Evropeyskaya Elektrotekhnica is working on the launch of its own production in the Russian Industrial Zone in Egypt

Evropeyskaya Elektrotekhnica is working on the launch of its own production in the Russian Industrial Zone in Egypt

March 29, 2019. Moscow — PJSC Evropeyskaya Elektrotekhnica (hereinafter — the "Company"), a leading company in the Russian engineering market, has begun working on a project to launch its own production of technological equipment in the Russian Industrial Zone in Egypt (hereinafter — the "RIZ").

In March 2019, the Agreement of Intent was signed regarding participation in the project to establish the Russian Industrial Zone within the Economic Zone of the Suez Canal. The Parties of the Agreement are Joint Stock Company Russian Export Center and Engineering Center Evropeyskaya Elektrotekhnica Limited Liability Company, which is the main operating company in the framework of Evropeyskaya Elektrotekhnica Group of Companies.

The Company's entry into the RIZ in Egypt, which was created in the Economic Zone of the Suez Canal in accordance with the laws of the Arab Republic of Egypt, aims to increase the export of the company's products and services within Egypt, in neighboring countries, and in other countries and territories in the Middle East and Africa.

Ilya Pomigalov, Director for Special Projects of JSC Russian Export Center, noted: "We expect the partnership project between the Russian Federation and Arab Republic of Egypt to have a huge stimulating effect on Russian non-raw high-tech exports to countries in this promising macro-region. As of March 2019, Russian Export Center has concluded 14 agreements of intent with Russian companies interested in locating their production facilities in the Russian Industrial Zone in Egypt. More than 100 domestic companies are currently interested in this project. This industrial zone and the legal status of its functioning are initially structured with the expectation of providing domestic businesses with new serious competitive advantages when entering the markets of countries in the region and around the world."

Sergey Dubenok, Head of the Board of Directors of PJSC Evropeyskaya Elektrotekhnica, commented: “The two main areas of our business today are the creation of engineering systems and the production of technological equipment for the Oil&Gas and petrochemical industries.

Our preliminary analysis shows a high demand for these categories of complex industrial products in Africa, the Middle East and Central Asia. The proposed location for our production in the Russian Industrial Zone in Egypt can provide us with logistically optimal access to this vast region. A number of countries in the region are in dire need of reconstruction and upgrade of civil and industrial infrastructure, including capacities in the Oil&Gas and energy sectors.

There are a number of factors that will provide us with a significant gain in the type of reduction in the cost of final products, including concessional tax treatment for residents of the industrial zone (zero rates for import and export customs duties, as well as zero rate for VAT), close proximity to deep-sea ports, state support in the construction of industrial and social infrastructural facilities, and systematic measures to ensure the safety of residents in the RIZ. We intend to acquire a number of raw materials, materials and components from local suppliers, which will facilitate the integration into the region's economy, with the active involvement of the local Arabic-speaking staff.”

REFERENCE: ABOUT THE RUSSIAN INDUSTRIAL ZONE IN EGYPT

The RIZ project in the Economic Zone of the Suez Canal provides for the creation of a special zone with a concessional tax treatment for Russian resident enterprises. The RIZ should become a hub for promoting Russian industrial products to markets in the Middle East, Africa and other neighboring regions.

The RIZ is based on the shore of the Suez Canal, in the east of Port Said, opposite Port Fuad. The RIZ industrial site will be located in close proximity to the port infrastructure under construction, with access to the roads. According to Muhab Mamish, Head of Administration of Suez Canal, the infrastructure adjacent to the RIZ will be fully operational by the end of 2020/beginning of 2021.

As of February 2019, more than one hundred Russian companies from a number of industries have shown interest in the project, including pharmaceuticals, fertilizer production, construction materials, steel structures, agricultural machinery, ship equipment and Oil&Gas equipment.

Russian public funding of primary infrastructure for the RIZ is estimated at approximately USD 180 million. Investments from private Russian business may total about USD 7 billion. Egypt supports the development of the RIZ by creating modern environmental infrastructure.

On the Russian side, the project is being supervised by the Ministry of Industry and Trade of the Russian Federation and Russian Export Center. The intergovernmental agreement between Russia and Egypt that regulates the parameters of the special zone was signed on May 23, 2018.

The Ministry of Industry and Trade assumes that the implementation of the project will take about 13 years. At the same time, it is predicted that resident companies will be able to produce USD 3.6 billion annually by 2026.

