News & Analysis

EBRD to lend €100m to Pulkovo airport

The European Bank for Reconstruction and Development is waiting for final approval to lend €100m to the sponsors of Pulkovo airport – Russia’s first airport PPP, in St. Petersburg. Russian bank VTB is seeking commercial banks to participate in the project alongside other multilaterals.

By
Bruno Alves
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The European Bank for Reconstruction and Development (EBRD) has given preliminary approval for a €100 million loan to the help close the €1.4 billion Pulkovo airport project in St. Petersburg – Russia’s first airport public-private partnership.

EBRD: €100m loan could
help Pulkovo FC takeoff
Final approval for the loan should take place on April 13 2010, the bank said in a statement. The project reached commercial close last October and is being sponsored by a consortium comprising Russian bank VTB Capital, German airport operator Fraport and Greek investment group Copelouzos. They will have to build a new terminal and refurbish the airport’s existing infrastructure facilities.

Other multilateral organisations, such as the European Investment Bank and the International Finance Corporation – part of the World Bank group – are also expected to be involved in the deal. Russian development bank Vnesheconombank is set to help fund a sizeable chunk of the PPP, a source close to the process said.

But VTB is also trying to attract commercial banks to help fund the deal. The source indicated that Pulkovo – with its mixture of ruble and euro-denominated returns – is in a better position than most Russian PPPs to attract international bank funding. Post-crisis, international banks have shied away from taking on currency risk on Russian projects, stalling much of the country’s incipient PPP programme.

However, VTB is not likely to lend to the project, the source said, as it will already have to write a substantial equity cheque for it. Institutional investors might also be involved in funding Pulkovo, should the sponsors issue government-guaranteed infrastructure bonds. Late last year, the Russian government set aside some RUB100 billion (€2.4 billion; €3.3 billion) to guarantee infrastructure bonds issued by companies to help finance their projects.

Pulkovo airport was originally targeting a March financial close but the EBRD’s final approval date for its €100 million loan seems to indicate that financial close will get pushed back until at least April.