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First deputy PM says no plans for state machine-building corp.

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ZAVIDOVO (Tver Region), July 24 (RIA Novosti) - Russia does not plan to establish a state corporation uniting assets in machine building, First Deputy Prime Minister Sergei Ivanov said Tuesday.

"There has been talk of government plans to create a state corporation here as well. But this is not true. The state has no production assets left in this sector," Ivanov, a former defense minister, said at a meeting between the president and the Cabinet.

"We can only talk about consolidation in the scientific-research sphere, to enhance its quality," Ivanov said.

Russia's Industry and Energy Ministry proposed last Friday that the Russian government consider setting up a united machine-building company on the basis of a public-private partnership, an idea received coolly by the economics ministry.

Deputy Minister Andrei Reus told a government commission meeting: "Russian machine and tool producers have supported the idea of establishing a united machine building company, and have confirmed their readiness to invest a portion of their assets into this."

Reus said the holding could increase the competitiveness of Russian machine and tool makers, through the consolidation of scientific and production potential in the sector.

But Deputy Economic Development and Trade Minister Andrei Belousov cast doubt over the initiative. He told the commission meeting that about 14 machine building plants are currently operating in Russia, with aggregate turnover of $15 million. "This is too little [for unification] - at least $40 million is needed," he said.

Reus also said about 60 billion rubles ($2.4 billion) needs to be invested in machine building in Russia by 2015.

Russia recently moved to create two state-controlled industry conglomerates, in aircraft construction and shipbuilding.

The United Aircraft-Building Corporation (UABC) was formed last year from leading domestic plane producers. Economic Development and Trade Minister German Gref said earlier in July that the UABC could hold an IPO in 2008.

In late March, President Vladimir Putin signed decrees to establish the United Shipbuilding Corporation and a shipbuilding and maintenance technology center.

According to the documents, the conglomerate will be set up in four months' time and will have three subsidiaries - the Western Shipbuilding Center in St. Petersburg, the Northern Shipbuilding and Maintenance Center in Severodvinsk, and the Far Eastern Shipbuilding and Maintenance Center in Vladivostok.

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