Barnaul Water Utility

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In December 2005, the Municipality of Barnaul awarded a 25 years lease contract for the city’s water infrastructure facilities to Rosvodokanal (RVK), one of Russia’s largest private utility operators. The municipality also signed a parallel five year investment agreement with RVK for a total investment commitment of about $73.3 million. RVK owned a 51% stake in the Barnaul Water Utility. Prior to RVK, the water utility was operated and maintained by the Municipal Unitary Enterprise (MUE). As of January 2007, RVK provided technical and operational management services through long term lease contracts to total six municipal utilities throughout Russia (Barnaul, Kaluga, Krasnodar, Orenburg, Tyumen and Tver). RVK is a wholly owned subsidiary of A1, the private equity arm of Alpha Group, one of Russia’s largest financial and industrial groups, with oil and gas, banking, telecommunications and other holdings. In 2008, RVK obtained a loan from the IFC for RUB 624 million or $25 million and another loan from the EBRD for RUB 5.6 billion or $224 million to support its obligations under the six long term lease contracts and investment agreements with the municipalities. The EBRD/IFC loan provided financing to implement 5-year investment programs in each city in which RVK operated in 2007 and the acquisition of new utility operator(s). Information received from the IFC Investment Officer Sergei Mytarev smytarev@ifc.org Investment committment is for 2007-2011