Moscow press review for July 16, 2015
MOSCOW. July 16 (Interfax) - The following is a digest of Moscow newspapers published on July 16. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
Cuts in spending on defense, security and the economy make nonfinancial compensation to the affected parties inevitable. The dissolution of Russia's Ministry for Crimean Affairs that was announced on Wednesday will clearly strengthen the military's position on the Black Sea peninsula, while the Anti-Monopoly Service's takeover of the Tariff Service will create new tools to pressure state companies. Neither decision will benefit planned structural and institutional reforms in these areas (Kommersant, p. 1).
The Russian government has decided to fold the Federal Tariff Service into the Federal Anti-Monopoly Service, forming a new mega-regulator that will protect the market from monopolies and regulate their prices. The consolidation, intended to streamline regulation, will not reduce the costs of businesses, analysts and market players believe. The new regulator will be headed by FAS chief Igor Artemyev (Vedomosti, p. 4; Kommersant, p. 2).
The slump in Russian industrial production accelerated to 4.9% year-on-year in the second quarter of 2015 from 0.4% in the first quarter. Industrial production fell 2.7% in the first half, Rosstat reported. However, in June the decline slowed to 4.8% from 5.6% in May. Some analysts believe industry has hit bottom, but they see little potential for a rebound (Vedomosti, p. 5; Kommersant, p. 3).
OIL & GAS
The European Commission has for the first time said directly that it will oppose any plans by Gazprom aimed at weakening Ukraine's role in transit shipments of gas to Europe. Meanwhile, European Parliament members have started a campaign against the latest such project - Nord Stream 2. Sources at the Russian gas giant and analysts believe these positions are inconsistent and contradictory with the policy of the European Union itself (Kommersant, p. 7).
Working with Ukrainian tycoon Dmitry Firtash may have cost Russian gas giant Gazprom dearly. Due to provisions made on guarantees for Firtash's Ostchem Holding, Gazprom Export posted a loss of 25.1 billion rubles in 2014, compared to a net profit of 6.8 billion rubles in the previous year. Gazprom essentially paid for the gas it sold to Ostchem (Vedomosti, p. 12).
METALS & MINING
One of the options for restructuring the debts of Russian steel and coal group Mechel, which stood at $6.77 billion at the end of 2014, would see Sberbank selling its Mechel debt of $1.36 billion to fellow creditor Gazprombank, which is owed $2 billion rubles. Gazprombank would then get a stake in Mechel's huge Elga coal field and the railway to it. Mechel could get an option to buy back the stake (Vedomosti, p. 1).
BANKING, FINANCE & INSURANCE
Against the backdrop of the crisis in Russia and general trend of businesses moving into the shadows, illegal cashing of money through corporate bank cards is also on the rise, a new study shows. The share of transactions to withdraw cash on such cards has grown from 56% to 62% since the third quarter of 2014. Combined with an increase in the average size of cash withdrawals, this could indicate that cards are being misused (Kommersant, p. 1).
REAL ESTATE & CONSTRUCTION
VTB has lost more than 177 hectares of land on the western outskirts of Moscow that the Russian state bank inherited from exiled tycoon Sergei Pugachev. A district court, in a lawsuit brought by the city environmental prosecutor, has ruled that real estate investment fund Ekselend, which is managed by VTB Capital Asset Management, does not have the ownership rights to the land, which has a cadastral value of 11 billion rubles (Vedomosti, p. 11).
TELECOMMUNICATIONS, MEDIA & TECHNOLOGY
Russia's communications minister is proposing to amend the procurements policy of Rostelecom to require the national operator to give extra points to vendors offering Russian telecom equipment tested by the Telecom Equipment Competency Center. This is part of a broader plan to substitute imports of telecom equipment. The ministry has a list of 25 priority types of equipment for which it wants to see imports decrease (Vedomosti, p. 11).
Interview: Yekaterina Tikhomirova, President of European Media Group (Vedomosti, p. 8).
TRANSPORTATION & LOGISTICS
Mandatory certification of organizations that monitor aircraft fuel quality in Russia ends this week. Until now jet fuel has been inspected by state agencies, but now the main responsibility for fuel quality will be placed on airline staff, including flight crews, raising serious concerns at airlines about flight safety. The Transport Ministry and Air Transport Agency are only starting to discuss the new system of control, although the law was passed a year ago (Kommersant, p. 1).
AUTOMOTIVE & ENGINEERING
The chairman of the United Rocket & Space Corporation, Andrei Klepach will soon step down. He will be replaced by the former head of the Federal Space Agency, Oleg Ostapenko, in a decision made by Kremlin chief of staff Sergei Ivanov. Klepach might join the board of the Space Agency (Kommersant, p. 1).
Despite government expectations, Russia's United Aircraft Corporation will not be able to build as many Sukhoi SuperJets this year as it did in 2014, as airlines do not need new passenger liners and are reducing orders. UAC plans to build only 21 of the aircraft this year, compared to 37 in 2014 (Vedomosti, p. 10).
AGRICULTURE, FISHING & FORESTRY
United Grain Company's development program for 2015-2020 calls for turning the company into the largest player on the Russian grain market, with a significant role in the global grain trade. UGC, which will remain the agent for state intervention on the grain market, is aiming for a 40% share of marine port handling of Russian agricultural cargo and 15-17% of Russian grain exports by 2020. The company will need 52 billion rubles to achieve these goals (Vedomosti, p. 10).
