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. Last Updated: 07/27/2016

Yeltsin Signs Coal-Reform Order

COMBINED REPORTS


President Boris Yeltsin has signed an order liquidating the state coal company Rosugol in a move widely viewed as vital for the government in order to win World Bank funds to continue reforming the sector.


The order, which will take affect following an as-yet unscheduled meeting of Rosugol's shareholders to work out the company's dissolution, would transfer control of the coal industry to the Fuel and Energy Ministry.


Deputy Prime Minister Yakov Urinson had said earlier in the day that the decree would establish a special interagency commission to determine coal-industry policy. Within the Fuel and Energy Ministry, a unit would be created to handle the closure of unprofitable mines and another to deal with the social problems of coal-producing regions, including welfare payments.


Urinson said this system would eliminate the current conflict of interest in which the Rosugol company distributed state subsidies and was supposed to conduct restructuring in the sector, Itar-Tass reported.


Although state-owned, Rosugol didn't always support the government's restructuring initiatives.


The changes come as Russia is seeking a new loan from the World Bank to support coal restructuring. Urinson said the credit is to be worth $500 million to $700 million and could be approved next month.


The World Bank held up disbursement of parts of a previous $500 million loan for the coal industry, citing a lack of restructuring. Government officials have blamed Rosugol for blocking reform in the coal sector, which depends on enormous government subsidies to survive.


Rosugol was set up in December 1992 for the commercial management of government stakes in coal-mining companies. Rosugol is a 100-percent government-owned company.