The European Bank for Reconstruction and Development (EBRD) has agreed to provide 6.3B roubles (US$235M) in long-term funding for the modernisation of nine power stations on the Volga-Kama cascade, one of Russia's largest sources of hydro power.

EBRD will be the lender of record for the full amount of the loan to OAO HydroOGK, a fully-owned subsidiary of the main Russian power utility RAO UES, but 4B roubles (US$149.4M) has been syndicated to nine banks under an EBRD A/B loan structure.

Co-Arrangers under the B loan are: Standard Bank PLC, Bank Austria Creditanstalt AG, and ING Bank (Eurasia) ZOA. Lead Managers are: Calyon, Fortis SA/NV and ZAO Raiffeisenbank Austria. Managers are: ZAO Citibank, Credit Suisse and Banque Societe Generale Vostok.

The B loan is in two tranches, with 3.15B roubles (US$130.7M) for 10 years (provided by Standard Bank, ING, Bank Austria, Calyon and Fortis) priced at 305 basis points over MosPrime and 850M roubles (US$31.7M), provided by the remaining banks, for eight years priced at 275 basis points over MosPrime. The EBRD A loan is for 14 years.

In an earlier EBRD rouble syndication for the Russian power sector, six banks last April provided a seven-year loan of over 4B roubles (US$149.4M) to Mosenergo at a price of 275 basis points over MosPrime. The EBRD loan for Hydro OGK sets a new record in terms of maturities for the rouble syndication market, now stretching to 10 years for the first time.

The total cost of rehabilitating obsolete equipment, mainly turbines, generators and transformers, on the Volga-Kama cascade is estimated at 26B roubles (US$971M) and it is expected to take five years to complete.