EBRD to bail out RusVinyl PVC project

The European Bank for Reconstruction and Development is injecting cash into RusVinyl, the 330,000 tonnes/year world scale PVC plant located at Kstovo, Nizhniy Novgorod region, Russian Federation. Why it’s doing this is an interesting question. Is the project running out of finance? The EBRD has also approved an 11 year E150m loan with a three year grace period to RusVinyl.

Earlier press reports suggested the project was indeed running out of cash, with projects costs escalating to $1.2bn from $944m and the start of construction held back from 2009 to 2010.

This is an interesting project because it is one of few potentially successful examples of joint venture cooperation between the Russian chemical sector and Western groups. RusVinyl is 50% owned by Sibur and 50% by Solvin, itself a JV between Belgium’s Solvay (75%) and Germany’s BASF. 

The terms of this loan will be detailed in an agreement between EBRD and RusVinyl, which is scheduled to be signed in the autumn of 2010.

According to Solvay, the Russian authorities are giving great importance to RusVinyl, which is included in the Development Strategy for the chemical and petrochemical industry of Russia of the Ministry of Industry and Trade of the Russian Federation for the period up to 2015. The investment also received the priority status of the Investment Council of the Nizhniy Novgorod region in Russia.

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