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. Last Updated: 07/27/2016

Business in Brief

New Alrosa President

MOSCOW (MT) -- The supervisory board at diamond monopoly Alrosa said Friday that Vladimir Kalitin, the company's chief engineer, will become the company's new president, Interfax reported.

In line with Alrosa's charter, the supervisory board will sign a contract with Kalitin, after which he will take office.

PMI Rises

MOSCOW (Reuters) -- Manufacturers said output and new orders increased in February, showing a return to growth in Russian industry after a near-flat month in January, Moscow Narodny Bank said in a survey Friday.

The bank said growth from domestic demand was sustaining growth of the manufacturing economy despite declining exports. But the bank also said employment levels were falling and rising energy and transport expenses were pushing up overall costs at the fastest rate for the past six months.

February's Purchasing Managers Index levels appear to back up government assurances that the economy returned to growth in February after staying flat throughout the fourth quarter of last year.

The bank said in a report that its PMI, compiled from the responses of 300 Russian manufacturers, came in at 50.7 in February after 50.1 in January, its fourth month of decline. A level of 50 indicates flat growth.

Gazprom Eyes $300M

MOSCOW (Reuters) -- Gazprom said Friday it planned to borrow up to $300 million from Western banks in 2002 to cover its budget deficit due to low profitability in domestic sales.

The company did not say when the syndication might take place and which banks were behind it, but a Gazprom source said the syndication might start next week.

Gazprom said it planned a balanced 991.6 billion ruble ($32.2 billion) budget this year but needed a cost-cutting program, more loans and the urgent approval of its investment plan by the Cabinet.

Gazprom said it wanted to see its investment program at 146 billion rubles this year.

Share Liberalization

LONDON (Reuters) -- The government is close to approving the first stage of liberalizing share trading in Gazprom but will take no rapid decision on a broader restructuring of the gas sector, a Kremlin official told the Financial Times on Thursday.

Dmitry Medvedev, a first deputy head of the Kremlin administration and deputy chairman of Gazprom's board, told the newspaper he believed rules to ease the trading of Gazprom shares by Russians on domestic stock exchanges were likely to come soon, possibly ahead of the annual meeting in June.

He also told the newspaper he hoped a second stage of liberalization, designed to tackle the "ring fence" limiting foreign investors to purchases of American Depositary Shares, could begin this year.

"Russians and foreigners should be [treated] equally," he said.

Power Tariff Hike?

MOSCOW (Reuters) -- Russia may hike electricity transmission fees by a further 2.4 percent next month as a compromise in a dispute over price hikes that is delaying a restructuring of the power sector, a Federal Energy Commission official said Friday.

"The size of the grid fee will be agreed to at a commission headed by Deputy Prime Minister Viktor Khristenko and will likely come into force on April 1," the deputy head of the commission, Vyacheslav Ovchenkov, told a hearing.

The government said Thursday it planned to plough 102 billion rubles ($3.3 billion) into the power sector this year but delayed approval after grid monopoly Unified Energy Systems said its share of the investment was insufficient.

Foreigners to Pay Tax

MOSCOW (MT) -- Foreign citizens doing business in Russia will lose their exemption from the unified social tax as of Jan. 1, 2003, Interfax reported Friday.

Employers paying foreign citizens and persons without citizenship will also have to pay the tax as of next year, even if the employees do not have the right to receive state pension, social security and medical care funded by Russian government off-budget funds, an official at the Tax Ministry said.

He said the exemptions for these categories of taxpayers will be scrapped next year in line with the amendments passed last Dec. 31 to the Tax Code and several tax laws.

The exemptions will still be in effect for 2002 because the law canceling them went into force after Jan. 1 of this year, and the Tax Code stipulates that tax rules that worsen the tax regime for taxpayers cannot be backdated, he said.

Georgian Touts Pipe

ISTANBUL, Turkey (Reuters) -- A top Georgian oil official said a pipeline from a Russian port to a planned line from the Caspian Sea to Turkey will earn Russia hard cash and save the Turkish straits from further tanker congestion.

Giorgi Chanturia, president of the Georgian International Oil Corp., said the pipeline should be built from Novorossiisk on the Black Sea to near the Turkish-Georgian border, where a planned pipeline carrying Caspian crude from the Azeri capital Baku to Turkey's Mediterranean port of Ceyhan will pass.

But he warned the project could only be realized if a settlement was reached to end the conflict in Abkhazia, which declared independence from Georgia in 1991.

"This pipeline will earn the Russian budget an annual $500 million and will solve the problem of hazardous oil tanker passage through the Bosporus Strait," Chanturia told an international energy conference in Istanbul on Thursday.

Chanturia said in a statement the proposed pipeline could mostly handle oil pumped out of Kazakhstan through the Caspian Pipeline Consortium, a U.S. and regional partnership company.

Energy Cooperation

MOSCOW (MT) -- President Vladimir Putin said Friday that Central Asian states had agreed to boost their energy cooperation with Moscow, Agence France Presse reported.

Putin said he had held talks with the leaders of Kazakhstan, Turkmenistan and Uzbekistan and that "we agreed to cooperate in the energy sector, above all in the gas sphere."

Putin in January called for the creation of an alliance of gas producers grouping Russia, Turkmenistan, Kazakhstan and Uzbekistan to coordinate the volume and destination of gas exports from the region.

"This issue is of unifying our efforts … especially as countries like Russia and Turkmenistan are large producers and Kazakhstan and Uzbekistan are prepared to offer their transport system," Putin told journalists Friday.

Putin was speaking after a summit of CIS presidents.

2.8% Growth Forecast

MOSCOW (MT) -- Russia's gross domestic product may rise 2.8 percent in the first quarter of this year, Prime-Tass reported the Economic Development and Trade Ministry as saying Friday.

The ministry said in a monthly report that it expected Russia's industrial production to increase 2 percent in the first quarter. The population's real income is expected to rise 7.4 percent during the period.

$6Bln Sunk in Moscow

MOSCOW (MT) -- Foreign investment in Moscow reached some $6 billion in 2001, 60 percent of the total investment in Russia, Interfax reported Moscow City Duma Chairman Vladimir Platonov as saying Friday.

The reliability of foreign investment in Russia is guaranteed by federal legislation, regional legislation and international treaties, Platonov said at a conference in Geneva.

For the Record

Alfa Bank on Friday raised its target price for No. 2 oil company Yukos almost 13 percent to $8 per share on its strong third-quarter 2001 results and comparative strength versus its biggest rival. Alfa said it expected Yukos to post a 10 percent rise in net income in 2002. (Reuters)

A 20 percent increase in domestic wholesale power rates took effect Friday in line with a decision by the Federal Energy Commission in early February, Prime-Tass reported. (MT)