A. Project Opportunity Description

(а) Short name: Reconstruction of nonwoven materials production shop (second stage).

(b) Full name: Reconstruction of nonwoven materials production shop (second stage) at R.U.E.«SPA «Khimvolokno»

(c) Summary: The purpose of the project is to increase output of modern, high tech and economically effective production of a new generation of PP  nonwovens “SpunBel” and “AquaSpun” on production areas of  R.U.E.«SPA «Khimvolokno». The project is planned to realize in 2 turns: the capacity is 5 thousand ton per year each.

A2. Project Status

Design estimates and a business-plan for the project have been elaborated.

A3. Organizations involved and their roles

(а) Republican  Unitary Enterprise “Svetlogorsk Production Amalgamation «Khimvolokno», Zavodskaya str.5,  Svetlogorsk, Gomel Region, Republic of Belarus — an initiator of the project

Vasiliy V. Kostyukevich, General Director

Tel. (02342) 25470, Fax (02342) 28800, E-mail: sohim@sohim.by, Internet: www.sohim.by

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

The  project provides for the additional equipping of the installed line with the second spinning beam. The equipment will be arranged at the existing nowovens production line in the Nonwoven materials production shop of the Artificial Fiber Plant

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

R.U.E. “SPA “Khimvolokno” at the  moment comprises:

Polyester Textile Yarns Plant (PTYP);

Artificial Fiber Plant (AFP);

Consumer Goods Plant.

R.U.E. “SPA “Khimvolokno” is specialized in the production of polyester textile filament yarns, rayon industrial yarns, rayon cord fabric, polymer and carbon fiber materials, industrial yarns and fibers «Arselon», consumer goods. The acquired line for the production of thermobonded and hydrobonded  material is grouped by principle of independent modules, which allows commissioning of each spinning beam and individual equipment in stages, thus step-by-step increasing production capacity.

А6. Environmental impact summary

Air contaminants which will be released into the air as a result of the given production are: nitrogen dioxide, carbon oxide, acetaldehyde, acetic acid, polypropylene dust, propylene, hydrocarbons C1 — C10, particulate matter and formaldehyde.

Analysis of the results of calculations of contaminant dispersion into the atmosphere shows that the projected production will not have material adverse effect on the ecological state of the environment.  Maximum ground air concentrations of harmful substances at the border of control area (C33) and residential area practically will not change and will make 0.3 – 0.4 fraction of maximum permissible concentration (MPC) for acetaldehyde; 0.6 fraction of MPC for particulate matter, and 0.03 fraction of  MPC for polypropylene dust. Emissions escape from the projected production are absent.

А7. Possible obstacles/ problems/ risk assessment

Increase in utilities prices. Lack of own raw materials sources in the Republic of Belarus.

А8. Project implementation and recoupment period

Term of realization of the project: 2009 – 2011, payback time – 7,5 years

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,

'000 EURO

Purchase of equipment and materials

5 000,0

Civil and erection works

121,4

Customs duties

7,5

VAT at capital cost outlay

1 025,8

Total

6 154,7

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

С1. Type of sources

C2. Amount, '000 EURO

Internal funds

1 154,7

D. Investments required. Insufficient means

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

5 000,0  '000 EURO – direct investments, loan, credit

D2. Sources of financing

D3.Type of  financial instrument

D4. Amount,

'000 EURO

Borrowed funds and debt capital

direct investments, loan, credit

5 000,0

Е. Demand (Consumers) and revenues

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

It is planned to realize the products on the CIS markets and foreign markets.

Е2. Revenues (Sales)

Е3. Amount, '000 EURO

Realization incomes per year

8 099,00

F. Operating and Maintenance Expenses

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

The necessary engineering utilities and power sources are available at the enterprise for the manufacturing locations. Additional land occupation is not required.

F2. Cost items

F3. Amount, '000 EURO

Raw materials, materials

4 956,3

Energy resources

439,0

Personnel expenses

-

Amortization

572,1

Others

76,1

TOTAL production costs on realized production

6 043,5

G. Net Income Value

G1. Receipts E2 less operating expenses F2

G2. Amount, '000 EURO

2 055,5

H. Source of Information about the Project

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

Gaishun Irina Grigorjevna – Chief of perspective development department

H2. Organization (name and address):

Republican Unitary Enterprise Svetlogorsk Production Amalgamation «Khimvolokno»

Zavodskaya str. 5, 247400 Svetlogorsk, Gomel Region, Republic of Belarus.

H3. Теl/Fax/ Е-mail:

tel. (02342) 94950, fax (02342) 94877,  opr@sohim.by

H4. Date 23.02.2010

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