Alfa-Bank provides US$537m in credit to Russian power firms

26 April 2018, Week 16, Issue 907

Alfa-Bank, one of Russia’s largest commercial lenders, has agreed to provide up to US$537 million in credit to a pair of state-owned power companies.

In a statement last week, the bank said it would issue two loans worth US$375 million to Atomenergoprom, a subsidiary of government-run nuclear group Rosatom. One loan of US$225 million will be issued with a repayment term of five years, while a second worth US$150 million will need to be settled over four years. Alfa-Bank said the funds would be used for corporate purposes, without elaborating.

“Alfa-Bank has been partnered with state corporation Rosatom since 1997. Over the past five years, we have been a core bank for the nuclear generation sector,” Alfa-Bank board member Maxim Pershin commented.

Atomenergoprom is responsible for the engineering, design and construction of nuclear power plants (NPPs). As such, it is involved in Rosatom’s projects to build stations in Bangladesh, Belarus, China, Egypt, Finland, Hungary, India, Iran and Turkey. The company’s last major financing deal was made in November 2016, when it secured an overdraft from state-owned Sberbank, Russia’s largest lender, with a limit of 10 billion rubles (US$160 million).

Alfa-Bank also announced last week it would extend a 10 billion ruble (US$160 million) revolving credit line to RusHydro, Russia’s largest producer of hydroelectric power. The company will use the funds to bankroll current investments, pay back previous loans and provide its own loans to third parties.

RusHydro reported a 41.3% dip in net profits last year to 22.5 billion rubles (US$365 million), under international financial reporting standards (IFRS). This was despite the company achieving modest gains in sales and EBITDA. The firm blamed the result on penalties related to arrears and asset depreciation.

Atomenergoprom revealed its IFRS financial results for 2017 at the start of last week, reporting a 6.7% growth in revenues to 747.1 billion rubles (US$12.1 billion), on the back of increased sales volumes. It saw net profits climb by 25.2% to 116.2 billion rubles (US$1.88 billion), thanks to much smaller foreign exchange losses during the year. The company also noted it had reduced its loan portfolio to 111.1 billion rubles (US$1.8 billion) by the end of 2017, 37.6% less than a year earlier.

However, Atomenergoprom also booked a 10.8 billion ruble (US$17 million) write-off connected with its Mantra Resources joint venture with Canada’s Uranium One. The joint venture held rights to the Mkuju River uranium mine in Tanzania. The investors decided to suspend the US$1.2 billion project in July 2017 after years of delays, citing the downturn in the global market for uranium.

Joseph Murphy

Edited by

Joseph Murphy


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