Projects financed by the EDB
Constructing the Tikhvin freight car building plant
Europe’s largest industrial project is set to ease the shortage of rail freight wagons in the CIS
Railways have been the «arteries» of Eurasia since the 19th century. Railways in Russia and the CIS have a common standard gauge of 1,520 mm and this determines the specifications of all rolling stock purchased by countries in the region.
The total capital expenditure for constructing the Tikhvin Freight Car Building Plant (Leningrad Region) exceeded US $1.2 billion, making it one of the largest mechanical engineering projects in Europe.
In 2008, ICT Group, a Russian investment and industrial holding, launched a large-scale project to construct a new rail freight wagon plant in Tikhvin. Within four years, the company launched a state-of-the-art, integrated production facility to produce new generation, high-performance freight wagons. The plant was built and equipped by ICM, a joint venture between ICT Group and BARAN Group, an Israeli engineering holding.
The plant will manufacture 10,000 wagons annually of four types, including new generation wagons. Depending on demand, the plant’s design capacity can be increased to 13,000 wagons per year.
In October 2008, EDB, Vnesheсonombank and Tikhvin Freight Car Building Plant (TVSZ) signed a loan agreement, under which Vnesheсonombank and EDB provided TVSZ with an eight-year, non-revolving loan facility for US $430 million (US $215 million from each lender) to launch high-tech production at the new rail freight wagon plant in Leningrad Region. The funds were used to build, equip and commission the facility. The terms of the loan were tailored to the specific nature of this large investment project and the repayment schedule reflects the company’s financial and production capabilities. The main repayments will start only after the plant reaches its design capacity.
In late 2010, EDB and Vnesheсonombank raised TVSZ’s loan facility limit from US $430 million to US $660 million. This increase was agreed to cover necessary improvements in the plant’s level of automation and to its production capacity for new generation freight wagons.
The project will ensure large-scale production of new freight wagons and contribute to the overall development of the transport sector in Russia by enhancing the efficiency of rail transport and preventing accidents resulting from the use of obsolete wagons. The project has generated 3,500 new jobs.
The project contributes to Russia’s economic integration with the CIS countries by strengthening the common transport space of the CIS and expanding Russia’s exports to the countries of the region.