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Nezavisimaya Gazeta
Belarus starts bargaining with Gazprom
Belarus has launched negotiations with Russian natural-gas giant Gazprom to prevent the price it pays for Russian gas from soaring next year. Experts say the package of state-run Beltransgaz shares that Gazprom covets has not yet been included in the proposals.
A high-ranking source in the Belarusian government said Gazprom was invited to take part in the construction of the second leg of the Yamal-Europe gas pipeline, an underground gas storage facility, the second line at the Grodno mineral fertilizers production plant, and a gas pipeline to Poland, as well as in the reconstruction of the Berezovskaya hydro power plant (HPP) in the Brest Region.
Experts say energy and gas storage proposals would be most interesting to the monopoly. Valery Nesterov of Troika Dialog brokerage said Gazprom was lacking in underground storage facilities. The proposal referred to the Berezovskaya HPP, Belarus' third largest power plant with a design capacity of 995 MW, and is also attractive because of its energy export opportunities.
Gazprom is unlikely to take part in the construction of gas pipelines and in mineral business, Nesterov said.
"With construction of the North-European gas pipeline underway, it is unnecessary to build a second leg of the Yamal-Europe pipeline," Nesterov said. "Gazprom will have to make efforts to distribute the total amount of gas to the North-European pipeline. Fifty-five billion cubic meters is not a trifle."
Nor would the Russian holding wish to stretch a leg to Poland due to complicated bilateral relations, he said, adding that Gazprom, which has a lot of marginal assets in Russia, would not join in construction of a mineral factory either.
These proposals may be revised, Nesterov said, but one thing is clear: Minsk is paying heed to the Russian monopoly's intentions and is set to reach an agreement before the current contract expires.
Gazeta
Kremlin to continue enlargement of Russia's regions
President Vladimir Putin recently refused to accept the resignation of Sovmen Khazret, the president of the North Caucasus republic of Adygeya, who is a firm opponent of the Kremlin's policy of merging Russia's regions into larger entities.
Khazret, whose wealth Forbes has assessed at $400 million, was told Monday that the federal center would postpone the merger of Adygeya with the Krasnodar Territory, which surrounds it, if he pledged not only to take care of his own business but also to attract investment into the republic's economy.
Sources in the Kremlin said Khazret was told to attract funds from the large and wealthy Circassian diaspora in the Middle East, the United States and Western Europe.
"In fact, he was faced with an ultimatum: attract investment and stop begging for subsidies, or you will be merged with the Krasnodar Territory," the source said.
The Adygeyan leader was also told that his personal money should work to the benefit of the republic, not accumulate dust and interest in Moscow and Swiss banks - especially as he had promised this to his electorate.
Khazret will have to fulfill his promises now, because his conversation with Putin included words like the "the prosecutor general" and "your business." Put together, they create a perfectly clear picture of Khazret's possible future.
"The Kremlin takes into account the ethnic factor, which means that nobody wants to pressurize Adygeya too strongly," the Kremlin source said. "On the other hand, everyone thinks that the recent unrest in Maikop [protests against the merger with the Krasnodar Territory] was orchestrated."
The source said Dmitry Kozak, presidential envoy to the Southern Federal District, had convinced the head of the presidential staff, Sergei Sobyanin, and then Putin to give Khazret time to ponder his dilemma.
"However, the success of the referendum in the Irkutsk Region [to enlarge it by taking in Ust-Ordyn Buryat Autonomous Area] convinced the administration that the best policy in the North Caucasus would be the appointment of a Russian governor general," the source said.
If Khazret fails, which is most probable, this opinion will gain priority in the Kremlin.
Vremya Novostei
Russian government proving ineffective in business
Experts comment on the warning issued by Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs, that Russia is facing de-industrialization and a slump in growth rates, despite increased public sector and state investments.
Yevsei Gurvich, head of the Economic Expert Group: The state has proved to be completely ineffective in business. Sectors that are dominated by the state are lagging behind other sectors. The state has not learned to profit from its giant assets, as budgetary revenues are minimal.
It has created a specific economic model that provides competitive advantages for sectors that are affiliated with the state. At best, the state can only complement private business, but it cannot replace private investment, especially in a state as corrupt as Russia.
