Russian govt discussing aviation industry development project with over 1-trln rubles in financing through 2040 - source
MOSCOW. Jan 9 (Interfax) - Russia's Ministry of Industry and Trade has submitted a draft order to the government that approves investments in the expansion of civil aircraft production, and includes tapping the National Wealth Fund (NWF), the Ministry press service told Interfax.
The investment project is aimed at implementing a comprehensive program for the development of Russia's national aviation industry through 2030, and "to ensure we reach the established design capacity for aircraft production, as well as delivery to Russian leasing companies and operators," the Ministry said. According to the current version of the comprehensive program, the Russian aviation industry plans to produce 1081 civil aircraft, including 270 MS-21, 142 SJ-100 and 115 Tu-214 by 2030.
"Financing of the project is planned using funds from the National Wealth Fund, the federal budget and extra-budgetary sources," the Ministry of Industry and Trade said, without specifying the amount of money the project will require.
TRILLION+
As part of the investment project, there is work planned on the development and modernization of engines, instrumentation and units, the import substitution of foreign materials and electronic components, the technical re-equipment and expansion of aircraft factory capacities, and maintaining an after-sales service system, Interfax's source in the aviation industry said. The source said that the project is supported by Rostec's business plan, which envisages production of over 1,800 aircraft by 2040. The state corporation's entire program is estimated to cost more than 1 trillion rubles (in prices for the corresponding years). Nearly 284 billion rubles would be allocated from the National Wealth Fund alone based on the already standard bond scheme for similar investment projects at 1.5% per annum (in this case, the issuer will be Rostec, and the placement period will be 15 years). The remaining funding is expected to be raised from banks, the federal budget and the aviation industry's own funds.
Aircraft would be supplied to airlines not at commercial prices, but at special prices supported by government subsidies. For example, the cost of an MS-21 in 2024 is estimated at 6.9 billion rubles while the so-called guideline price is 3.1 billion rubles. (A subsidy covers 55%); in the case of an SJ-100, the cost is 4.8 billion rubles and the guideline price is 2.4 billion rubles (51% is subsidized). The Tu-214 costs 5.4 billion rubles, with a guideline price of 3.1 billion rubles (42% subsidized). Subsidies would be allocated to cover these price differences starting in 2025.
As for inter-ministerial coordination, the Ministry of Industry and Trade's investment project has received a number of comments from the Ministry of Finance and the Ministry of Economic Development, the source said. The Ministry of Economic Development, for example, was not satisfied that the project provides for a grace period for the payment of coupon income (in 2024-2025), and the Ministry of Finance had questions about the proposed guideline price for the Il-114-300 aircraft (1.9 billion rubles, with a cost of 2.5 billion rubles). The Ministry of Industry and Trade told Interfax "all comments on the draft order received from interested federal executive authorities have been addressed."
Interfax has not received any comments from the Ministry of Economic Development, the Ministry of Finance or Rostec. The government press service reported the day before that in 2024, "passports for major projects regarding technological sovereignty, and involving the development of production based on our own development lines," would be approved. The comment relates to "megaprojects" which involve the production of domestic aircraft, among others.
Russia's aviation industry enterprises come under the umbrella of PJSC United Aircraft Corporation (UAC), which is part of Rostec.