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    Construction of a factory on manufacture of cars in Lida

    A. Project Opportunity Description: A1. Project Name:

     Construction of a factory on manufacture of cars in Lida

     а. Short name:

     Construction of a factory on manufacture of cars in Lida

     b. Full name:

     Construction of a factory on manufacture of cars in Lida capacity 20-30 thousand cars a year.

     c. Summary description:

     The organization of manufacture with the purpose of creation of the modern

    enterprise on assembly of cars in a class of the small-displacement cars, differing the economic fuel consumption, having a consumer demand and competitive advantages

    in the market.

     А2. Progress Status:

     Search of partners and investors.

     А3. Organizations involved and their roles:

     1) Lida regional executive committee initiator of the project. 231300, Republic of

    Belarus, Grodno area, Lida, Sovetskaya str. 8. Hudyk Andrei Pavlovich Chairman,

    tеl. (+375 1561) 3-40-01, tel./факс: (+375 1561) 3-40-04, E-mail: office@mail.lida.by Web: www.lida.by 2) Grodno Region Executive Committee: 3,

    Ozheshko Str., Grodno, 230023, Republic of Belarus. Shkrebova L.L., tel.: (+375-152) 77-20-38

     А4. Project Description:

     Within the limits of realization of the planned investment project creation of new manufacture on assembly of cars in a class of the small-displacement cars, differing is provided by the economic fuel consumption having a consumer demand and

    competitive advantages in the market. It is offered two variants of realization of the project: - Allocation under construction of a factory of the separate ground area in the

    area of Experimental plant Neman in Lida, Zhukov str. - Creation of joint venture on the basis of available free areas of RUE ?Optic? in Lida, Masherov str. 10. Appeal of

creation of manufacture on assembly of cars in territory of Lidas area, is caused, first

    of all, by a favourable geographical position and developed industrial infrastructure of

    area. Lidas area is on a crossroads of the major automobile, railways and airlines ways. Station Lida of the Belarus railway will take to transportation cargoes in the

    intrarepublican, international, direct and commixed means of communication. In

    territory of area there is an airport, capable to accept supersize planes. In city the sphere of mechanical engineering is developed. Lidas enterprises make buses,

    combines, agricultural machinery. The powerful factory on release of a paint,

    varnishes, components of plastic successfully works. The personnel potential of

    region allows to satisfy all needs of any future manufacture for experts and workers.

    There is a technical college in town and 3 schools on preparation of the basic

    industrial personnel in sphere metal and wood processing, mechanical engineering,

    optics, glassmaking, car-care center, etc.

     А4a. Project cost (mln USD):

     40.0

     A5. Background / history / overall programme / related or similar projects:

     One of priority directions of development of economy of Republic of Belarus is the

    mechanical engineering. Production of the given branch: MAZ, BelAZ, MoAZ.

    MZKT, MTZ are world renowned. Alongside with manufacture of cars, strong

    enough development have received in Republic of branch and enterprises providing

    the basic assembly manufacture by accessories and spare parts (the Belarus tires,

    engines, hydraulic boosters and drive gears, electrotechnical devices, chemical

    materials, products from plastic, paint and varnish materials, etc.).] Unfortunately,

    manufacture of cars only has started to develop in Belarus, but it has the most mass development and greater rates of growth of a consumer demand. In the year 2006. in

    the joint venture of Joint-Stock Company ?Unison? assembly of Iranian cars

    ?Samand? has begun. Prepares two versions of car ?Samand? - standard and

    lux-version with engine ?Peugeot? in volume of 1,8 liters and capacity of 100

    horsepower’s. Cost of the car is made with 12 thousand US dollar. In Belarus in 2007

    is planned to produce on a home market 2 thousand passenger Iranian cars of the

    Belarus assembly. Signed in February, 2007 between Joint-Stock Company ?Unison? and holding ?Iran Hodro? the agreement assumes, that by 2014 60 thousand cars a

    year should make volume of manufacture. At the same time in Belarus the

    organization of assembly of Chinese cars ?Hafei? is planned. Company ?Union

    Motors? plans to realize the given project. Midget car model Brio will be assembled

    in republic. At the first stage cars will assemble from import accessories. Further

    enterprise is measured to receive certificate ST1 which means, that assembled cars

    have the Belarus origin that will allow to export them on the Russian market. For this

    purpose it is planned to organize in Belarus a line of welding and painting of car

    bodies. In creation of the given line the Chinese party is ready to invest $50-70

    million

     A6. Environmental impact summary:

     Application of modern technologies will allow to reduce influence on an

    environment to a minimum.

