Moscow press review for April 5, 2016
MOSCOW. April 5 (Interfax) - The following is a digest of Moscow newspapers published on April 5. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
Russian government and Kremlin officials have apparently concluded that they can no longer drag their feet with economic reforms. A decision has been made to reconvene the presidium of the president's economic council, which last met two years ago. It will discuss the current agenda and draft an economic reform program ahead of the 2018 elections. In addition to government and Kremlin officials, it will include Sberbank CEO German Gref and former Finance Minister Alexei Kudrin (Vedomosti, p. 1).
One of the key topics at Friday's meeting of CIS foreign ministers will be reform of this organization, sources said. Kazakhstan has proposed making the CIS more effective and streamlining its structure. Kyrgyzstan also believes the time has come for reforms. Russia generally supports the idea of improving the CIS, but is avoiding the term 'reform' (Kommersant, p. 1).
Russia's Finance Ministry reckons the Tax Service will need an extra 35.4 billion rubles in funding in 2016-2020 if it takes over administration of insurance contributions from the Pension Fund by January 1, 2017 as planned. The reform will see 16,000 jobs cut at the Pension Fund and 12,000 added at the Tax Service. However, big business lobby RSPP and union federation FNPR are asking the president to delay the transfer to the middle of 2018 (Kommersant, p. 1).
The Party of Growth, which is headed by Russia's business ombudsman Boris Titov, is trying to bolster the ranks of its candidates for the State Duma elections with famous names. The party is trying to recruit Yekaterinburg Mayor Yevgeny Roizman, former Union of Right Forces and Right Cause leader Boris Nadezhdin and other politicians with national name recognition (Vedomosti, p. 2).
OIL & GAS
Russia, which has proposed to freeze oil production to support world prices, increased crude output by 3.1% in the first quarter. Other leading producers are also not taking steps to reduce production yet. Analysts believe the meeting of oil producing countries in Qatar on April 17 is unlikely to be productive given that Saudi Arabia and Iran still disagree (Kommersant, p. 9).
UTILITIES
Enel Russia is looking to sell some of its power plants, including Reftinskaya GRES, its core asset. Finding buyers is not easy as the facilities need modernization and the company has lost much of its value since privatization. Some sources said Enel is considering pulling out of the Russian energy market altogether, though the Italian company says it does not intend to leave the country (Kommersant, p. 7; Vedomosti, p. 11).
METALS & MINING
Prime Minister Dmitry Medvedev, backing a proposal from the governor of coal-rich Kemerovo Region on Monday, ordered the energy and natural resources ministries to consider closing particularly dangerous coal mines in order to remove methane gas. Such mines primarily produce coking coal for the steel industry, which believes that replacing valuable grades of coal with imports could cost up to $1 billion per year (Vedomosti, p. 10; Kommersant, p. 9).
BANKING, FINANCE & INSURANCE
New Russian disclosure rules have not only led to organizational problems for Russian issuers, but also tax problems for foreign holders of depositary receipts on Russian shares. Russian depositaries cannot always identify them since foreign rules of the game are not subject to the Russian changes, resulting in excessive taxation of income on such shares and the risk of tax claims against their holders (Kommersant, p. 1).
RETAIL & CONSUMER MARKET
LeEco, a Chinese online video company akin to Netflix, might enter the Russian market. Russia might also become the third international market after the U.S. and India to which LeEco will ship its smartphones. LeEco management in Russia might be joined by key executives from Chinese online retailer JD Victor Xu and Alex Vassiliev, who are leaving the retailer (Kommersant, p. 1).
Russian tycoon Rustam Tariko's spirits group, Roust hopes to restructure its debt on credit notes, on which it is due to pay $664.6 million in 2018. The company's revenue fell 30.8% to $584.2 million in 2015 and its total debt was $960.2 million as of December 31. Roust warned that its ability to service this debt depends on its cash flow, which is under considerable pressure from the negative situation in Russia and Ukraine and the depreciation of the ruble (Vedomosti, p. 10).
TOURISM
The principal shareholder of Interros, Vladimir Potanin, who was planning a major expansion on the tourism market six months ago, might acquire a tour operator. The group's ski resort operator, Rosa Khutor has been in talks to acquire Roza Vetrov, which is controlled by Sergei Zenkin. However, the companies have not been able to agree on a price (Kommersant, p. 7).
REAL ESTATE & CONSTRUCTION
President Vladimir Putin has ordered the government to draft a bill to recognize parking spots in buildings as real estate, and wants it passed by June 1. This should make life easier for owners of parking spots, who currently often have trouble registering their ownership rights and therefore buying and selling such property (Vedomosti, p. 4).
