"The Japanese shared the risks of equipment deliveries for Russian satellites", "Vedomosty" newspaper

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"Sumitomo", financial industrial group (Japan), undertook to share financial risks under the project for renovation of Russian communications satellite constellation. This is how the Japanese promote their compatriots (NEC corporation) in the local market. "NEC" corporation will supply the equipment for new communications satellites. "NEC" will supply the hardware to the amount guaranteed by Sumitomo - $ 123 mln USD.

The project for renovation and replenishment of aging Russian satellite communication systems provides for launching of seven "Express-A" and "Express-M" communication satellites into geo-stationary orbit within 2002-2005 timeframe. The total cost of the project (including setting-up of ground infrastructure) amounts to nearly $ 800 mln. USD. In the early 2001, "Sberbank" joined to finance the project. In January the bank granted to the satellite operator, "Russian Satellite Communication Company" ("RSCC'), a credit line amounting to $ 48,75 mln USD. The money was spent to order "Express-A" satellite scheduled to be launched in April 2002. A part of the spacecraft capacity has already been acquired by "Eutelsat" for the amount of $ 60 mln USD. In September "Sberbank" opened another credit line for RSCC in the amount of $ 53 mln. USD.

Today the Russian communications satellite constellation is in a poor state. As a result of malfunctions of wear and tear satellites there was a real threat in 2001 that the whole Far East and Northern areas would remain without federal TV broadcasting. Until recently "RSCC" has been allocating funds mostly from its own financial resources to support the production and launching of new satellites.

"RSCC" expects to receive from the government before 2005 nearly one third ($250 mln. USD) of the state budget required to implement the project. In 2002 the government is intending to give guarantees to "RSCC" for borrowings up to 600 mln. roubles. Also, the government contribution will be in the form of free-of-charge launching of new satellites by "Proton" launch vehicles manufactured by the "The Khrunichev State Research and Production Space Center". Approximately 15% of the expenses under the project for renovation of civil satellite constellation will be incurred by "RSCC" from its own financial resources.

Yesterday Mr. A. Kazmin, the Chairman of the Board of Directors of "Sberbank", announced that a credit line for "RSCC" was opened in the amount of $116 mln USD. According to Mr. Kazmin, the total volume of credits of the bank under the "RSCC" investment projects may amount in the range between $400 mln and $500 mln. Mr. Kosoboro Marinaka, Chief Executive Officer of "Sumitomo" corporation, noted that his company would share credit risks of "Sberbank" in the amount of $123 mln USD. Besides, "Sumitomo" undertakes to supply "NEC" equipment for three of seven satellites to the above mentioned amount. If "RSCC" fails to repay the credits to "Sberbank" in due time, the bank is entitled to claim compensation from "Sumitomo". It is the implementation of this funding scheme undertaken by the Japanese corporation stimulated the Russian side to place an order with "NEC" corporation. However, according to Mr. B. Antoniuk, the equipment for the project will be also supplied by "Alcatel", France. This is not the first example of joint activities of Japanese corporations in Russia. In 1997, "NEC Neva Kommunikatsionnyje Sistemy" was established by "Sumitomo", "NEC" and "Mitsui' companies jointly with "Telecominvest" in Saint-Petersburg.

"Vedomosty", 26.12.2001