RUSSIA – UPPER VOLGA NEWS REPORT

April 30, 2007

Author: Roman Vvedensky, BISNIS representative in Nizhny Novgorod, Russia

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2007. ALL RIGHTS RESERVED FOR USE OUTSIDE OF THE UNITED STATES.

The report summarizes commercial, political and business development news in the Nizhny Novgorod region, and Republic of Tatarstan in April 2007. The information is received from the Russian news agencies (INTERFAX, AK&M, NTA), TATAR-INFORM.RU, INTERTAT.RU, REGNUM.RU, regional periodicals, PR departments, and web-cites of regional governments and local companies.

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The report highlights:

Nizhny Novgorod Region:

· Nizhny Novgorod region’s governor attracts Japanese companies to infrastructure projects

· French and Nizhny Novgorod based logistics companies agree on direct container shipping

· Russian-German JV to produce prefabricated houses in Nizhny Novgorod region

· Salamander plans over Euro 30 million investment in Nizhny Novgorod region

Republic of Tatarstan:

· Tatneft to set two joint ventures in Alabuga special economic zone

· DeLonghi to invest additionally US$ 15 million in its Alabuga plant

NIZHNY NOVGOROD REGION

Nizhny Novgorod region’s governor attracts Japanese companies to infrastructure projects

The Nizhny Novgorod region’s mission led by Governor Valery Shantsev visited Japan on April 7-12. The agenda of the visit included meetings with large Japanese companies, i.e. Sumitomo Corporation and Ishikawajima-Harima Heavy Industries Co (IHI). The region’s government agreed to set two working groups with Japanese counterparts to develop the following projects: a high-speed railroad between Moscow and Nizhny Novgorod (Sumitomo); a northern bypass around Nizhny Novgorod, and a logistics center next to Nizhny Novgorod (IHI).

Last year, the foreign trade turnover between Japanese and Nizhny Novgorod region’s companies equaled US$ 34.9 million with prevailing US$ 28.7 imports of Japanese products. Asahi Glass Co. is a principal Japanese investor in the Nizhny Novgorod region with US$ 110 million modernization project at Bor Glassworks.

French and Nizhny Novgorod based logistics companies agree on direct container shipping

CMA CGM (Compagnie Générale Maritime) and Logoprom, Nizhny Novgorod, reached a preliminary agreement to arrange container shipping from Western Europe to Nizhny Novgorod. Containers will be delivered to Kostarikha cargo station (Nizhny Novgorod) by rail, and then carried to Logoprom Sormovo logistics terminal by trucks for further handling and distribution.

CMA CGM is one of the largest French companies in container shipping by boats, which operates 600 offices in 150 countries. It owns 306 vessels, servicing 80 navigational routes. Logoprom Sormovo logistics center was set in 2003. Its area totals 2,800,000 square feet, where 485,000 square feet meet Class B requirements, and 53,800 square feet – Class A requirements.

Russian-German JV to produce prefabricated houses in Nizhny Novgorod region

On April 5, the Russian-German joint venture Maloetazhnye Komfortnye Doma and Hanlo House Export GmbH signed a contract to set an advanced wood processing plant, and four factories, producing prefabricated houses in the region.

The project provides for Euro 100 million investments, with Euro 40 million invested at the first stage.

Salamander plans over Euro 30 million investment in Nizhny Novgorod region

According to Nizhny Novgorod region’s government, Salamander Industrie - Produkte GmbH considers Euro 30-40 million investment project to produce PVC pipe fittings in the region. The design capacity of the plant is 8,800 – 11,000 short tons of fittings annually. Construction works may start in 2008.

REPUBLIC OF TATARSTAN

Tatneft to set two joint ventures in Alabuga special economic zone

According to the investment department of Tatneft, the leading petrochemical company of Tatarstan, it plans to set two joint ventures with European companies - Preiss-Daimler and Basell Polyolefins - in Alabuga special economic zone.

The project with Preiss-Daimler (Germany) provides for Euro 70 million investment in a fiber glass plant with a design capacity of 22,000 short tons per year. The project with Basell Polyolefins (Italy) is estimated at Euro 20 million to produce compounds for the automotive and electrical engineering industries. The design capacity of the second plant is 49,600 short tons annually; the initial capacity is set at 22,000 short tons per year. Both plants will use polypropylene as a major raw material.

DeLonghi to invest additionally US$ 15 million in its Alabuga plant

DeLonghi group of companies plans to invest additionally US$ 15 million in its plant in Alabuga special economic zone. In 2003, it invested US$ 10 million to produce DeLonghi oil heaters for the Russian market. Last year, the plant produced 800,000 oil heaters, which made approximately 50% of the Russian market. The company’s sales in Russia exceeded US$ 46 million in 2006.

New investment should increase the share of DeLonghi to 60% of the Russian oil heater market, and widen the range of DeLonghi products, manufactured in Tatarstan.

For more information on Upper Volga region, Russia, visit BISNIS online at http://www.bisnis.doc.gov/bisnis/country/volga.cfm

BISNIS (www.bisnis.doc.gov) is part of the U.S. Commercial Service (www.export.gov).