RUSSIA: VEB bank may fund engine projects
Russia's state-owned Vnesheconombank (VEB) bank could be about to approve the financing of diesel engine projects for both Kamaz and GAZ.
Business daily Vedomosti has reported that a working group at the VEB has recommended the financing to the bank's board of directors.
Prime-Tass reported that in 2008, Avtodiesel, a unit of GAZ, asked VEB to provide a securitised 10 billion rouble loan to set up a facility to produce a new diesel engine model.
According to the company's proposal, the facility would have an annual production capacity of up to 110,000 engines, the report said. Russian Prime Minister Vladimir Putin, who chairs VEB's board, expressed his support for the project at that time.
The report added that in April, VEB received a request from Kamaz for 1.26 billion roubles worth of financing to launch full-cycle production of Cummins engines. Kamaz already assembles Cummins diesel engines at its joint venture with US engine maker Cummins.
After receiving the bid from Kamaz, VEB's management told GAZ that it was likely to finance only one of the two proposals. VEB also requested that GAZ seek support for its project from state-owned conglomerate Rostekhnologii, which holds about 30% in Avtodiesel and 37% in Kamaz.
Last week, Rostekhnologii CEO Sergei Chemezov said that he supported both projects.
GAZ has cut the size of its financing request to 7 billion roubles, sources close to the company told the newspaper.