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| Joint Stock Company "Freight One" |
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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 | 27033 |
| Company name | Joint Stock Company "Freight One" |
| Country | Russian Federation |
| Sector | Transportation and Warehousing |
| Environmental category | B |
| Department | Sub-National Finance |
| Status | Pending Approval |
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| Date SPI disclosed | November 20, 2008 |
| Projected board date | December 23, 2008 |
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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 |
Joint Stock Company “Freight One” (JSC “Freight One”, or the “Company”) was incorporated in July 2007 as a wholly owned subsidiary of Russian Railways (JSC) (“RZD”), a monopoly railroad infrastructure provider and dominant freight and passenger rail carrier that is 100% owned by the Russian Federation.
JSC “Freight One” was established in order to create a flexible and effective mechanism for management of the rolling stock on the existing rail freight market. To archive this goal, about 200 thousand of RZD’s freight cars were transferred to JSC “Freight One” as in-kind equity contribution.
The project is to provide a loan to JSC “Freight One” to support its capital investment program aimed at the upgrade of the company’s fleet of railroad cars. The project will support the ongoing reforms in the railway sector, and help renew Russia’s railroad car fleet. |
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| Project sponsor and major shareholders of project company |
| JSC “Freight One” is wholly owned by Russian Railways, a monopoly railroad infrastructure provider and dominant freight and passenger rail carrier that is 100% owned by the Russian Federation. |
| Total project cost and amount and nature of IFC's investment |
JSC “Freight One” has large capital expenditure program over the next five years to replace the life-expired railcars, and to increase the fleet size to meet the market growth. On a conservative basis, the company’s capex program involves purchase of 130,000 railcars from 2008 to 2015, representing an investment of about RUR250 billion ($9.1 billion equivalent).
The proposed IFC investment is an A loan of up to RUR 3 billion (approximately $110 million equivalent) to partially finance the company’s capex program. |
| Location of project and description of site |
| In Russia. Applicable to Russia's railway sector. |
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| Anticipated development impact of the project |
| The project will provide financing to the Company’s rolling stock investment program. This will help to increase capacity and reliability of the rail freight services that are critical for the country’s economy. The project will also support Russian rail sector reform and further the Russian government’s agenda to increase transparency and competition at a critical juncture for the country’s rail sector. |
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| IFC's expected development contribution |
IFC’s role and contributions include:
- providing long term Ruble financing that is not available to JSC “Freight One” on the local capital market;
- assist in moving JSC “Freight One” further along the path of becoming a true public-private partnership that is professionally managed and commercially operated; and
- support the company’s access to international capital markets and raise additional funding for its investment program. |
| Environmental and social issues - Category B |
| This is a category B project according to IFC’s environmental and social review procedure. A 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) disclosed through IFC’s external website. |
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| For inquiries about the project, contact: |
Oleg Panachev
Head of infrastructural projects department
Tel. +7 (499) 975 1892;
E-mail: PanachevOI@pgkweb.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://www.pgkweb.ru |
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