Russian Government Looks To Support Sochi Investors And Avoid Loan Defaults
The Russian government is looking at ways to provide support for Sochi investors to avoid defaults on bank loans. The move is expected amidst fears that venues for the 2014 Sochi Olympics may not be completed properly and on time or could be abandoned after the Olympics are over. Later this month, the government will hold a special session aiming at working out extra measures to support Sochi investors, including restructuring their loans, subsidizing bank interest rates and extending tax privileges, the Russian business newspaper Vedomosti reported, quoting unnamed government officials. Over the last few months, some Sochi investors have approached the government to claim they were unable to service loans taken out for the construction of Sochi venues, which are potentially loss-making.
GOVERNMENT ON THE HOOK: Most of the loans for Olympic projects were extended by state-run Vneshekonombank. Of the total of 241B rubles ($7.45B) in loans, 165B rubles ($5.1B) have government guarantees. That means if the investors default on their loans to Vneshekonombank, the government will have to compensate the bank’s losses from the federal budget -- a prospect that the government apparently wants to avoid. Among investors in Sochi Olympics projects are Vladimir Potanin’s Interross and Oleg Deripaska’s BasEl. Both companies declined to comment.
Vladimir Kozlov is a writer in Moscow.