Moscow press review for October 30, 2015
MOSCOW. Oct 30 (Interfax) - The following is a digest of Moscow newspapers published on October 30. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
The Industry Ministry is drafting a bill to revise rules for classifying goods as military or civilian products. Russian suppliers to the Defense Ministry sometimes face criminal prosecution for lacking a special license to manufacture military products even though they are supplying civilian goods or services that the military uses for its own purposes. The changes will also lift barriers to import substitution in the sector, as foreign suppliers of the Defense Ministry are not subject to such regulation (Kommersant, p. 1).
Former Defense Minister Anatoly Serdyukov, who stepped down amid a corruption scandal, has been named industrial director in charge of the aircraft industry at state corporation Rostec. The appointment is part of the reorganization of Rostec. The Communists said they might again raise the question of holding parliamentary hearings into Serdyukov's activities while he was minister (Kommersant, p. 1).
The IMF is prepared to change the rules for extending loans so that Russia cannot block aid to Ukraine if Kyiv defaults on $3 billion in bonds held by Moscow that mature in December. The IMF board is expected to consider this issue soon. Not all IMF members will agree to change the charter because of Ukraine's problems, one analyst said (Vedomosti, p. 4).
OIL & GAS
The Russian government could lose about $16 billion if Stockholm arbitration rules in favour of ExxonMobil in a dispute over payment of taxes on profits from the Sakhalin-1 project. The project pays taxes at the rate of 35% that was in effect in 1996 when the production sharing agreement on it was signed, but the company wants it reduced to the 20% rate in effect in Russia since 2009 (Vedomosti, p. 12).
METALS & MINING
Mechel, the heavily indebted Russian steel and coal company controlled by Igor Zyuzin, might sell 50% to 100% of the huge Elga coal project to its biggest creditor, Gazprombank, and use the proceeds to pay down some principal debt and pay interest owed to Sberbank. The company wants an option to buy back the shares in Elgaugol (Vedomosti, p. 1).
BANKING, FINANCE & INSURANCE
Russia's Constitutional Court has ruled that deceived depositors of failed banks should be able to get their money back even if they do not have proper contracts with the banks. The ruling was made in a lawsuit filed by VIP depositors of Pervomaisky Bank and Master Bank who deposited money at inflated interest rates under nonstandard contracts. The ruling could increase the burden on the Deposit Insurance Agency (Vedomosti, p. 11; Kommersant, p. 9).
RETAIL & CONSUMER MARKET
A London court has ruled that the Bank of Moscow has sufficient grounds to move forward with a fraud lawsuit against Vladimir Kekhman, the former owner of the bankrupt JFC Group, which was once of Russia's biggest fruit importers. The bank is seeking about $200 million from Kekhman, who is also facing fraud charges in Russia. Kekhman said the legal action of banks against him is "nothing but personal revenge" (Kommersant, p. 1).
Sales of luxury goods in Moscow have stabilized in 2015 despite the crisis, in part thanks to tourists from China, Bain & Company reported. There is a simplified procedure for issuing Russian visas in China and since the collapse of the ruble Chinese shoppers have been flocking to Moscow to buy cosmetics, clothing, footwear, accessories, jewelry and watches. The number of Chinese tourists visiting Russia surged 51.6% year-on-year in the first half of 2015 (Vedomosti, p. 11).
REAL ESTATE & CONSTRUCTION
Interview: Alexander Dolgin, Principal Owner of Urban Group (Kommersant, p. 14).
TRANSPORTATION & LOGISTICS
S7 Airlines co-owner Vladislav Filev will meet with the creditors of Transaero on Friday and propose a recovery plan for the financially troubled airline, in which he is buying a controlling stake. He proposes to change Transaero's business model and not fight for the same routes as Russian flag carrier Aeroflot, but rather create a hub in Novosibirsk and develop a network of routes between Asia and Europe (Vedomosti, p. 10).
Major Russian leasing companies have found problems with the fleet leased by Transaero. The airline, trying to cut costs, has been cannibalizing parts from some planes to install them in others for the past year. If the aircraft owners want to terminate their contracts and lease the planes to another airline, they will first half to put everything back in its place (Kommersant, p. 9).
AUTOMOTIVE & ENGINEERING
Joint venture Ford Sollers is closing its two largest plants in Russia that assemble Ford automobiles for two months due to weak demand. A third plant will be shut for a month. At the Vsevolozhsk plant, which has about 1,500 employees, the company will offer a negotiated resignation program. Sales of Ford cars in Russia tumbled 41% in the first nine months of 2015, while the whole market contracted by 33% (Vedomosti, p. 10).
AGRICULTURE, FISHING & FORESTRY
Ahead of the high season for vegetable imports into Russia, domestic producers are asking Deputy Prime Minister Arkady Dvorkovich to impose comprehensive inspections of imported produce at the border and at retail chains. Russian companies, claiming that up to 20% of tomatoes, cucumbers and greens contain excessive amounts of pesticides and chemicals that increase shelf life and reduce production costs, say they face unfair competition (Kommersant, p. 1).