Czech export insurer underwrites massive Russian fertilizer project

Arkady Dvorkovych, Andrej Guryev, UniCredit Bank CEO Jiří Kunert, photo: CTK

The Czech state will back a huge investment by a Czech company in Russia. Russia’s fertilizer producer PhosAgro, has contracted Czech technology firm Chemoproject Nitrogen to build a plant.

Arkady Dvorkovych,  Andrej Guryev,  UniCredit Bank CEO Jiří Kunert,  photo: CTK
The Czech state insurance company EGAP will provide the Russian company with a long-term loan worth 2.3 billion crowns (some 73.4 million euro). According to the PhosAgro CEO Andrej Guryev, the loan will be provided for 12 years at an interest rate below three percent.

The money will be used for the new project documentation and acquisition of equipment from the Czech engineering company for the construction of a granulated urea production line in the Vologda region in the northwest of Russia. The project should be completed by the end of 2017.

Representatives of the Russian firm, EGAP insurance company and UniCredit Bank, including Russian deputy prime minister Arkady Dvorkovych, signed the deal at Prague’s Strahov monastery on Tuesday.

Mr Dvorkovych said that the Russian government was ready to support other future technological investments in all fields of industry.

The CEO of EGAP, Jan Procházka, said that while the volume of Czech exports to Russia have declined in the last year due to more cautious approach following the devaluation of rouble, in this case the transaction showed an acceptable level of risk and both the domestic exporter and the borrower met the key criteria for export insurance.

“On one side we have an experienced Czech exporter Chemoproject Nitrogen and on the other a very strong Russian investor, the PhosAgro company, which is a global leader on the fertilizer market, has an international rating and, what is very important for EGAP, has significant income in foreign currency, the insurance company’s spokeswoman Hana Hikelová told Czech Radio.

The new facility in the Vologda region will meet the standards of other world leading urea production lines in terms of raw material consumption energy efficiency, labour output, and ecological safety.

With the launch of the new urea capacity, Phos Agro may become Russia’s largest producer of this type of fertilizer.