This text is translated into Russian by google automatic human level neural machine.
EastRussia is not responsible for any mistakes in the translated text. Sorry for the inconvinience.
Please refer to the text in Russian as a source.

Delay, but do not refuse ...

As the issue of structuring financial debts to credit institutions is resolved, two Mechel investment projects will be considered by the Government subcommittee "out of schedule"

At a meeting of the Government Subcommittee on the implementation of investment projects in the Far East and the Baikal region, chaired by the Plenipotentiary Envoy of the President of the Russian Federation in the Far Eastern Federal District, Deputy Prime Minister of the Government of the Russian Federation Yuri Trutnev, six Far Eastern investment projects were discussed (total investment is 365 billion rubles, the requested amount budget investments - 31 billion rubles), claiming financial support from the state in the development of the required infrastructure.

Delay, but do not refuse ...
Special project Coal of the East of Russia
The result of the meeting was the approval of state support in the requested financial volumes for almost all projects submitted for discussion by the subcommittee.

Consideration of two projects has been postponed: the project for the development of the Elginsky coal deposit in the Republic of Sakha (Yakutia), presented by Mechel Mining Management Company, and the project for the reconstruction of the Posiet port in the Primorsky Territory, submitted by Mechel-Trans Management Company OOO.

The reason for the postponement of the consideration of these projects was the fact that the company had financial debt, the conditions and the possibility of repayment of which have not yet been finally determined.

The Elga Coal Deposit project, which Mechel presented to the government subcommittee, from any point of view seems more than promising not only for republican development, but also for the growth of industrial production in the Far Eastern region as a whole.

The first stage of the project provides for the production of 11,7 million tons of processed coal, the entire reserve of the deposit is 2 billion 100 million tons.

In 2015, the company has already mined 3 million tons of coal from this field. During the development of the field, it is planned to create 4200 jobs, the first stage is scheduled to be commissioned in 2019.

The volume of private investments is 204 billion rubles, of which 81 billion rubles have already been invested. According to preliminary estimates, taxes and contributions for the first 10 years of the project will amount to 24 billion rubles.

Mechel requested financial state support for the creation of several infrastructure facilities, including two substations, a power line, a rotational camp, residential and communal facilities, and external power supply facilities for the rotational camp - for the amount of a planned subsidy of 10 billion 660 million rubles.

During the discussion, the Elginskoye Coal Deposit project itself was almost unanimously supported by the meeting participants, certain concern was caused by the existence of financial debt obligations of Mechel to Sberbank, the only credit institution that has not yet found an opportunity to complete lengthy negotiations with Mechel with a mutually acceptable agreement that would suit both parties concerned.

The discussion resulted in the decision of Deputy Prime Minister Yury Trutnev to postpone the decision on the issue of providing the requested financing for Mechel's projects to a later date.

“We cannot make a decision in a situation where the company has not settled its external debt,” said the presidential envoy.

The project was supported by the governors of the Far Eastern regions. But the Deputy Prime Minister stressed that he understands the importance of developing the Elga project not only for the development of the coal industry, but also for the development of the Far East as a whole, noted that the work to resolve the difficult financial situation around Mechel is indeed in the final stage - but, unfortunately, not finished.

Yuri Trutnev suggested not to rush, although he noted that this is the first time he hears such a progressive position, in particular, of the Ministry of Finance of the Russian Federation - readiness to support a project that has certain financial difficulties.

He pointed out that in this case we are talking about an agreement between the state and the project owners. One party undertakes to allocate money to the budget, and the other, represented by the owner, undertakes obligations to implement the project. This is a serious responsibility, about which all the participants in the meeting who presented their projects were warned. “We will not risk budget funds,” the Deputy Prime Minister noted during the discussion, pointing out at the same time the significant role of Gazprombank, which is now at the epicenter of Mechel's agreements with creditors, and expressed gratitude to him for such active assistance in solving the problem. At the end of the discussion, Yuri Trutnev indicated his readiness to consider on an extraordinary basis both of Mechel's projects, with which the companies came to the government subcommittee, as soon as the issue of debt restructuring is finally settled.

