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| RVK-Invest |
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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 | 25753 |
| Company name | RVK-Invest OOO |
| Country | Russian Federation |
| Sector | Utilities |
| Environmental category | B |
| Department | Infrastructure |
| Status | Pending Signing |
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| Date SPI disclosed | November 8, 2007 |
| Projected board date | December 10, 2007 |
| Previous Events | Approved: April 16, 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 |
| The proposed project is to provide financing for the rehabilitation and expansion of water utilities operated by RosVodoKanal (RVK), Russia’s largest private water provider. Current operations are dispersed across southern Russia and Siberia and account for about 2.5% of the country’s population. The group also has significant expansion plans throughout the former Soviet Union. Built decades ago and previously managed by Municipal Unitary Enterprises, Russia’s water and wastewater networks now require substantial modernization and expansion. The project would provide financing to implement 5-year investment programs in each city in which RVK currently operates and the acquisition of new utility operator(s), the total cost of which is estimated at RUB18.4 billion ($736 million). |
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| Project sponsor and major shareholders of project company |
| RVK is a wholly owned subsidiary of A1, the private equity arm of Alpha Group, one of Russia’s largest financial and industrial groups, with oil and gas, banking, telecommunications and other holdings. In addition, the local municipality and/or local business partners own minority stakes in some of the operating companies. |
| Total project cost and amount and nature of IFC's investment |
| The total project cost is estimated at RUB18.4 billion ($736 million). IFC’s proposed investment is an A loan of up to RUB624 million ($25 million). EBRD is expected to provide parallel financing on similar terms to IFC. |
| Location of project and description of site |
| RVK is headquartered in Moscow and currently has operations in Barnaul, Kaluga, Krasnodar, Orenburg, Tver and Tyumen. It is also negotiating contracts in a number of other cities. Investments could be made in any of its operations. |
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| Anticipated development impact of the project |
The proposed investment would facilitate improvements to water and wastewater services in the project cities which, in turn, would result in:
- improvements in health, quality of life and productivity through the provision of cleaner water;
- more efficient management of water resources and better treatment of wastewater;
- the transfer of knowledge and best practice across the company’s operations; and
- the development of further public-private partnerships in the sector by encouraging the involvement of other private players. |
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| IFC's expected development contribution |
IFC’s role includes:
- promoting private sector participation in the water and sanitation sector in Russia;
- providing much needed long-term local currency financing for the rehabilitation of a vital but neglected sector;
- providing comfort to other potential investors on the regulatory risks inherent in the sector; and
- helping enhance the environmental and social performance of the project companies.
IFC would also provide advice on the appropriate legal structure for the underlying contracts, based on its wide international experience of the sector, to help ensure the sustainability of the project. |
| Environmental and social issues - Category B |
The project is a category B investment according to IFC’s Environmental and Social Review Procedure. RVK operations help in environmental protection and enhancing public health through providing potable water and safe disposal of sewage. The proposed project will be largely focused on substantial modernization of the existing infrastructure to improve its efficiency, including environmental, health and safety performance of water utilities and associated infrastructure. The project is in material compliance with the regulatory requirements of Russian Federation. Implementation of the specific measures agreed in the Environmental and Social Action Plan (ESAP) will ensure compliance with IFC's environmental and social Performance Standards.
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) through IFC’s external website.
The environmental documentation will be made available at the company’s headquarters in Moscow and on the company’s website:
http://www.rosvodokanal.ru |
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| For inquiries about the project, contact: |
Elena Ustinova, Head, Project Financing Department
Rosvodokanal Management Company
13/15, 2 Zvenigorodskaya street
Moscow 123022
Russian Federation
Telephone/fax: +7 495 514 02 11
Website: http://www.rosvodokanal.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 |
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