A. Project Opportunity Description

А1. Project Name

(а) Short name: Line No. 2 for production of polyester substrates for roofing materials.

(b) Full name: Line No. 2 for production of polyester substrates for roofing materials at JSC “Mogilevkhimvolokno”, Republic of Belarus.

(c) Summary: The target of the present Project is to establish the production of reinforced polyester substrates for roofing materials and spunbond polyester substrates for roofing materials reinforced with glass scrim. This will allow to improve the quality of roofing materials and to increase their life time up to 25 years.

A2. Project Status

Pre-investment stage. Technical and commercial offers for the supply of a complete process line (Equipment, Engineering, Know-How) have been received. A feasibility study and a business plan of the investment project have been developed. An investor is required.

A3. Organizations involved and their roles

(а) JSC “Mogilevkhimvolokno” is the borrower. Republic of Belarus, 212035, City of Mogilev

General Director – Sergey M. Puzevich, tel.:  (0222) 44-74-12, fax: (0222) 322053(0222) 322070

А4. Project Description (approaches, objectives, components, results, stages, time, financing, advantages, influence on transient processes in economics, etc.)

PET chips manufactured at JSC “Mogilevkhimvolokno” are to be used as raw material for the production of reinforced polyester substrates for roofing materials. Roofing materials with polyester substrates will meet the requirements of world quality standards increasing the life time of roofing materials up to 25 years. The production capacity will be 8300 tons/year.

Startup of the line for production of reinforced polyester substrates for roofing materials will allow to extend the range of goods, to attract modern technologies and equipment and to enter a dynamically growing market with the products new for the CIS countries.

CIS (Russia) is the most perspective market for polyester substrates for roofing materials. It is connected with the fact that there are well — established contacts with potential consumers of the product, the market is well— known and besides, at the present moment its considerable growth is anticipated.

In this case of a favorable combination of the possibility to bring the product quality to the conformity with the international requirements and at the same time to increase the economic efficiency of the production due to the guaranteed sale of new products

 The equipment cost (without VAT and customs payments) – 26,5 mio. EURO.

All financial and economic calculations of the project have been made in euro in prices as of 1st of May, 2008 under the conditions of free economic zone " Mogilev"

А5. Background / history / overall program / related or similar projects

Public Joint –Stock Company “Mogilevkhimvolokno” is a major exporter of polyester fibres and yarns to Russia and to CIS countries.

 The Enterprise is shown to be  as  a manufacturer and supplier of high quality products. Quality management at the Enterprise  has been certified  for conformity to the international standard ISO 9001-2000. The products of the Enterprise are used in the manufacture of products as follows: textile goods,  nonwoven materials, technical fabrics, general mechanical rubber goods, molded articles, magnet tape backing, phototechnical and x-ray technical materials, cabling,  tires and other items.

The availability of own raw materials makes it possible to specialize the process flows and lines of the Enterprise for the production of polyethylene terephthalate, fibres, yarns having  the desired  application properties which can  be flexibly adjusted to the consumer requirements in a wide range of basic characteristics.

The high quality of the products provides the competitiveness thereof at the international markets.

In this connection the Enterprise is interested in the realization of the Investment Project" Line No. 2 for production of polyester substrates for roofing materials".

А6. Environmental impact summary

Production process of reinforced polyester substrates for roofing materials   is envisaged to take place in hermetically sealed vessels where pumps with double end seals are used. The installation equipment is manufactured taking into account the observance of all relevant safety requirements of the production process; possible emergency situations are minimized due to means of automation, alarm and interlocking systems employed.

Modern equipment and technology  will  make it possible to decrease the total quantity of emissions. The supplier of the equipment and technology assures, that the emissions of harmful substances shall not exceed MAC values specified by legislation of Republic of Belarus.

А7. Possible obstacles/ problems/ risk assessment

— Guaranteed product market;

— Practically monopolistic ownership of  polyester goods production;

— The feedstock –  home-produced PET chips.

А8. Project implementation and recoupment period

Project implementation period: in years 2008 – 2011. Project recoupment period: 7, 6 years since the beginning of construction.

А9. The branch of industry the Project belongs to

Petrochemical branch

B. Capital Cost Items (total investment required for the Project realization)

В1. Project physical components (equipment, works, services, etc. required for the Project implementation)

В2. Capital cost, Euro mln

Pre-investment expenses

1,8

Construction and erection works

10,4

Equipment

26,5

VAT, paid from capital costs

6,7

Net current capital increase

0,8

Total

46,2

С. Capital (as per its source of origin) to be available from the project initiator, owners,  copartners, sponsors)

С1. Type of sources

C2. Amount, EUR mln

Own funds of JSC “Mogilevkhimvolokno”

23,6

D. Investments required. Insufficient means

D1. Lack of required funds, type of financial assistance (credit, share interest and e.t.c)

Lack of required funds is  Euro 22,6 mln. Type of financial assistance— crediting, direct investments

D2. Sources of financing

D3.Type of  financial instrument

D4. Amount, EUR mln

Investor's funds

crediting, direct investments

22,6

Е. Demand (Consumers) and revenues

Е1. Type of consumers/markets, volumes, prices, revenues, profits/savings:

Reinforced polyester substrates for roofing materials are the feedstock for manufacture of roofing materials.

Main users of polyester substrates are:

1. ZAO "Technonikol", Moscow

2. JSC "Filikrovlya", Moscow

3. "Isoflex", Kirishi and others

Е2. Revenues (Sales without VAT)

Е3. Amount, EUR mln

Revenue from sales

23,7

F. Operating and Maintenance Expenses

F1. Expenses components, expenses cover strategy, organization of production

Free area, utilities pipelines and power supply are available for the project implementation.

F2. Cost items

F3. Amount, EUR mln

Feedstock, materials

12,0

Utilities for process needs

0,1

Salary incl. VAT

0,2

Depreciation

2,7

Other expenses

3,0

Total:

18,0

G. Net Income Value

G1. Receipts E2 less operating expenses F2

G2. Amount, EUR mln

Under the conditions of free economic zone "Mogilev"

5,7

H. Source of Information about the Project

Н1. This form is filled in by (Name, position):

Mr. A.V. Yakovlev, Deputy Chief Engineer for Technical Development of JSC “Mogilevkhimvolokno”

H2. Organization (name and address):

JSC “Mogilevkhimvolokno”, Republic of Belarus, 212035, City of Mogilev — 35

H3. Теl/Fax/ Е-mail:

 (0222) 49 99 82, (0222) 45 34 59,  invest@khimvolokno.by

H4. Date: 2010

H5. Departmental identity of the Project: concern "Belneftekhim"