After the meeting, the Deputy Prime Minister answered questions from the EastRussia correspondent.

- Yuri Petrovich, why do you think Sberbank takes such an irreconcilable position in relation to the company, which employs 60 thousand employees, and which both economically and socially has done a lot of useful things?

- Sberbank takes a position related to protecting the savings of depositors and protecting its assets. Sberbank has no right to argue that we will forgive the debts to this, we will not forgive this, this is impossible. Sberbank occupies, in my opinion, an absolutely competent position. And the task of supporting investment projects lies on the shoulders of the RF Government. And the Government is ready to implement this support. Another conversation is that any enterprise, no matter how ambitious and important projects it implements, must be financially stable, otherwise we will begin to forgive everyone's debts, and I will not even say what this can lead to.

The Mechel project turned out to be unbalanced for a number of reasons. The initial reasons for the current financial situation may have been good (the construction of a 320 km railroad to the Elginskoye field by the company at its own expense), but this does not negate the urgent need for a financial balance in order for the enterprise to be economically sustainable. Therefore, we consider the project as a whole really important, and we will undoubtedly support it. But we need to finally complete all the problems of debt restructuring, so that it has been finally determined who is the owner of the project.

- To what extent does Gazprombank offer a viable scheme for resolving the situation with Mechel's debt?

- Gazprombank is one of the most active parties in terms of forming a way out of this situation. They are working on a task, and we are grateful to the bank, but this bank is not the only creditor, so it is necessary that all creditors agree on acceptable terms. We are also making efforts to this, I talked with all the participants in the process - the movement is underway, but the end point in the discussion has not yet been set.

- The past December 22 was called the date of the resolution of the Mechel problem ...

- It's true, and I'm not very happy about it. But the government of the Russian Federation is not in a position to give commands to banks - and rightly so. Because, otherwise, all economic mechanisms break down. We can express a wish, we can participate, helping to move forward in this work, but we can say - to 22-mu all lined up together and signed an agreement - impossible. Then the transition of responsibility begins, then we, as a government, must take responsibility for the results, but everyone must still be responsible for their results independently. As soon as the issue of debt restructuring is finally settled, we are ready to consider both Mechel's projects on an extraordinary basis.

- And the last question regarding another investment project for the creation of IC "Zvezda". Will Rosneft give guarantees for the construction of housing for Zvezda employees? A few days ago there was no information about Rosneft's guarantees ...

- Rosneft will give guarantees for housing construction. Otherwise, we will not be able to bring together this entire program to launch the construction of the social infrastructure of the SC "Zvezda". Rosneft is building a facility, and now Rosneft has asked the government to help build housing for workers.

Actually, as you know, this is not always done. In this case, since the project is large and important, we are ready to take such actions. Moreover, this financial structure is quite complex in structure. We have brought together the possibilities of the budget of the constituent entity of the Russian Federation - Primorsky Territory, and the possibilities of AHML and the Far East Development Fund.

- Who will be the consolidating structure of all three sources of financing for housing construction?

- The Ministry for the Development of the Far East will perform a coordinating function and control. But, having collected such a number of tools participating in the project, we must be sure that these apartments will be needed by employees of SK Zvezda, because it is impossible to invest all this money and then look at empty apartments. Therefore, naturally, if Rosneft orders housing, it must guarantee that this housing will be in demand.

- Has the customer set the terms for providing such guarantees?

- This is a working process, we do not set any rigid date. The design of the first series of houses has already begun, and we are confident that everyone will be able to fulfill their obligations.

ER Help: Mechel negotiates restructuring  of its debt to the largest creditors since the beginning of 2014. At the moment, the company has entered into a restructuring agreement with VTB and Gazprombank. With the third creditor - Sberbank - Mechel is still in the negotiation process. The general director of the company, Oleg Korzhov, announced earlier in December that he expects to sign an agreement with Sberbank in the near future.
September 22: current information on coronavirus in the Far East
Digest of regional events and latest statistics