A. Project Opportunities

A 1. Project Name

аа) Short name: Technical Reequipment of Off-the-Road Tire Plant б) Full name: OTR Tire Plant. Main Building. Technical Reequipment of the Plant. в) The Project is aimed at increasing the volume of output and expanding the assortment of large-size and giant cross-ply and all-steel radial tires that are compliant with the current engineering excellence of the leading foreign manufacturers and meet the demands of both the industry of the Republic of Belarus and customers in CIS countries and other countries worldwide.

A 2. Project Status

Pre-investment stage. A business plan has been worked out, and Belgosexpertiza Minstroiarchitectury RUE has concluded that investments are justified, an architectural design has been developed and sent for examination. Work on tender documentation for acquisition of equipment and its coordination in accordance with the established procedure is near completion.

A 3. Organizations Involved and Their Role

Belshina JSC - borrower, Republic of Belarus, Mogilev region, Bobruisk Mr. Dmitriy Katerinich , Director General Tel. +375 (225) 43 43 90 Fax +375 (225) 43 31 11, 44 63 88

A 4. Project Description

The program of technical reequipment of OTR tire plant includes upgrading and modification of the existing equipment, replacement of morally and physically obsolete equipment to increase the volume of output, expand the assortment produced, raise productivity of labor, upgrade the quality of production, and improve labor conditions. The project is expected to be implemented in the period 2007 - 2011. A business plan has been worked out, and Belgosexpertiza Minstroiarchitectury RUE has concluded that investments are justified, an architectural design has been developed and sent for examination. Work on tender documentation for acquisition of equipment and its coordination in accordance with the established procedure is near completion.

A 5. Prerequisites/History/ Overall Program/ Related or Similar Projects

Belshina Joint Stock Company (JSC) was established in 1972 as an enterprise of petrochemical industry. The enterprise was state-owned before 26.09.2002. At present the share of government in the authorized capital of the company is 100 %. Due to high level of technical and technological tooling, high-skilled personnel, high production and labor organization standards the company is capable of producing high-quality tires of various standard sizes depending on the market conditions. The territory is 172.6 hectares, of which 104.2 hectares are built-up. Key activities of Belshina JSC: production of tires for heavy-duty and super heavy-duty trucks; construction, road-building and materials-handling vehicles; tractors and agricultural vehicles; motor cars and light trucks; trucks and buses; and retreaded tires. Belshina JSC includes two tire plants (car and truck tire plant and large-size tire plant), mechanical plant, and tire repairing facility. OTR tire plant is a manufacturer of tires for heavy-duty dump trucks, construction and road vehicles, trailers, and agricultural machinery. It includes the works for production of giant tires for heavy-duty dump trucks operated in the open-cast mines. Belshina OJSC is the sole producer of giant tires among the tire plants in the CIS countries. Car and truck tire plant produces tires for truck families such as MAZ, GAZ, ZIL, buses, and agricultural machinery. It also produces tires for motor cars such as VAZ, Moskvich, Volga, and practically all types of imported cars. Mechanical plant produces polymer and non-standard equipment and spares, performs major repairs of equipment at the tire plants. Products of the plant are sold in the Republic of Belarus and exported to more than 50 countries worldwide. Exports account for more than 60% of total sales. Russia is a major foreign trade partner, exports to Russia account for 49% of total exports. The share of certified products is 90%. The plant has been certified for compliance with the international quality system standard ISO 9001 - 2000.

A 6. Summary of Environmental Impact

Significant emissions are within the permissible limits. Modern equipment and technologies will make it possible to reduce total emissions, including by reduction of fuel and power consumption.

A 7. Potential Obstacles/Problems/Risk Level

The most important risk to which Project implementation is exposed is the growth of prices for raw materials and supplies.

A 8. Project Implementation and Payback Period

Project implementation period: 4 years Payback period: 6.18 years.

A 9. Industry Classification of Project

Petrochemical

B. Capital Cost Items (Total investment requirement for project implementation)

В 1. Physical components of Project (equipment, works, services, etc for Project implementation)	В 2. Capital '000 EURO
Purchase of equipment, including spare parts and installation supervision	32520
Other costs	6769
Total	39285

C. Available Capital by Source

С 1. Source type	C2. Amount,'000 EURO
Internal funds of Belshina JSC	6769
Total	6769

D. Investment Requirement, Shortage

D 1. Underinvestment, Kind of Financial Assistance

Crediting  - 32520

D 2. Sources of finance	D 3. Type of instrument	D 4. Amount, '000 EURO
Credit facilities	Credit, loan, direct investment	32520

E. Demand (Customers) and Income

E 1. Customers/markets, volumes, prices, revenues, estimated profit/saving

Buyers of products to be produced: domestic market (BelAZ), CIS markets (open-mine vehicles) world markets (India, Indonesia, Western Europe). Expected assortment of products: 33.00-51, 27.00-49, 24.00-35, 21.00-35, 37.5-39, 35/65-33, 29.5R2S, 26.5R25, 23.5R25 with volume of production 26.3 thousand units/year. Implementation of this Project will make it possible to increase productivity of labor in production of giant diagonal tires, reduce consumption of fuel and power, maintain and improve competitive positions of the enterprise in the domestic and foreign markets, increase export capacity.

E2. Revenues (sales)	Е 3. Amount, '000 EURO
Revenue from sales of tires	49081

F. Operating and maintenance expenses

F1. Cost components, cost coverage strategy, and management of production

To implement the project, the enterprise has unused production space, utilities and liner networks, power sources, and part of equipment required therefore. No need of new buildings and structures.

F 2. Cost items	F3. Amount, '000 EURO
TOTAL costs of marketing	42713

G. Net income

G 1. Receipts E2 less operating expenses F2	G2. Amount, '000 EURO
	6368

H. Source of Information on Project

H1. Form filled by (Name, post):

Dubasov Dmitri Yurjevich , Head of Advanced Development and Investment Department

H2. Organization (name and address):

Belshina JSC Republic of Belarus, Mogilev region, Bobruisk, Minsk Highway

H3. Tel./Fax/E-mail:

8 (0225) 43 43 90; 43 31 11, 44 63 88; belshina@belshina.biz

H4. Date:

19.06.2008г.

H5. Superior organization:

Belneftekhim Concern