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Wednesday, 09 September 2015

Vostochny Port attracts $100m investment pledge

Proposed plans to develop a multi-million dollar terminal project at the Port of Vostochny in Eastern Russia have attracted interest from investors, with the Japan Bank for International Cooperation (JBIC) already promising around $100 million for the project.

"Vostochy... is almost a done deal. We’re on the verge of providing funds," Tadashi Maeda, senior managing director for JBIC said.

The port is located in the Primorsky region and is a key route for coal shipments. The proposed coal terminal will have a capacity of around 20 million tonnes per year and is expected to serve Russian coal exports to the Asia-Pacific region.

“There are two problems faced by foreign investors – the low transport capacity of the Trans-Siberian Railway and the insufficient capacity of the existing port infrastructure. Together, this hinders the growth of freight traffic. Therefore, Japan is planning to increase investment in the infrastructure development of the Far East,” Maeda added.

The port has also attracted investment pledges from the Russian Direct Investment Fund (RDIF) an equity co-investment fund, which acts as a catalyst for direct investment in the Russian economy. A 100% subsidiary of Moscow’s  Vnesheconombank the RDIF is keen to improve port investment infrastructure.

“Vostochny port is essential in connecting one of Russia’s most important railroads with sea routes to leading Asia-Pacific countries. It has the potential to become a major transport link within Russia’s Far East region. The new terminal will improve Russian companies’ export potential, making it easier for them to access international markets. It will also boost the development of the Primorsky region,” Kirill Dmitriev, chief executive of the Russian Direct Investment Fund (RDIF) said.

The Russian economy has faced significant headwinds in recent months as a combination of international sanctions and a global slowdown have impacted revenues.

The new Vostochny terminal is scheduled to start operations in 2018 with an initial capacity of 7 million tonnes per annum and may be amongst the first projects to benefit from $242 million of subsidies announced by Prime Minister Dmitry Medvedev to help expand capacity and drive “the creation and reconstruction of infrastructure” in the Far East and the Baikal region.

“We are actively implementing a programme of socioeconomic development of the Far East and the Baikal region, which includes dozens of major investment projects,” Putin explained. “Priority development areas, along with special economic zones, should become the ‘locomotives’ of economic transformation in the Far East, sort of clusters that attract and accumulate investment and technology.”

The government hopes that deregulation coupled with hefty subsidies will attract more than $2.2 billion of private investment to the region. 

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