Andrei Nechayev, president of the Russian Financial Corporation: Several years ago, experts diagnosed the Russian economy as having Dutch Disease, which means a major inflow of currency reserves from commodity exports provoking regress in many economic sectors.
State-run companies are playing a key role in nearly all economic sectors, although Russian and global experience has proved that state control of property and the economy is less effective than private control. Oil major Yukos certainly evaded taxes, but it still paid more taxes than state-owned Rosneft.
Alexander Khandruyev, head of the BFI (Banks, Finance, Investment) consulting group: Businessmen fear taking on big profitable projects because the state will sooner or later decide to take them over. The government thinks that it is smarter than the market, which is a gross mistake. State investments always have a corruption element.
The state has always acted not for economic but for political considerations. The worst comes when this policy is complemented with the misunderstood national idea of regaining superpower status.
Vedomosti
Sibneft unlikely to stay public
Gazprom's management will consider future strategy for its oil business May 25. Its consultants - Citigroup and McKinsey - are advising it to keep Sibneft independent, boost its assets and offer some of its stock on the market. But Gazprom, which paid $13.6 billion for Sibneft last fall, does not like these plans.
A Gazprom manager says the advisers see more pluses in Sibneft's autonomous development. They say Gazprom, by buying out Yukos's remaining 20% of Sibneft's shares, could place some of the company's stock on the market, keeping 75% plus one share for itself. But the source is confident this option is highly unlikely to be approved at a meeting of Gazprom directors.
Also, the source said the consultants had suggested using Sibneft as a core to create a major oil holding with capitalization reaching $100 billion in a few years' time. One of the likely scenarios was a merger with Surgutneftegaz, he says.
It is not yet clear whether all these ideas will find their way into Citigroup and McKinsey's final report, the manager said. He said the monopoly is staunchly opposed to Sibneft remaining independent and its securities trading on the stock exchange. Sibneft will be renamed Gazpromneft on May 13, he said, and the Sibneft brand would only survive at fuelling stations for a year or two.
"The umbrella structure of ownership would erode the costs of the core company," he concludes. "Unless Sibneft is integrated fully into Gazprom, its purchase will add nothing to Gazprom's capitalization."
"The option of Gazprom absorbing Sibneft has little chance," said Energy Politics Institute director Vladimir Milov. "Despite what it may have said, the gas monopoly has never planned to act big in the oil business. And mostly has played the role of a financial source to purchase Sibneft from its previous shareholders."
Kommersant
Norilsk Nickel gold subsidiary eyes assets in Uzbekistan
Norilsk Nickel subsidiary Polyus may become Russia's first gold-mining company to acquire assets in Uzbekistan. Company management reportedly intend to buy U.S. company Newmont Mining's share in the Zerafshan-Newmont joint venture. Newmont, the world's second largest gold company, has failed to establish good relations with the Uzbek authorities.
The deal has already been approved by the two countries. Without government support, Russian investors can get no access to gold mining enterprises in Uzbekistan, the world's sixth largest producer of gold.
In late March, the Uzbek authorities said they would revise taxation terms for Zerafshan-Newmont, which produced 4.8 tons of gold in 2005, in the light of growing world prices for gold. Previously the venture paid taxes under an individual scheme that made it almost fully exempt from taxes. Experts say now that the privileges have been removed gold mining in Uzbekistan may be less cost-effective: producing an ounce of gold costs $290, which is quite expensive, though gold was sold on exchanges yesterday at $616.7 per troy ounce, the highest price in the past 25 years.
In addition, there has been pressure on the Americans from local environmentalists. The Uzbek Society for Human Rights and Freedoms accused Zerafshan-Newmont of using harmful liquid cyanides, and assessed the environmental damage at a billion US dollars.
Market players think Polyus' approach in Uzbekistan is justified.
"Operating gold mines have already been distributed in Russia," a gold mining company said. "It is much more beneficial to buy assets in Asia at half the Russian price than to invest in exploration."
Experts say the cost of Newmont's share in the venture is not high. Vladimir Zhukov, an Alfa-Bank expert, said a conservative estimate is some $100 million. Market players believe the asset is valuable for its capacity, which could help boost production many times over.
