Moscow press review for February 8, 2016
MOSCOW. Feb 8 (Interfax) - The following is a digest of Moscow newspapers published on February 8. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
The baseline scenario of the economy ministry's draft forecast, on the basis of which Russia will revise its 2016 budget and approve an anti-crisis plan, assumes a price of $40 per barrel for Urals crude. It projects a federal budget deficit of 5.1% of GDP, privatization revenues of 900 billion rubles, some strengthening of the ruble, and a continuation of the recession (Kommersant, p. 1).
The plan of urgent measures to stabilize the social and economic situation in Russia in 2016 will be submitted to the government on Monday. There are plans to spend 207 billion rubles, but the weakening of the ruble will require new expenditures of 143 billion rubles. The structural reform part of the anti-crisis plan appears to be mostly regulatory. It does not provide any financing for reforms, which are to be carried out over three years (Kommersant, p. 1).
Russia is presenting new arguments to a court in The Hague against a ruling that it should pay $50 billion to the former shareholders of Yukos oil company. It will cite a January 18 Stockholm court ruling that a Stockholm arbitration tribunal did not have the authority to order Russia to pay compensation for the expropriation of Yukos in a 2012 lawsuit. The Hague court will begin hearing Russia's appeal on February 9 (Vedomosti, p. 2).
Russia's Finance Ministry is tightening control over budget expenditures and investment. Money will be locked up in the Treasury and disbursed only as needed. All unspent state subsidies will have to be returned by April 1, and control will be tightened over subsidies for state companies, which have been criticized for just keeping the money in bank accounts. The system is effective, but small banks might suffer, analysts warn (Vedomosti, p. 4).
OIL & GAS
For the first time this year, Russia's Finance Ministry has openly said that it intends to revise the formula for the tax on oil production. Such a revision could cost oil companies 650 billion rubles in extra taxes per year with an oil price of $50 per barrel and almost 1 trillion rubles at a price of $30. Oil companies warn that a tax hike will lead to a drop in production (Kommersant, p. 1).
METALS & MINING
Mechel principal shareholder Igor Zyuzin will share control over the heavily-indebted steel and coal company with its creditors. Most of the company's major transactions will require unanimous approval by the board of directors, which will be joined by a representative of Gazprombank. Shareholders are expected to approve a debt restructuring and a new charter, and elect the new board on March 4 (Vedomosti, p. 10).
BANKING, FINANCE & INSURANCE
Russia's National Payment Card System is preparing its Mir card, the mass issue of which is scheduled for the second half of 2016, for online payments. It has decided to guarantee the security of such payments with Visa's 3D Secure technology, which banks have begun testing with Mir cards. But NPCS could not get a license to use 3D Secure independently so Mir cards will be serviced by Visa itself. As a result, the technology will probably not be available to banks subject to sanctions (Vedomosti, p. 11).
Russia's Central Bank has increased risk ratios for banks' foreign currency investments in corporate loans and securities. This will require banks to provision more capital for such investments and therefore de-incentivize them. However, this will force more corporate borrowers to seek forex financing abroad or borrow in rubles and carry forex risks themselves (Kommersant, p. 8).
REAL ESTATE & CONSTRUCTION
Demand for luxury residential properties in Moscow continues to grow, with the number of sales up 20-25% in January. Realtors attribute the trend to the fact that prices in rubles are currently good for buyers with dollar savings. But consultants say data has been manipulated as intermediaries are including mid-range apartments in the list of premium properties (Kommersant, p. 1).
RDI Group, one of the biggest landlords in Moscow Region, plans to build another 1 million square meters of housing in New Moscow next to its Western Valley project. The company's investments in real estate development projects between the Borovsk and Minsk highways could total about 93 billion rubles (Vedomosti, p. 10).
Interview: Alexander Volosov, Director of the Special Construction Agency (Kommersant, p. 4).
TRANSPORTATION & LOGISTICS
Following President Vladimir Putin's criticism of the high tolls on the first section of the M11 Moscow-St. Petersburg highway, the government has imposed a cap on the rates that state company Russian Highways and private concession holders can charge on toll roads. This will reduce costs for drivers, but the government might have to pay more to comply with concession agreements. It will also scare investors away from future road projects, analyst believe (Vedomosti, p. 1; Kommersant, p. 5).
Russian Railways and the authorities are thinking about how to attract freight to railways. One of the ideas is to link the rail transport price for a good to its export price. However, this could make transport costs unpredictable for shippers, analysts said. Another proposal is to expand discounts on short-haul shipments (Vedomosti, p. 11).
AUTOMOTIVE & ENGINEERING
Interview: Carlos Ghosn, CEO of Renault and Nissan (Vedomosti, p. 8).
