Moscow press review for February 18, 2015
MOSCOW. Feb 18 (Interfax) - The following is a digest of Moscow newspapers published on February 18. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
Under pressure from the Russian government, which is trying to prevent layoffs, industrial companies are lining up for a new anti-crisis instrument - 52.5 billion rubles earmarked for temporary employment and retraining. Automakers Kamaz, Avtovaz, GAZ and Sollers have already begun processing requests for over 10,000 people, and other engineering companies intend to follow their example. The money could be enough for nearly 730,000 people to the end of the year, but on average they would get less than a third of their wage (Kommersant, p. 1).
When it cut its key interest rate to 15% from 17% in a controversial move earlier this year, Russia's Central Bank did not rule out the possibility that annual inflation would exceed the key rate throughout the year and amount to 15-16% by the end of 2015. But now the regulator has warned that this forecast is incorrect and it now projects that inflation will slow to about 12% by the end of 2015 (Vedomosti, p. 4).
OIL & GAS
Not all of Russia's natural monopolies have agreed to include Rosneft's ambitious Far East Petrochemical project in their investment programs, the state oil major has complained to the government. Nonetheless, the Energy Ministry has already drafted a government order to implement the project, which analysts see as very risky in the current circumstances (Vedomosti, p. 10).
Rosneft has not managed to close a deal to consolidate control in the Solimoes gas project in Brazil. The Russian state oil major did not deposit funds for the project's development and the situation is also being complicated by the new shareholders of the partner in the project, Brazil's HRT. Meanwhile, Rosneft intends to reduce investment in dollars and analysts believe the company might altogether abandon the Brazilian project, which it acquired along with TNK-BP (Kommersant, p. 9).
The contractor for the construction of the underwater section of the scrapped South Stream gas pipeline to Europe, Italy's Saipem might get a contract from Gazprom for the construction of an alternative pipeline to Turkey, sources close to the Russian gas giant said. Since part of the new pipeline will be laid along the same route that was planned for South Stream and Gazprom already has a contract with Saipem, it makes sense to keep the contractor, analysts said (Vedomosti, p. 11).
Novatek, Russia's leading independent gas producer has acquired its third license on the Gydan Peninsula, for the Trekhbugorny block with forecast resources of over 1 trillion cubic meters of gas for 435 million rubles. The relatively low price is due to the remoteness of the block and its absence of explored reserves. If Novatek finds a big enough field at the block, the gas might be used to expand the Yamal LNG project, analysts reckon. But this will require changes to legislation (Kommersant, p. 9).
METALS & MINING
Investment company Sapinda, led by former En+ CEO Artyom Volynets, has bought up almost 5% of shares in Petropavlovsk and is proposing that the financially troubled Russian gold miner carry out a new share issue instead of the debt restructuring deal proposed by the company's management. Petropavlovsk shareholders had reached an agreement with holders of $310.5 million in bonds maturing in February 2015 (Vedomosti, p. 12).
Alrosa is discussing options for paying dividends for 2014-2015 with the Federal Property Agency. Despite an IFRS net loss of 12.55 billion rubles for 2014, the Russian diamond giant is prepared to maintain returns to shareholders at the 2013 level in order to keep its promises of stable payments. But as a result, Alrosa will have to reduce future dividends for 2015, in which it expects to earn a net profit of 113 billion rubles (Kommersant, p. 7).
BANKING, FINANCE & INSURANCE
Russia's Central Bank is changing its approach to oversight and has sent out recommendations to its regional divisions. It has decided to assess banks based on expert judgments of the value of their assets and potential losses. Attention will be focused on transactions with shareholders, the financial condition of which the Central Bank will study by the end of the year (Vedomosti, p. 1).
Despite the difficult economic situation in Russia, retail banks still prepared for a surge in consumer lending in December and most hired new staff in the fourth quarter. But due to the steep increase of the Central Bank's key interest rate and collapse of the ruble, there was no one to lend to. Now these banks, having failed to make money on a credit boom that did not materialize, will bear additional costs associated with layoffs (Kommersant, p. 7).
RETAIL & CONSUMER MARKET
While the Russian government is thinking about the wisdom of regulating prices for 'socially important' food goods, a number of the country's regions have already begun curbing prices for such goods. Regional authorities are reaching agreements with retailers on minimum mark-ups, and demanding that they give preference to locally made products and fix prices for goods sold under chains' own brands (Kommersant, p. 1).
The Supreme Court of Cyprus has ruled that Maxim Nogotkov must cede a 51% controlling interest in Trellas, the head company of the Svyaznoy group, which includes Russian mobile phone retailer Svyaznoy, to Oleg Malis's Solvers. Other creditors can now also lay claim to the group's mortgaged assets. Mobile operator MTS, meanwhile, is reportedly still interested in Svyaznoy and is negotiating with the group's creditors (Vedomosti, p. 10).
The launch of the Integrated Automated State Information System for production and sale of alcohol at Russian breweries, possibly as early as July 1, might force them to stop making non-alcoholic beverages, which are an important source of revenue and account for up to 10% of production. A spokesman for the Alcohol Market Regulation Service said the regulator is prepared to propose technical solutions to resolve this issue, but did not elaborate (Vedomosti, p. 11).
TELECOMMUNICATIONS, MEDIA & TECHNOLOGY
Channel One has agreed to legalize its content in Russia's largest social network, VKontakte. The leading Russian TV channel will grant rights to show its broadcasts and shows, including its most popular, in exchange for a share of advertising revenue. Video advertising on the Internet will continue to grow this year, despite the crisis, market players believe, while TV advertising is expected to fall (Kommersant, p. 1).