Zvezda to invest in new Russian engine plant

Zvezda is reported to have signed an agreement with the government of St Petersburg and Vnesheconombank (VEB), one of Russia’s largest state-owned banks, for the establishment of a new production of engines in St. Petersburg. The total investment is said to approach 7.8 billion rubles (USD$240 million), funded partly from the company’s own resources and the rest covered by loans from VEB.

The new 22,000m² facility will be used for the production of engines in the 400kW to 2,000kW power range, and will be capable of building up to 1,800 engines per year. According to Paul Plavnik, general director of Zvezda, the new plant is scheduled for commissioning in the fourth quarter of 2016. Mr Plavnik said that the company has signed contracts with several Russian shipbuilding design bureaux to supply engines for new projects.

Currently Zvezda specialises in production of diesel engines and generators, with turnover in 2013 of some 1.9 billion rubles.

Analysts at the Russian Ministry of Industry and Trade believe that the new plant will fulfil an acute need, as the expansion of the national shipbuilding industry, including the commissioning of new shipyards, is expected to highlight a shortage of engines and other on-board equipment. This is heightened by delays to previously announced projects, such as the joint venture between Transmasholding, one of Russia’s largest engineering companies, and Wärtsilä. The new plant in the Penza region, expected to produce 300 diesel engines per year, was to have been commissioned in March 2014, but, according to Penza government sources, this is now suspended indefinitely due to certain issues partially caused by sanctions imposed on Russia. There is a possibility that Wärtsilä may withdraw from the venture.