OREANDA-NEWS. February 18, 2011. The Eurasian Development Bank (EDB) and State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ increased the credit line limit for the construction of the Tikhvin Railway Car Building Works in the Leningrad region from 430 to 660 million US dollars. Thus Vnesheconombank and EDB will provide 330 million US dollars each to the Tikhvin Railway Car Building Works.

An Agreement on opening a non-renewable credit line for the construction of a high-technology production facility on the basis of the new railway car building works in the Leningrad region was signed by Vnesheconombank, EDB and the Tikhvin Railway Car Building Works in October of 2008. The funds are intended for building a production facility, purchasing equipment and commissioning the plant.

A growth in the amount of borrowed funds is caused by the increased level of production automation and the increased manufacturing capacity of new-generation freight wagons and scarce railway car casting.

The total amount of capital investments for the construction of the Tikhvin Railway Car Building Works exceeds one billion US dollars, this is the largest production facility under construction in Europe in mechanical engineering. The production is scheduled to be phased in during the current year.

The project is being implemented in cooperation with the investment-industrial holding, the IST Group of Companies. The Russian ISM Company is responsible for construction and technological tooling. This Company is a joint venture of the IST Group of Companies and the engineering holding BARAN Group (Israel). The production facility is a full cycle technological production designed to manufacture new-generation freight wagons with improved performance.

Demand for the new production facility’s products is driven by the need to renew the worn out rolling stock, the dramatic growth in demand for new-generation freight wagons associated with increased freight turnover as well as with growing needs of main-line railway transport throughout the whole space of track gauge 1520mm.

The project aimed at constructing a freight wagon manufacturing facility is in line with both banks’ mission and strategy:
The project’s implementation will result in mass production of new freight wagons thus helping to upgrade Russia’s transport sector and boost railway transportation efficiency as well as prevent emergency situations on railway tracks caused by worn out wagon fleet.
The project’s implementation would make it possible to create 3500 new jobs and increase budgetary tax revenues.
The project is characterized by high value added proportion and it is being implemented in the sectors of top priority for the banks (mechanical engineering, transport).
The project promotes economic integration between the Russian Federation and EurAsEC and CIS countries through developing the Russian transport system, enhancing CIS countries’ unified transport zone and exports of products to these countries.

The Eurasian Development Bank (EDB) is an international financial institution founded by Russia and Kazakhstan in January 2006 to facilitate the development of market economies in its member states, their sustainable economic growth and the expansion of mutual trade and other economic ties. The EDB charter capital exceeds 1.5 billion US dollars. The EDB members are the Russian Federation, the Republic of Kazakhstan, the Republic of Armenia, the Republic of Tajikistan and the Republic of Belarus.

State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ was established subject to the Russian Federal Law “On the Bank for Development” by way of reorganizing Vnesheconombank of the USSR in 2007. The Bank for Development is a key instrument for pursuing the government economic policy aimed at removing economic growth infrastructure restrictions, boosting natural resources utilization efficiency, developing high-technology industries, unlocking innovation and production potential of small and medium-sized enterprises, providing support for industrial exports and services.