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. Last Updated: 07/27/2016

60% of Moskvich Caught in Limbo

Itar-TassMoskvich workers protesting outside the White House earlier this week over the government's delay in transferring the shares.
City officials on Thursday demanded that the federal government turn over a 60 percent stake in Moskvich to the Moscow administration, but refused to pay the struggling carmaker's $666 million debt if the share transfer is completed.

"Our position is that we can do something for the plant once we become its owners," Yevgeny Panteleyev, head of the Moscow government's science and industry department, said at a news conference Monday.

But the city will not pay off Moskvich's debt, he said.

The carmaker owes 500 million rubles ($15.8 million) to local utility Mosenergo, which switched off its electricity at the end of last year, halting production.

The main debt in question, though, is the $650 million that the federal Property Ministry says Moskvich owes for foreign-made industrial equipment that the Soviet government bought to create an engine-making division at the plant in 1987.

Moskvich considers the debt unfair.

"The equipment was intended for the whole of the Soviet auto industry," said Moskvich deputy general director Lyubov Timonina. "Why should we be saddled with the entire debt?"

The equipment was imported and paid for according to a Soviet government resolution and was distributed to plants in six different cities, Timonina said. "That's how it was written in the resolution at the time," she said.

Former President Boris Yeltsin's administration issued a resolution in 1997 saying the federal government would grant Moscow the stake in Moskvich. The federal Property Ministry blames the city for stalling the share transfer.

"We prepared the documentation for the share handover to Moscow over a year ago," ministry spokesman Alexander Parshukov said by telephone Thursday. "The reason it has not yet been handed over is simple: Moscow has not fulfilled the requirements for receiving the stake." Parshukov did not specify those requirements.

The Moscow industry department's Panteleyev denied that Moscow had failed to complete its end of the bargain.

Moskvich workers added their voice to demands for the share transfer, protesting outside the White House.

"We have been standing under the burning hot sun picketing the White House for the past week to get our point across, and we will go out again tomorrow," Galina Nesterova, chairwoman of the Moscow Automobile and Agricultural Machine-Building Union, said at the news conference.

"There isn't a family in Moscow that hasn't been touched by Moskvich," she said.

The union has sent an open letter to President Vladimir Putin and Prime Minister Mikhail Kasyanov asking them to "immediately intervene and help make a final decision."

"Social tensions are heating up and could lead to unforeseeable consequences," Nesterova wrote in the letter.