OJSC Tatsinsky Elevator

MIGA provided a $2.1 million guarantee to Sungrain S.A., of Switzerland, covering its $2.3 million equity investment in OJSC Tatsinsky Elevator (OTE) in Russia. The guarantee is for up to seven years, and is against the risks of transfer restriction, expropriation, and war and civil disturbance. Russia's agricultural sector has experienced a substantial decline since the beginning of the 1990s, and rural poverty is a significant problem.

The World Bank Group strategy for the sector includes support for the acceleration of farm restructuring, development of land markets, and elimination of the remaining restrictions on trade and marketing of agricultural products and inputs. This project, which involves the acquisition and modernization of an agricultural commodity storage facility in the Rostov region, reflects the Group's strategy. The project's impact will be significant: knowledge and technology transfer to Russia's agro-business sector will improve the quality and quantity of agro-industrial products available to the local markets; the provision of prime storage capacity for local farmers will lead to reductions in the current losses of grains and seeds; upstream and downstream benefits to industries in the region, such as transportation and trading, will ensue; the local procurement of all required goods and services (other than fertilizers) will benefit local businesses; and the project will provide full-time employment for about 50 people, along with an additional 50 during peak harvest times. Over the next five years, OTE will pay approximately $2.5 million in taxes.