Moscow press review for September 10, 2014
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
In the first month after Russia imposed retaliatory sanctions, food imports from outside the CIS fell 7.5% by value, customs statistics show. Imports of milk, pork, poultry and vegetables, hit by the import ban, tumbled 40-60%. Market players are reporting growing shortages in both the retail and processing sectors, while both remaining foreign suppliers and domestic producers are raising prices. The policy of import substitution will not become the engine of the economy, economists believe (Kommersant, p. 1).
Russia's Finance Ministry has drafted a bill to preserve the defined contribution pension system. It would restrict the sequestration of contributions to this portion of the pension system to two years and give frozen contributions, totaling more than 500 billion rubles, to private pension funds in 2015. The bill should be passed this year, a senior ministry official said (Vedomosti, p. 1).
Dutch investigators released a preliminary report on the crash of the Malaysia Airlines airliner in eastern Ukraine in mid-July that killed all 298 people on board, concluding that the jet broke up in midair likely after being hit by objects from outside the aircraft. The report does not say who is to blame for the disaster. The investigation will continue (Kommersant, p. 1; Vedomosti, p. 2).
Next year could be more difficult for the Russian economy than 2014 due to the impact of sanctions, the retaliatory restrictions on imports, higher inflation, falling exports, and the uncertainty of consumers and investors. Economists are revising their forecasts and some now expect Russia to fall into a recession in 2015 (Vedomosti, p. 4).
Residents of the Moscow Region will see their transport taxes go up in 2015. Rates will go up 5-6% for owners of cars, while owners of trucks, yachts, jet skis, planes and helicopters will pay 10% more on average. The regional authorities expect to raise an additional 800 million rubles with the tax hike (Kommersant, p. 4).
KPMG has prepared a study for Russia's Economic Development Ministry on changing the system of federal subsidies for small and medium businesses. The ministry is considering various models for distributing support, including with a view to the growth potential of a given sector. But business leaders said this money is not the most important thing for small enterprises, what they need is clear rules for doing business (Vedomosti, p. 5).
OIL & GAS
The European Union is preparing in earnest for disruptions in gas supplies from Russia and intends to take manual control of the sector if needed. Europe is not ready to stop buying from Gazprom, but in the medium term plans to reduce its dependence on imports of piped gas by buying LNG at spot prices. However, even in this case gas will cost Europe more than what Gazprom is currently selling at, analysts believe (Kommersant, p. 1).
Leading Russian independent gas producer Novatek might also receive state support in the face of sanctions, like state oil major Rosneft, which has been promised 1.5 trillion rubles from the National Welfare Fund, Prime Minister Dmitry Medvedev said. Novatek might need help financing the $27 billion Yamal LNG project (Vedomosti, p. 12).
UTILITIES
A Russian government board of expertsl has concluded that the investment program of the Federal Grid Company for 2015-2019, totaling 562 billion rubles, can be reduced by at least half. The experts question the effectiveness of a number of projects, particularly the company's spending on increasing reliability of power supply to consumers, which accounts for 76% of the investment program (Vedomosti, p. 11).
METALS & MINING
Russian steel and coal company Mechel is preparing all of its assets for sale, even its core Chelyabinsk Metallurgical Plant, and is willing to consider selling if offered a good price. The company, which is struggling under a debt of $8 billion, hopes to earn $3 billion from the selloff (Vedomosti, p. 10).
Interview: Oleg Korzhov, CEO of Mechel (Vedomosti, p. 8).
BANKING, FINANCE & INSURANCE
Russia's Central Bank has proposed to form a working group with Visa and MasterCard to discuss switching processing of domestic transactions with the international payment systems' cards to its new subsidiary National Payment Card System. Considering that the working group is being formed two months before the deadline for Visa and MasterCard to switch to Russian processing, joining NPCS will apparently guarantee them laxer rules of the game (Kommersant, p. 1).
RETAIL & CONSUMER MARKET
The Russia-China Investment Fund has agreed to buy a 10% stake in Detsky Mir, Russia's largest retailer of children's goods, from conglomerate Sistema. The deal, which could be followed by an IPO, could earn the retail chain at least $100 million. The proceeds will be used to open new stores and build additional logistics centers (Vedomosti, p. 10; Kommersant, p. 10).
The Rosinter restaurant group, the only McDonald's franchisee in Russia, is not rushing to open new outlets of the U.S. fast food chain. Rosinter had planned to open such outlets at all transport hubs in Moscow, but it has not even signed preliminary lease agreements yet. McDonald's business in Russia is currently in jeopardy due to inspections by the consumer rights watchdog (Kommersant, p. 7).
TELECOMMUNICATIONS, MEDIA & TECHNOLOGY
Mail.ru Group has sold a 4% stake in Qiwi, Russia's leading instant payments system. The shares were reportedly sold at a 2.8% discount to the market price, or for about $80 million. The Russian Internet group, which once owned 25% of Qiwi, has earned more than $300 million on its investment in the company (Kommersant, p. 7).