     A7. Possible obstacles/ problems/ risk assessment:

     Decrease in rates of the customs duties for imported cars on territory of Belarus.

    Increase in interest rates under bank credits for physical persons.

     A8. Term of realization / term of recoupment (years):

     2 / 4

     A9. Project’s branch:

     Mechanical Engineering and Metal-working

    B. Capital Cost Items (additional requirements for project): B1. Project physical components B2. Capital cost (mln USD)

     Cost of the equipment for industrial lines 28.4

     Estimated cost of construction, including design 11.6 works, expenses for the engineering specifications

     Total: 40.0

    C. Capital Resources Available from Sponsors/ Proposers: C1. Resources 'in kind', grants, investments, C2. Amount (mln USD) equity / ownership, etc.

    D. Required Financial Assistance: D1. Financing gaps, type of financial assistance required:

     Creation of the enterprise with 100 % of foreign capital. Direct investments. D2. Sources of finance D3. Type of investment D4. Amount (mln

    USD)

     Means of the foreign Direct foreign 40.0 investor: investments:

    D5. Financial/ International Institution Name:

    E. Demand (users) and revenues: E1. Type of users/ markets, volumes, pricing, revenues, quantifiable benefits/

savings:

     The automobile market of Belarus during 2001-2006 has been characterized by the tendency of growth of sales of new cars. During the given period the quantity of the

    sold new cars has increased from 2749 cars in 2001 up to 10020 cars in 2006

    (according to a monthly ?Motor show?, ? 2/2007). Sales of new cars in 2006 have

    increased on 104,5 % in comparison with 2005. The most sold import car in Belarus

    in 2006 became Dacia Logan of the Romanian assembly. For a year 515 cars of the

    given model at the price of 7 thousand Euros have been realized. Among the factors

    which have rendered positive influence on the market of new cars, in the Belarus

    Automobile Association (BAA): growth of well-being of the population,

    simplification of conditions of reception of the credit and sale of cars under leasing schemes, alignment of rates of the customs duties for legal and physical persons. In

    the first quarter 2007 the quantity of the sold new cars has grown more than in 2,4

    times in comparison with the similar period of 2006 (according to the company ?Atlant-M Facoighandl?. By results of the first quarter, by the end of current 2007 the

    given figure can exceed 15 000 cars. According to BAA, the real capacity of the

    Belarus market makes 50-60 thousand new cars a year. If existing tendencies will be kept, and the legislation will not undergo essential changes, it is possible to reach

    these parameters in the nearest few years. Thus, the market of new cars in Belarus is

    characterized by constant growth, and at the initial stage, the project offered to realization, will be the basic commodity market. As perspective the market of Russia,

    Ukraine and other CIS countries is considered.

    E2. Revenues (Sales) E3. Amount (mln USD)

     By 2012 20-30 thousand cars a year should 180.0 make volume of release of cars. At an output on

    the planned volumes of manufacture and average

    cost of one car 6,0 thousand US dollar the annual

    proceeds will make:

    F. Operating and Maintenance Costs: F1. Cost components, strategies for cost recovery, operating organisations, subsidies, etc.:

    F2. Cost Item F3. Amount (mln USD)

     Expenses for manufacture and realization of 172.0 products

    G. Net Income Value: G1. Net Income Value G2. Amount (mln USD)

     Net profit 18.0

    H. Project information source: H1. This form was completed by:

     Klimovich Ivan Anatolievich Deputy Chairman of executive committee of the

    Lida region, tel.: (+375 1561) 3-40-02, (+375 29) 313-40-02 H2. Organisation (address):

     Executive committee of the Lida region, 231300, Republic of Belarus, Grodno area, Lida, Sovetskaya str., 8

    H3. Тel/Fax/E-mail:

     Tel.: (+375 1561) 3-40-01, fax: (+375 1561) 3-40-04, E-mail: office@mail.lida.by

    H4. Date:

     December, 2007

    H5. Supreme Organization:

     Grodno Region Executive Committee

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