Moscow press review for September 10, 2015
MOSCOW. Sept 10 (Interfax) - The following is a digest of Moscow newspapers published on September 10. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
The weakening of the ruble and accelerating inflation, as well as uncertainty about a possible rate hike by the U.S. Federal Reserve, will keep Russia's Central Bank from lowering interest rates further, analysts believe. They expect the regulator to leave its key rate unchanged at 11% at its board meeting on Friday (Vedomosti, p. 1).
The Economic Development Ministry's new forecast to 2018, which Russia's 2016 budget will be based on, looks close to the economic realities for the first time. In 2016, it projects $50 oil, GDP growth of 0.9%, near-zero growth for real incomes, industrial production and retail sales, a slight drop in exports and capital outflow of $80 billion. But the forecast does not consider the possibility of a new slowdown in China, a further decline of investment or problems with import substitution (Kommersant, p. 1).
Despite Prime Minister Dmitry Medvedev's recent call to save money "on all fronts," VEB expects the government to continue recapitalizing the state development bank in 2016. VEB estimates it needs more than 1.3 trillion rubles in state support. Officials are recommending that VEB should be more modest in its wants, and work on cutting costs and selling noncore assets (Kommersant, p. 1).
Russian government agencies and state corporations are supposed to reorganize 507 federal unitary enterprises into joint-stock companies or state-funded institutions or liquidate them in 2014-2015. But many enterprises are dragging their feet in this process, a new rating shows. In light of this, experts are recommending a common program to reform these enterprises and a bill to eliminate federal unitary enterprises as a legal form of entity (Vedomosti, p. 4).
OIL & GAS
A federal arbitration court in Russia's Far East has overturned earlier rulings that Rosneft does not have the right to access the Sakhalin-2 gas pipeline. The court ordered Gazprom's Sakhalin Energy to give the state oil major the specifications for connecting to the pipeline to transport up to 8 bcm of gas per year. Rosneft planned to use the gas to build its own LNG plant, but it is not clear whether this project will go ahead given the current conditions (Vedomosti, p. 10; Kommersant, p. 9).
BANKING, FINANCE & INSURANCE
Russian Standard Bank has made an unprecedented offer to holders of its subordinated Eurobonds totaling $550 million - principal owner Rustam Tariko is prepared to pledge 49% of shares in the bank as collateral in exchange for a restructuring of the debt. The bank, which posted a record loss of 22 billion rubles in the first half of 2015, is in dire need of capital (Vedomosti, p. 10; Kommersant, p. 8).
RETAIL & CONSUMER MARKET
The slump in purchasing power and growth in the number of new shopping centers in Russia have significantly reduced the number of shoppers at large malls. They have lost 3% to 16% of their shoppers since August 2014, and a record 28% in the past two years. This time, even the usually strong last week of August before the start of the new school year did not help retailers. The market has hit bottom, consultants believe (Kommersant, p. 1).
Russian retailers have agreed to a number of concessions to suppliers, including a reduction of maximum fines for under-supplying goods for promotions and store brands to 15%. Previously such fines went as high as 100% of the undelivered amount. Chains have also agreed to give up the practice of charging partners for transferring contracts when there is a change in legal entity (Kommersant, p. 7).
Forty bars in St. Petersburg have banded together informally, in a "gentlemen's agreement," in their dealings with suppliers, which has helped them stay in business in the face of the crisis. By purchasing together and sharing information, they have managed to save money and hold down prices. By joining forces they have even been able to optimize rents and reduce the cost of cleaning services (Vedomosti, p. 11).
REAL ESTATE & CONSTRUCTION
The Audit Chamber reported that the amount of unfinished construction in Russia totaled almost 2 trillion rubles at the start of the year, four times more than Rosstat reported. The fiscal watchdog attributes the growth in delayed construction to the inclusion of state projects in the Federal Targeted Investment Program without approved project documentation and timely processing of land parcels (Kommersant, p. 2).
TELECOMMUNICATIONS, MEDIA & TECHNOLOGY
Leading Russian mobile services provider MTS saw revenue from data services in Moscow exceed revenue from voice traffic by 5% and 10% respectively in July and August. MTS attributes this to rapid 4G network construction, lower prices for mobile devices and new rate plans with higher Internet traffic, and expects such a shift to occur nationwide in about three years. Rivals question the veracity of the company's figures (Vedomosti, p. 11).
TRANSPORTATION & LOGISTICS
Transaero, Russia's financially troubled second largest airline, is reducing its flights by 5% at the end of October, altogether leaving or reducing its presence in 12 destinations from Moscow. It will not fly to Russian cities such as Yakutsk, Kemerovo, Tomsk, Perm and Astrakhan, or to Los Angeles. This will enable other airlines to raise their prices (Vedomosti, p. ).