Moscow press review for October 24, 2014
MOSCOW. Oct 24 (Interfax) - The following is a digest of Moscow newspapers published on October 24. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
The tax authorities of 45 countries are creating a special network, which one expert likened to a kind of Facebook for tax officials, that will enable them to quickly exchange information. The tax services of these countries, including Russia's Federal Tax Service, are expected to sign a communique setting out measures to improve tax control in Dublin on Friday (Vedomosti, p. 1).
OIL & GAS
This week marked a turning point for Russia's gasoline market, which had seen a spike in prices amid supply shortages. Following the completion of repairs at the Angarsk oil refinery, wholesale prices began to drop rapidly in anticipation of a further increase in supply. But now buyers are in no rush to purchase fuel and prices could keep falling. However, this will have less impact on retail gasoline prices, which will probably just gradually stabilize (Kommersant, p. 9).
The 19.5% stake in Rosneft that the Russian government wants to privatize by 2016 should be sold at no less than $8.12 per share, the same price BP paid at the end of 2012, the state oil major's president, Igor Sechin said. In that case, the stake would cost an investor at least $16.7 billion, about 50% more than its current market value of $11.3 billion (Kommersant, p. 11; Vedomosti, p. 13).
UTILITIES
The mechanism for support of renewable energy sources in Russia could be extended to include facilities that run on landfill gas. Sweden's Vireo Energy is prepared to invest in this technology in Russia and is already implementing such a project in Leningrad Region. But the decision is being held up by electricity consumers who fear higher prices and the Economic Development Ministry, which believes "renewable energy is a luxury" in the current economic situation (Kommersant, p. 11).
BANKING, FINANCE & INSURANCE
Russia's Central Bank is willing to allow banks to not additionally provision for loans in the event of non-payment due to sanctions, but only in certain cases. The exemption will be available not only to companies hit by sanctions, but also to their counterparties that are not subject to sanctions. Market players welcomed the concession from the Central Bank, but it is still unclear whether it will work (Kommersant, p. 1).
The Russian ruble slid to new all-time lows of 41.73 rubles against the dollar and 52.77 rubles against the euro Thursday, despite renewed intervention by the Central Bank and looming tax payments. The currency came under pressure from news that state oil major Rosneft might get 2 trillion rubles from the National Welfare Fund and anticipation of an announcement from Standard & Poor's, which could lower Russia's current investment-grade rating of BBB- to a speculative level (Vedomosti, p. 10; Kommersant, p. 10).
Alfa Bank has pushed state-controlled retail bank VTB24 out of fourth place in the ranking of Russian lenders by size of credit card portfolio, and is now only 500 million rubles behind No. 3 credit card lender TCS Bank. Alfa Bank's credit card debt portfolio increased by 4% to 76.27 billion rubles in September, while VTB24's grew by 2% to 75.48 billion rubles and the market overall also grew 2% (Vedomosti, p. 11).
The Central Bank intends to impose restrictions on investment of money in personal investment accounts that Russians will be able to open starting January 1. The regulator wants to bar individuals from investing this money in the forex market and foreign securities traded abroad, as well as restrict investment in bank deposits. The accounts, which are eligible for tax breaks, will therefore be channelled into the Russian stock market (Kommersant, p. 10).
RETAIL & CONSUMER MARKET
Online pharmacies operating without a license, as well as websites that sell drugs, narcotic or psychotropic substances not registered in Russia will be shut down without court orders under a bill being considered by the State Duma. The sale of drugs outside of pharmacies is technically already prohibited, but the authorities do not have the power to shut down websites. Analysts estimate online drug sales amount to about 1% of retail sales at pharmacies (Kommersant, p. 6).
Russia's largest producers of cigarettes and tobacco have appealed to President Vladimir Putin to not allow the imposition of minimum prices for tobacco products, arguing this would be disastrous for the domestic tobacco industry and destroy competition, leaving the sector in the hands of transnationals. A bill submitted to the State Duma in September would set a minimum price on cigarettes of 55 rubles per pack, while cheaper cigarettes now account for about 40% of the market (Vedomosti, p. 11).
REAL ESTATE & CONSTRUCTION
Russian officials want to simplify procedures for buying up real estate so that uncooperative owners will not hold up construction of housing and infrastructure. A bill that would help developers deal with this problem has been drafted by experts and is being considered by the Construction and Housing Policy Ministry, but critics say it would be unconstitutional (Vedomosti, p. 4).
The Russian government has approved two Economic Development Ministry bills on registration of title to real estate and cadastral registration, drafted as part of efforts to improve government services in this sector. Agreement of spouses to real estate deals will no longer require a notary public, and the Federal Registration and Cadastre Service will get the authority to declare real estate ownerless, as a result of which, lawyers say, it could become municipal property (Kommersant, p. 6).
TRANSPORTATION
The management of Moscow's Vnukovo Airport has resigned in the wake of the jet crash that killed the president of French oil company Total earlier this week. The driver of the snow plough into which the jet crashed upon takeoff has been arrested, and the airport's flight operations director, two traffic controllers and the chief engineer of airfield services have been detained by the Investigative Committee. A new CEO will be appointed at Vnukovo after the investigation is completed (Kommersant, p. 1; Vedomosti, p. 13).
Russian Railways' (RZD) negotiations with rail freight operators to put most of their gondola cars under the monopoly's management have hit a dead end. The government is opposed to RZD managing or leasing freight cars as this is inconsistent with the target model for the rail freight market's development to 2015. RZD already admits that in the absence of free pricing it is unprofitable for the state company to lease freight cars. But a source close to RZD believes it will revisit this issue in 2015 (Kommersant, p. 9).
AUTOMOTIVE & ENGINEERING
Russia's Industry and Trade Ministry might increase financing for the vehicle scrapping program intended to help the auto industry to the end of this year from 10 billion rubles to 15 billion rubles. Some automakers, such as Avtovaz and GAZ Group, have already completely used up their quotas. Analysts believe vehicle sales in Russia could fall 5-10 percentage points harder if there is a pause in the scrapping program before it is resumed in 2015 (Vedomosti, p. 10).