Moscow press review for June 23, 2016
MOSCOW. June 23 (Interfax) - The following is a digest of Moscow newspapers published on June 23. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
VEB, Russia's state development bank, will continue to sell off assets but still depend on government money. The bank's new strategy, which its board will review on Thursday, presupposes state support and the downsizing of the lender's business. It also calls for focusing on investment in infrastructure, high value-added manufacturing projects and supporting exports (Vedomosti, p. 1).
Russia's State Duma has passed in the second reading a government bill to simplify interested-party transactions at companies. Minority shareholders' influence over such deals could weaken. The bill also changes the definition of deals regarded as being part of the normal course of business. As a result, it will be possible to carry out many deals without the approval of shareholders or the board of directors (Vedomosti, p. 4; Kommersant, p. 9).
Global foreign direct investment surged 38% to $1.76 trillion in 2015, UNCTAD reported. But Russia's share of this investment amounted to just 0.6%, the lowest figure since 2001, as FDI in the country fell by two thirds to a 12-year low of $9.8 billion amid geopolitical tensions and a drop in oil prices. FDI in Kazakhstan tumbled by half in 2015, while FDI in Ukraine surged sevenfold after dropping almost 90% in 2014 (Vedomosti, p. 5).
OIL & GAS
Germany is starting an active dialog with eastern members of the European Union who are unhappy about the proposed Nord Stream 2 gas pipeline. Poland appears to be most implacable, while Slovakia is showing willingness to compromise. Berlin has assumed responsibility for laying the political groundwork for the project and it will probably succeed, sources and analysts said (Kommersant, p. 1).
Lithuania has lost its lawsuit claiming 1.4 billion euros from Gazprom that the country believes it overpaid the Russian company for gas over eight years. Stockholm Arbitration dismissed the claim, ruling that neither party can prove their claims and that it is not possible to determine damages due to vague contract formulas. The ruling could benefit Gazprom in a similar lawsuit filed by Ukraine's Naftogaz (Kommersant, p. 9).
UTILITIES
Former RusHydro CEO Yevgeny Dod, who is currently chairman of Quadra Generating Company, has been detained on charges of defrauding the Russian state hydropower company out of millions in collusion with RusHydro's chief accountant. The Investigative Committee suspects Dod of inflating his bonus for 2013 by at least 73 million rubles (Kommersant, p. 1; Vedomosti, p. 10).
RETAIL & CONSUMER MARKET
Russian retailer Seventh Continent is facing a wave of lawsuits from suppliers demanding payment of debts for delivered goods. The retailer has been having problems paying its bills since the start of the year, its partners say. The chain estimates its debt at 3.5 billion rubles. Seventh Continent owner Alexander Zanadvorov insists there are no risks to the retailer's operations (Kommersant, p. 1).
Financial Investments, a company affiliated with pension fund Blagosostoyanie, has filed a lawsuit to overturn the sale of a 51% stake in the parent company of Russian mobile phone retailer Svyaznoy to Oleg Malis's North Finance Overseas Corp. Financial Investments claims it lent a Svyaznoy Group unit 3 billion rubles in September 2012 that was secured by a 15% stake in Svyaznoy N.V., the retailer's Netherlands-based owner, and the personal guarantee of Svyaznoy founder Maxim Nogotkov (Vedomosti, p. 10).
REAL ESTATE & CONSTRUCTION
Residential real estate prices in Russia have stopped falling and have even begun to climb in places. Developers in the Moscow Region, for example, are starting to hike prices for new residential properties. Prices in Moscow rose by about 1% in May, though they are still down 10-15% year-on-year. But it is premature to say that the market is growing, analysts said (Vedomosti, p. 11).
TELECOMMUNICATIONS, MEDIA & TECHNOLOGY
The passage of an anti-terrorism bill that would require Russian telecom and Internet providers to store the content of users' communications for up to six months would lead to billions of dollars in losses not only for market players but also for the government. MTS, MegaFon and Vimpelcom reckon compliance would wipe out their net profit and therefore result in the loss of tax revenues (Kommersant, p. 10).
TRANSPORTATION & LOGISTICS
The Russian government has ordered the Anti-Monopoly Service, ministries and Russian Railways to determine the maximum share of transport costs in the price of goods in various sectors. Shippers now spend up to 50% of the end price of goods on transport in some cases, and analysts believe it will be difficult to determine a ceiling for these costs (Kommersant, p. 7).
AUTOMOTIVE & ENGINEERING
BMW is marking its 100th anniversary in Russia by offering owners of its cars and motorcycles free passage on the M11 toll highway from Moscow to Solnechnogorsk for the whole summer. The promotion, the first of its kind in Russia, will not be very expensive but it will be memorable, one analyst said (Vedomosti, p. 11).