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. Last Updated: 07/27/2016

World Bank Warns of Delay in Loans

The World Bank is disappointed with the way Russia is restructuring its troubled coal industry and will not release any more loans if the government doesn't speed up reforms, the bank's top Moscow representative said Friday.

"The World Bank cannot issue funds in the framework of the coal loan this year if Russia and the World Bank are unable to determine their positions on this program," said Michael Carter, World Bank director for Russia.

Carter said the government has yet to meet most of the conditions set for the next disbursement of two $200 million tranches, the last part of $800 million in loans meant to galvanize the coal industry. The two tranches are meant to help privatize the coal sector and resolve social problems in the mining regions.

"Privatization in the Russian coal industry has been seriously delayed as well as the process of closing loss-making mines," he said.

Russia is dragging its feet on the social program, World Bank officials, saying the nation is not giving severance pay to workers at closed mines and is not sending them to retraining programs.

The release of the tranches hinges on an agreement being reached between World Bank and Russian officials by their mid-February deadline.

The bank and the government will hold a "brain storming" session to address the loans over the weekend, Carter said. Economics Minister Andrei Shapovalyants and representatives of the International Monetary Fund and the European Bank for Reconstruction and Development are among the officials invited to the meeting.

Meanwhile, the Russian government sent out signals Friday that it is reluctant to speed up state privatizations.

Prime Minister Yevgeny Primakov, who is on a trip to the mining region of Kemerovo, said privatization in Russia had "many flaws," Itar-Tass reported.

Property sell-offs in Russia have seen "a number of scams," he said. "Money went into private pockets instead of the budget. Such privatization is no good; this has to be stopped."

Primakov also said that the government would earmark 6 billion rubles to support the coal industry in the first half of 1999 and a total of 10 billion to 12 billion rubles by the end of the year, Interfax reported.

Later Friday, Primakov and Kemerovo Governor Aman Tuleyev signed a proposal to evenly split the government's board seats with the regional authorities at state-controlled coal companies. The federal government will retain control of the shares.Tuleyev has been among the proponents of slower privatization, and last month tried to block the sale of the last state-owned shares in two Kemerovo coal companies, Kuzbassrazrezugol and Yuzhny Kuzbass. He had insisted that the stakes be handed over to the regional administration.

The stakes were eventually sold, but the World Bank complained Friday that this was only a tiny share of the assets that needed to be privatized.

Of the hundreds of coal companies in Russia, only those two have been fully privatized. The state has a controlling stake in 14 firms and a blocking stake of more than 25 percent in the rest of the companies, according to the State Property Ministry.

Vadim Voronin, World Bank deputy director for Russia, has said that giving blocking stakes in coal companies to local authorities would make it difficult for the new owners to restructure them.