The joint venture should produce 450 engines annually.
"If the new plant is built, it will involve $800 million in investment," Vladimir Artyakov said.
The engines will be equipped with a semi-automatic gearbox for luxury Lada cars and C class passenger cars, whose production AvtoVAZ will base in Togliatti with Canada's Magna.
As part of a cooperation program with Fiat, AvtoVAZ also plans to produce B class cars, Artyakov said.
"We have held the first working negotiations with Fiat, though no practical decisions have yet been made," the businessman said. "The implementation of projects [with Fiat] is possible, but relevant decisions will take into account the economic and technological expediency of the project."
Late in June AvtoVAZ announced its intention to cooperate with Fiat in the production of cars and engines. Fiat made an official response saying no negotiations were underway.
Artyakov said Thursday AvtoVAZ would report on specific agreements with Fiat Friday.
