MOSCOW: Russia announced state aid for a major energy project on Wednesday under a drive to shore up strategic firms as well as public faith in its banking system during an economic crisis deepened by Western sanctions.
The government said it had allocated 150 billion roubles ($2.5bn) to support the Yamal liquefied natural gas (LNG) project in the Russian Arctic, taking the total bill for state aid promised to firms in the past few days to over $5bn.
On top of the help for Yamal — which is controlled by the Novatek firm but also has Western and Chinese shareholders — Russia has announced support for the state railways and two banks: the country’s second-largest, VTB, and Gazprombank.
Russia is sliding into recession as the international price of oil, its main export earner, tumbles while the rouble has lost over 40 per cent against the dollar in 2014.
At the same time, sanctions imposed by the European Union and United States over Moscow’s role in Ukraine have effectively locked Russian firms out of global capital markets.
This has made them increasingly reliant on state aid during the crisis that is threatening the overall economic stability on which President Vladimir Putin’s popularity partly rests.
On Tuesday, the government boosted the capital of VTB by 100bn roubles and bought 40bn roubles’ worth of preference shares in Gazprombank.
Putin has said domestic banks should be helped to boost lending to important projects.