 10, 2009
Approved: April 1, 2009 |
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| View Environmental & Social Review Summary (ESRS), click here |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| The proposed Project involves IFC support to the Republic of Mariy El (“the Republic”) in financing its program of capital investment in roads (RUB 524 million / USD$ 9 million) and refinancing of the Republic’s bond due in May 2009 (RUB 500 million / USD$18 million). The road investments will primarily focus on roads forming part of the core network identified by the Republic: repair and rehabilitation of the road sections in bad condition, upgrade of roads needing increased capacity due to higher traffic, and selected improvement of “black spots” with excessive pedestrian accident rates to upgrade these sections of roads to a sustainable and safe standard. |
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| Project sponsor and major shareholders of project company |
The Republic of Mariy El is one of 83 Regions in Russia with autonomous executive and legislative branches and budget. It is located in the European part of Russia, bordering Chuvash Republic in the South West. It is one of the smaller and less developed Regions in Russia with a population of about 700 thousand and an estimated Gross Regional Product (GRP) per capita of $2,155 (2006), which is significantly below the national median ($3,111; 2006).
The key sectors of the Republic’s economy are processing industry, including oil refining and food processing (about 21% of the GRP), and agriculture and forestry (18%). The Republic’s GRP has been growing at an average rate of 7% during 2003-2006 and in terms of growth it has become one of the leading Regions in the Privolzhsky Federal District (consisting of 14 Regions) in a number of areas such as direct investment, SME output, retail sector and average salary.
The budgetary performance of the Republic has also been sound and improving over the last several years and its operating surplus averaged 12% during the period of 2002-2008. The Republic’s total revenues grew at an average annual rate of 25% during 2003-2008 and exceeded RUB13.5 billion (USD$483 million) in 2008. This growth was driven mainly by own-source tax revenues that have increased 6-fold in nominal terms over the period of 2002-2008 driven by economic growth and improved tax administration and collection. |
| Total project cost and amount and nature of IFC's investment |
| The total project cost is estimated at RUB 1,024 ($36.6 million) The proposed IFC investment is a senior local currency A loan of RUB 450 million (approximately $16.1 million) with up to 7 years maturity and 2 years grace period. |
| Location of project and description of site |
| The Republic of Mariy El is located in the European part of Russia, in Volga region West of Moscow and bordering Chuvash Republic in the South West. Roads to be rehabilitated under the Project are located throughout the Republic and mainly cover rural roads forming part of the core republican road network. |
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| Anticipated development impact of the project |
The Project will support the economic growth and private sector development in a frontier region in Russia linked to:
- lower road transportation costs and conservation of road network assets;
- increased road safety and improved access to public transport;
- better cost effectiveness of the Republic’s road investments; and
- demonstration effect. |
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| IFC's expected development contribution |
The following are the expected development contribution of the proposed WBG engagement:
- implementation of improved road sector management by the Republic;
- Advisory Assistance to improve the Republic’s road management and E&S practices; and
- access to long term financing that is otherwise not available currently in the market. |
| Environmental and social issues - Category B |
This is a Category B Project because of limited E&S impacts. The Project’s main impacts will be improvement in the Republic’s core road network to the benefit of the broader population and minimal or no negative effect with respect to environmental or social impacts, land acquisition, natural resources or cultural/indigenous people are foreseen. E&S impacts are assessed and will be managed in line with Russian regulatory requirements and IFC Performance Standards. The road authorities will strengthen the internal capacity to assess and manage broader environmental and social risks of the road maintenance and upgrading projects through training facilitated by IFC of the employees, road designers and selected contractors in social, environmental and safety management and monitoring.
The summary of IFC’s environmental and social review findings for the Project, including the rationale for the B categorization is publicly available in the Environmental and Social Review Summary (ESRS). |
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| For inquiries about the project, contact: |
Evgeny Dmitryevich Rizhakov
Minister of Finance of the Republic of Mariy El
36, Uspenskaya Street
424001 Yoshkar-Ola
Republic of Mariy El, Russian Federation
http://gov.mari.ru/ |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
| Local access of project documentation |
Website: http://gov.mari.ru
To contact the Maryi El road authorities, please write to: Mr. Alexander Salnikov
Director, Mariyskavtodor
26, Proletarskaya Street
Yoshkar-Ola
Republic of Mariy El, 424036
Russian Federation
Tel: +7 (8362) 686-105
e-mail: avtodor@mari-el.ru
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