On February 19, 2019, JSC Russian Export Center held a presentation on the export potential of the RIZ in Moscow. During the event, the first six agreements of intent were signed with companies that represent future residents of the RIZ. In addition, the second round of negotiations took place regarding the agreement on the terms of the development contract between JSC Russian Export Center and the General Authority of the Suez Canal Economic Zone.

Sources: https://tass.ru/ekonomika/6137349, https://rueconomics.ru/354475-proekt-rossiiskoi-promyshlennoi-zony-v-egipte-stanet-dlya-biznesa-oknom-v-afriku

Image source: http://industrialpro.ru/projects/industrialnye-parki-sez-tor/rossiyskaya-promyshlennaya-zona-v-egipte/

ABOUT JSC RUSSIAN EXPORT CENTER

REC is a state institute that supports non-primary exports that provide Russian exporters with a wide range of financial and non-financial support measures. Interaction with relevant ministries and departments, as well as cooperation with key industry and business organizations allow REC to improve export conditions in Russia and neutralize the effect of existing barriers during the implementation of external activity. Russian Export Center is part of the Vnesheconombank Group.

The legal status of REC is enshrined by the adoption of Federal Law No. 185-FZ dated June 29, 2015 “On Amendments to the Federal Law "On the Bank for Development" and Article 970 of Part Two of the Civil Code of the Russian Federation.”

The Russian agency for export credit and investment insurance (JSC EXIAR) and JSC ROSEXIMBANK are integrated into the group of Russian Export Center, which made it possible to optimize resources and create effective business processes for the provision of comprehensive services to export-oriented companies.

Source: https://www.exportcenter.ru/company

About Evropeyskaya Elektrotekhnica Group of Companies

• Evropeyskaya Elektrotekhnica Group of Companies (MOEX: EELT) offers comprehensive solutions in the field of engineering and technological systems for industrial, construction and infrastructural purposes: low and medium voltage distribution equipment, low current systems, lighting systems, industrial electric heating systems and equipment for the Oil&Gas and petrochemical industries.

• As a Russian joint-stock company with high corporate governance standards and financial sustainability, the Company's Mission is to improve people's quality of life with its entrepreneurial vigour and engineering competencies.

• The Company was founded in 2004 and unites a distribution center, engineering departments, an electrical laboratory and specialized production facilities. The company is one of the largest electrical equipment distributors in the Russian Federation and an industrial partner of leading companies on the international engineering market.

• The Company's logistics capabilities include delivery (including non-standard and oversize load) to customers throughout Russia, including hard-to-reach Northern areas, as well as to Central Asia, North Africa and the Middle East.

• The Company has its own production of the following equipment:

• Complete transformer substations;

• Medium voltage units;

• Low voltage panels of up to 6,300A (including metro solutions);

• Electric lighting systems;

• Industrial electric heating systems;

• Cabling and wiring products.

• Areas of application of the Company's competences:

• Oil&Gas industry;

• Electric power sector;

• Peaceful atom,

• Steel and mining industry;

• Engineering;

• Transport infrastructure, water supply and sanitation.

• Evropeyskaya Elektrotekhnica's customers include major Russian companies: Rosneft, Gazprom, NOVATEK, LUKOIL, Sibur and Nizhnekamskneftekhim. Supplies were successfully implemented for the following projects: Power of Siberia, Yamal LNG, Smolensk NPP, Data Center of Sberbank of Russia, the Domodedovo, Sheremetyevo, and Pulkovo Airports, etc.

• New areas of Company activity starting from 2018 include development and production of the following:

• Modular equipment for the Oil&Gas and petrochemical industries (Company subsidiary ROG-Engineering, Ufa, Republic of Bashkortostan, Russian Federation);

• Industrial specialized solutions for metro substations (currently being consolidated into the Group's structure: Metrotonnel, Moscow, Russian Federation);

• Industrial electric heating systems.

• Key financial indicators of PJSC Evropeyskaya Elektrotekhnica (IFRS):

The personnel headcount is around 400 people. Since September 2017, common shares of PJSC Evropeyskaya Elektrotekhnica are traded on the Moscow Exchange with trading code EELT.

In June 2018, the company was named Import Substitution Leader at the Leader of Competitive Sales annual national awards, in which 450 domestic suppliers from various industries took part.

Contacts:

PJSC Evropeyskaya Elektrotekhnica

Tel.: +7 (800) 600-71-18

Mailing address: 1 Lyotchika Babushkina Street, Building 3, Moscow, 129344

For more information, please contact:

Stanislav Martyushev

Director for Corporate Communications and Investor Relations

PJSC Evropeyskaya Elektrotekhnica

Tel. +7 (495) 660-71-18 ext. 164

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