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. Last Updated: 07/27/2016

NEC, Siemens to Help Build Phone Link

Russia's main long-distance phone company has chosen a consortium including Japan's NEC and German firm Siemens AG to construct the world's longest microwave link from Moscow to Khabarovsk, a spokesman for the consortium said Monday.

The $235 million project will both improve telecommunications in Russia for Rostelecom, Russia's long-distance phone company, and create a new link between western Europe and Japan which will earn hard currency for Russia.

Trading firm Sumitomo led the Japanese-German consortium, while Siemens and NEC will provide equipment and supervise construction of the 10, 500-channel line, said Bettina Drexler, a Siemens representative in Moscow.

The line, which is to be finished by 1995, will connect a Copenhagen-St. Petersburg-Moscow link in the west to a submarine fiber-optic cable connecting the Russian town of Nakhodka with Korea and Japan.

Danish Telecom, Denmark's Great Northern Telegraph and U. S. West advised Rostelecom on the tender, said Drexler. The basic documents of the tender contract were signed last week. Other bidders included AT&T, Northern Telecom and Belgian firm Alcatel.

Rostelecom has agreed to pay $35. 3 million in advance for the project, with the rest coming from a $200 million loan from the Japanese government.

Japanese officials Monday confirmed that the government was considering the investment credit and said it was discussed with President Boris Yeltsin during his recent visit to Japan.

"We have already received confirmation from Deputy Prime Minister Alexander Shokhin that the Russian government has placed priority on this project", said Export-Import Bank of Japan representative Hitoshi Kamikubo.

But the Japanese bank will not release the $200 million for the project until the terms under which Russia will repay its debt to Japan are clear, Kamikubo said.

Kamikubo explained that the Paris Club agreement on rescheduling of former Soviet debt which Russia signed in April allows creditor nations to pull out if Russia's talks with the IMF collapse. In such a case, Russia would be left with unsettled debts to Japan.

"We are carefully watching the negotiations between the Russian government and the IMF for a standby agreement", said Kamikubo. "In a situation of arrears, it is impossible to give money to the Russian government".

Officials at Siemens and NEC had no comment on what will happen to the project if the Japanese financing falls through.