Kostroma Region to Launch Unique SIB in Education with Support from VEB.RF and Sistema Foundation
VEB.RF; the Sistema Foundation, the social investment arm of Sistema; and the Kostroma Region Administration are to launch a social impact bond (SIB) in education to train personnel for the local timber industry.
The project charter was approved by the Kostroma Region Administration. The document was signed by Governor Sergey Sitnikov.
The project is designed to provide young people with career guidance and job search assistance for highly sought-after occupations in the region.
The investor and service provider are the Sistema Foundation, a Russian major charity and Sistema’s ESG competency centre. VEB.RF is traditionally the SIB operator, helping the stakeholders throughout the project life cycle.
The principal beneficiaries are eighth- to eleventh-year students from 16 schools in the cities of Kostroma and Galich and the municipalities of Kostroma, Galich and Chukhloma as well as students at the Kostroma Engineering School of Construction and Forestry, the Galich Engineering School of Agriculture, the Chukhloma Engineering School of Forestry, and Kostroma State University.
Over the next three years, the Sistema Foundation will provide Kostroma Region students with career guidance and job search assistance based on their received education.
The project will contribute to retaining young talent in the region, making them attractive to employers and ensuring that they are paid decently. Segezha Group, part of Sistema, is to recruit adequately trained, highly motivated employees.
The project will deliver social outcomes if at least 75 high school students enroll on the sponsored college or university programmes and if at least 30 trainee programme graduates are employed by timber companies.
If the social outcomes are achieved, the investor will be paid 35 million roubles from the Kostroma Region budget.
The project delivery period is three years. The project will start with supplying modern equipment to the educational institutions and training the teaching staff.
Svetlana Yachevskaya, Deputy Chairperson and member of the Management Board, VEB.RF:
“The Kostroma Region project is Russia’s second social impact bond in education. It is noteworthy that according to a global SIB database, Russia ranks seventh among 34 issuing countries by number of bonds. We have seven more projects in the pipeline for over 300 million roubles and intend to carry out projects on a pay-for-success basis in the future at nationwide level.”
Oksana Kosachenko, President, Sistema Foundation:
“A responsible business has to invest in dealing with difficult problems across a wide range of areas, including staff training and understaffing, and the results of such investments are increasingly important. The Sistema Foundation is one of Russia’s first non-profit organisations implementing a project on a pay-for-success basis. We want to use the project in the Kostroma Region to help with responses to the loss of employees, providing an opportunity to receive special training and get a job at a local member company of Sistema Group. The principal outcomes of the project are to increase staffing by 18 per cent for the group’s entity, the Galich plywood mill, every year. The Sistema Foundation has two similar projects in the pipeline.”
Krasnoyarsk Territory’s Chernogorskoye Deposit to Receive Project Financing from VEB.RF and VTB
VEB.RF, VTB and Chernogorskaya Mining Company have signed a syndicated loan agreement for the project to build the first phase of a concentrator for the Chernogorskoye deposit in the Krasnoyarsk Territory.
The project budget totals about 240 billion roubles, with VEB.RF’s and VTB’s commitment of up to 180 billion roubles. The transaction uses the Project Financing Factory (PFF) mechanism, with VEB.RF acting as the operator. The first disbursements are scheduled for as early as February 2022.
Until the loan is repaid, the government will subsidise the borrower to offset any increase in the Bank of Russia’s key rate. In addition, VEB.RF will lend a tranche that can be used to pay interest at the investment stage and cover a possible increase in the project budget.
Yuriy Korsun, Deputy Chairman and member of the Management Board, VEB.RF:
“The Project Financing Factory provides a unique opportunity for borrowers and lenders to hedge their interest rate risks, subsidising them for increases in the key rate. When the key rate reaches 8.5 per cent, all PFF-funded projects can apply for government subsidies in 2022, including the Russian Platinum project. Given the number of ongoing and intended projects, it’s safe to say the Factory is a good mechanism. We see it is highly in demand among investment projects, as some investors asked VEB.RF to provide PFF financing again for their new projects.”
Yuri Soloviev, First Deputy President and Chairman of the Management Board, VTB:
“The goals of VTB’s strategy include support for investment projects of major socio-economic significance for regional; development. The concentrator built for the Chernogorskoye deposit will have an important role in developing the Russian Arctic. The signed documents on long-term financing prove VTB Bank’s leading expertise in large-scale project financing.”
Evgeny Vorobeichik, CEO, Russian Platinum:
“The Chernogorskoye project will lay the foundations for creating Russia’s second-largest palladium and platinum producer. The second phase of the project involves building the infrastructure of the southern part of the Norilsk-1 deposit and its concentrator. We are satisfied with effective cooperation with our financial partners, VEB.RF and VTB, in promoting this large-scale project aimed at contributing the socio-economic development of the Krasnoyarsk Territory, building up the capacity of the Russian mining industry, and consolidating its strategic position in the global platinum-group metals market.”
Chernogorskaya Mining Company is part of the Russian Platinum Group. The Chernogorskoye deposit has productive reserves of 131 million tonnes of ores containing palladium, platinum, rhodium and gold. The designed capacity of the Chernogorskoye deposit concentrator’s first phase is 7 million tonnes of ore per year; end-products are copper and nickel concentrates with a high palladium and platinum content. The project will use best practices in the mining industry.