MOSCOW, June 14 (RIA Novosti) – Russia’s state-owned development bank expects to lose more than 165 billion rubles ($5.2 billion) from unprofitable construction projects for next year’s Winter Olympics in Sochi, the bank’s head said in an interview published Friday.
Vneshekonombank, or VEB, has committed to lending a total of 220 billion rubles to a slew of Russian companies engaged in Olympic construction, bank chairman Vladimir Dmitriev told Gazeta.ru. The bank has already transferred 110 billion rubles, with the rest scheduled to be paid out by the end of the year, he said.
Recipients of the cash include billionaire Vladimir Potanin’s Interros, billionaire Oleg Deripaska’s Basic Element and state-owned energy giant Gazprom.
At least eight of the 19 Olympic projects being funded by VEB are loss-making, the bank chairman said. “That means that we have big doubts about whether our debtors will be able to honor their obligations.”
VEB is fully owned by the Russian government and is mandated to provide loans to long-term projects that would otherwise struggle to attract financing. However, the bank always seeks to make a return on investments.
Construction for the Winter Olympics has been hit by a series of cost overruns and delays. In February, President Vladimir Putin fired Akhmed Bilalov, vice president of the Russian Olympic Committee, after publicly scolding him in front of a group of officials.
According to VEB head Dmitriev, “The budgets for a whole series of projects have increased twofold, or even more.”
The Winter Olympics in Sochi are expected to be the most expensive Olympic Games in history, with a price tag of 1.5 trillion rubles ($51 billion).