Moscow press review for September 4, 2014
MOSCOW. Sept 4 (Interfax) - The following is a digest of Moscow newspapers published on September 4. Interfax does not accept liability for information in these stories.
POLITICS & ECONOMICS
Moscow and Kyiv announced Wednesday that they had reached an understanding on the situation in southeastern Ukraine following a telephone conversation between the two countries' presidents. Russian President Vladimir Putin also unveiled his peace plan for Ukraine. Although it is premature to talk about a ceasefire, the two countries' leaders sent a clear signal that it is necessary to find a political, not military, solution (Kommersant, p. 1; Vedomosti, p. 1).
France said Wednesday that it cannot at present go ahead with the delivery of the first of two Mistral helicopter carriers to Russia due to the events in eastern Ukraine. For now the contract is still in effect, but the delivery date is being pushed back. Russian government officials said that by refusing to deliver the ships France "risks losing not only money but also face" (Kommersant, p. 1).
Medium-sized businesses that do not have direct access to capital markets, rather than state banks and companies, will suffer first of all as a result of the U.S. and EU sanctions against Russia, Standard & Poor's said in a report. Even without the imposition of tougher EU sanctions, which is expected Friday, higher bond yields and interest rates on ruble loans have already increased the cost of financing for Russian companies, analysts said (Kommersant, p. 4).
OIL & GAS
The mechanism for calculating tax breaks for oil companies will change with Russia's tax reform in the oil sector. The natural resource extraction tax will have to be paid on fields previously exempt from the tax. But the tax burden will not increase, government officials and experts say. Zero resource tax rates, which cost the government 165 billion rubles in 2012, will be replaced by deductions calculated according to a formula (Vedomosti, p. 4).
Russia's Energy Ministry has submitted to the government its proposals for an excess profits tax in the oil industry that could replace the natural resource extraction tax. The ministry is proposing to tax operating income from oil sales at a fixed rate of 60%. But the Finance Ministry remains sceptical about the very idea of such a tax (Kommersant, p. 9).
UTILITIES
Ukraine intends to sign an agreement on the construction of new nuclear power plants by the end of this year. Statements by the country's prime minister indicate they will not be built by Russia's Rosatom. Ukraine will probably award the new nuclear plant contracts to U.S. company Westinghouse, which has been showing keen interest in the Ukrainian market since the deterioration of relations between Moscow and Kyiv (Kommersant, p. 9).
METALS & MINING
Norilsk Nickel is continuing to sell off assets, despite the steady growth of demand and prices for nickel, and does not intend to alter its strategy. The Russian mining giant said it has agreed to sell the Lake Johnston project in Australia to Poseidon Nickel Limited. A source said Norilsk Nickel would gain $100 million on the deal. After this sale, the company's only remaining asset in Australia will be the huge Honeymoon Well deposit (Vedomosti, p. 12).
BANKING, FINANCE & INSURANCE
Russian companies hit by sanctions are looking for ways to get them lifted. Gazprombank has hired Squire Patton Boggs to lobby its interests in the area of banking legislation and regulation, including rules concerning sanctions. The Russian bank's interests will be represented by two former senators. In August, gas producer Novatek hired Qorvis MSL to tackle issues concerning sanctions (Vedomosti, p. 11).
RETAIL & CONSUMER MARKET
The turmoil on the Russian tourism market that has seen a number of tour operators halt operations has not left travel agencies untouched. The government is proposing to create a unified federal register in order to more effectively monitor their operations. Such companies might also be required to insure their liability to clients (Kommersant, p. 1).
REAL ESTATE & CONSTRUCTION
PIK Group, one of Russia's largest real estate developers, has unveiled a more focused strategy for 2014-2017 aimed at increasing returns and construction in the affordable housing segment. The company plans to sell its business class residential projects and is slashing production of panel structures by half (Vedomosti, p. 10).
TELECOMMUNICATIONS, MEDIA & TECHNOLOGY
Mail.ru Group might soon acquire full control, directly or indirectly, over VKontakte, Russia's largest social network. The group's negotiations to buy out the 48% stake in VKontakte held by Ilya Scherbovich's UCP are in the final stage. The company will probably be valued at about $2.9 billion for the deal, so the price of the 48% stake could reach nearly $1.4 billion (Vedomosti, p. 10).
TRANSPORTATION
Russia's rail freight market could see another round of consolidation. Major operators are discussing handing over a large portion of their gondola cars to Russian Railways (RZD) - possibly 170,000 cars or more than 13% of the country's whole fleet. Private companies had previously refused to give RZD their cars, but amid the slump in freight shipments the monopoly can offer them better terms than the market (Kommersant, p. 7).
The Russian government has begun the process of forming the Russian-Belarusian-Kazakh Unified Transport Logistics Company. The prime minister has already signed an order to hand Russian Railways's stake of 50% plus two shares in Transcontainer to UTLC. The creation of UTLC will put an end to plans for the privatization of Transcontainer, for which Summa Group has been hoping. Analysts question the economic benefits of creating the new company (Kommersant, p. 9).
AUTOMOTIVE & ENGINEERING
Avtovaz, Russia's largest carmaker, wants to double its share of the Moscow market to 6.5%. The company will not be able to do this without new models, analysts believe. Sales of Avtovaz's Lada will get a boost from the government scrapping program this year, but subsequently a major change in its share of the country's largest and most competitive market is unlikely before the appearance of the new Lada Vesta sedan, one analyst said (Vedomosti, p. 11).
