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VEB ready to refinance Baikal PPP’s debt when its fate decided

July 12, 2012, 4:47 UTC+3

The refinancing measures will concern the plant’s accounts payable to several creditors, including Alfabank, Irkutskenergo and some others

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MOSCOW, July 12 (Itar-Tass) —— VEB is ready to refinance the debt of the Baikal pulp-and-paper plant but only after the federal government has decided its fate, Vnesheconombank CEO Vladimir Dmitriyev said.

“VEB’s position is that refinancing or assignment of accounts payable should be conditioned on the determination of the fate of the Baikal pulp-and-paper plant and the relevant programme for its further modernisation and revitalisation or closure and waste management,” Dmitriyev said.

The refinancing measures will concern the plant’s accounts payable to several creditors, including Alfabank, Irkutskenergo and some others. “All in all, it’s about two billion roubles,” Dmitriyev said.

The Russian government is now working with the owner of the Baikal pulp-and-paper plant in order to convert the enterprise and reduce environmental damage to zero.

“We are engaged in negotiations with the owner, the Irkutsk region, and will be ready to provide funding from the federal budget to turn this plant into an enterprise that will not do harm to Lake Baikal, even potentially,” President Vladimir Putin said earlier.

“This is a unique lake and we will exert maximum effort in order to protect it from possible environmental risks,” Putin said.

The plant stopped operation in October 2008 after the Ministry of Natural Resources had demanded that it install a closed-loop water recycling system, which however proved unprofitable during the global economic crisis.

The plant has not been operating since October 2008, due to what its management described as “financial and economic default and inability to carry out further operations with a closed-loop water recycling system”.

The plant was commissioned in 1966. Fifty-one percent of its shares belong to the Base Element company that manages the plant through LPK Continental Management. The remaining 49 percent are owned by the Federal Property Management Agency. Before the plant had stopped production, 95 percent of its cellulose was exported to China.

After the principal owner had started unilateral mothballing of the plant and mass personnel cuts, regional authorities drafted a petition to the federal government, asking it to create a commission to resolve the situation surrounding the pulp-and-paper plant. They said the commission should work out mechanisms for the transfer of controlling interest in the plant to the federal government, including in exchange for federal funding to reduce environmental damage and convert the plant.

The plant also has to get rid of waste and dispose of underground water trapped under the enterprise. The Baikal pulp-and-paper plant director-general said earlier the plant would use advanced technology to further reduce its negative impact on the environment

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