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. Last Updated: 07/27/2016

Business in Brief

$1Bln Svyazinvest Sale?



MOSCOW (Prime-Tass) -- The government intends to sell 25 percent minus two shares in national telecommunications holding Svyazinvest for 34 billion rubles in 2003, Vedomosti quoted State Duma budget and tax committee chief Alexander Zhukov as saying Friday.

The sum is equal to $1 billion at the average exchange rate of 34 rubles to the dollar expected by the government next year.

Vedomosti quoted analysts as saying the current market price of the Svyazinvest stake is no more than $300 million to $400 million.

In 1997, Mustcom Ltd., a consortium led by international financier George Soros, paid $1.875 billion for a 25 percent stake in Svyazinvest.

Soros later called it the worst investment he ever made. The government owns 75 percent minus one share of Svyazinvest, which holds controlling stakes in 80 regional fixed-line operators.




Russian Post Created



MOSCOW (Prime-Tass) -- Prime Minister Mikhail Kasyanov has signed a decree creating state-owned postal service Russian Post (Pochta Rossii), the government press service said in a statement Friday.

The ruling set Russian Post under control of the Communications Ministry, the press service said.

The Property Ministry was advised to agree with the Communications Ministry and Industry, Science and Technology Ministry on the range of federal property to be transferred under Russian Post's management, the press service added.

The Communications Ministry, together with the Property Ministry, will draft the new company's charter and appoint its director, the press service said.

Earlier this year, the government approved a reform program for the postal service placing all postal organizations under state control in the form of a company, which would subsequently be turned into a state-owned joint-stock company. The reform is aimed at increasing the efficiency, speed and quality of the postal service in Russia.

According to the program, the postal service's restructuring will take up to four years.




Metal Industry Plan



MOSCOW (Prime-Tass) -- The government has approved a package of measures aimed at developing the domestic metals industry up to 2010, the government press service said in a statement Friday.

The plan spells out upgrading the metals industry, boosting its export potential and ensuring a shift toward innovation-based development, which should enhance the competitiveness of the products of related industries.

The Industry, Science and Technology Ministry is expected to ensure that by 2010, Russia's ferrous rolled stock output rises 18 percent to 21 percent from 2001 levels to 54 million to 56 million tons, while output of nickel and aluminum rises 7 percent to 9 percent and copper 10 percent to 14 percent, depending on different development scenarios and adjusted for demand.

No other details of the plan were available.




Baltic Ferry Service



MOSCOW (Prime-Tass) -- The government approved a plan to build waterfront infrastructure to organize a multipurpose passenger and cargo ferry service in the Baltic Sea, the government's press service said in a statement Friday.

The ferry service is expected to link the port of Ust-Luga near St. Petersburg, the Baltiisk port in the Kaliningrad region and unspecified German ports.

The construction of the ferry infrastructure is scheduled to be carried out between 2003 and 2005.

The ferry links are expected to ensure free cargo and passenger turnover between Kaliningrad and the rest of Russia, should the European Union refuse to simplify its customs regulations to ensure unrestricted transport.




Meat Output Up 5%



MOSCOW (Prime-Tass) -- Farmers increased meat output 5 percent on the year in January-August to 3.901 million tons in live weight, an Agriculture Ministry official said Friday.

Increases were registered mainly in poultry and pork production, which rose 12.6 percent and 6 percent, respectively.

The number of slaughtered fowl increased 1.3 percent on the year to more than 217 million tons as of Sept. 1, while the number of pigs was up 6.8 percent to 15.58 million tons.

The expansion of the sector was partly pushed by a considerable drop in poultry imports as a result of Russia's months-long ban on U.S. poultry.

The official said Russia's poultry imports in January-July were down 13 percent on the year.




Aluminum Tariffs Stay



MOSCOW (Reuters) -- The government will keep its 5 percent export tariff on aluminum, but will consider whether to cut the 10 percent tariff on copper exports, Deputy Prime Minister Alexei Kudrin told reporters Friday.

He said the government commission for protective measures in foreign trade, responsible for drafting resolutions on customs tariffs, had decided not to discuss lowering the aluminum tariff.

"But a special report will be presented to the government," said Kudrin, who is the chairman of the commission.

When asked whether this meant that the tariff would remain unchanged, Kudrin said: "Yes."

He said the commission would look at lowering the tariff on copper exports. The commission had been scheduled to decide Friday whether to cut the tariff on aluminum and aluminum alloys exports to 3 percent from 5 percent and on copper exports to 6.5 percent from 10 percent from next year.




$30M to Help Megafon



MOSCOW (Reuters) -- The nation's largest bank, state-owned Sberbank, has extended a $30.3 million four-year loan to a leasing company to buy equipment for Russian-Nordic cellular firm Megafon, Sberbank said Friday.

Sberbank had extended the loan to RTK-Lizing, an affiliate of state long-distance company Rostelecom, which would buy the equipment and lease it to Megafon to develop its network in the northwest of Russia, Sberbank and RTK-Lizing said in a joint statement. RTK-Lizing will use the Sberbank credit and $11.7 million of its own funds to buy the equipment, it said.

Megafon, the nation's No. 3 cellular operator, is a joint venture created last year by Sweden's Telia, Finland's Sonera, St. Petersburg-based holding Telecominvest and LV Finance, a Moscow investment banking boutique.




Retail Pioneer Closes



MOSCOW (Vedomosti) -- Sadko, Russia's oldest supermarket chain, is shutting down after 13 years in the business.

Sadko introduced Muscovites to quality products and good service at a time when retail brought 100 percent profits. Today, the company has lost interest in maintaining its supermarket venues.

Sadko's two supermarkets on Bolshaya Dorogomilovskaya and the Sadko-Arkada complex have closed their doors.

Sadko Inter development director Tatyana Vavilova said the supermarkets were generating profitability of just 5 percent to 7 percent -- much less than the company's restaurants and boutiques -- due to heavy competition.

The first Sadko supermarket was opened in 1989 in a former Beryozka store. Until the 1990s, it was only accessible to foreigners, who had to show their passport at the door to gain entry.




Alrosa Polishes Business



MOSCOW (Prime-Tass) -- Uncut diamond giant Alrosa plans to transfer its diamond-polishing assets to Russian Polishing (Russkaya Ogranka) by Jan. 1, Alrosa senior vice president German Kuznetsov said in Vedomosti's Friday edition.

Kuznetsov said Russian Polishing will be a fully owned Alrosa subsidiary incorporating Alrosa's shareholdings in Oryol-Alrosa (51 percent); Oryol-Almaz (34 percent); Diamond World, formerly Moscow Kristall, (25 percent); and Sakha's Tuimaada Diamond (12.74 percent), as well as any new diamond-cutting facilities Alrosa acquires.

"If any [diamond-cutting enterprises] are put up for sale, we will buy them," a senior Alrosa official told Vedomosti separately.




For the Record



Fuel oil exports rose 33 percent on the year in January-August to 18.9 million tons, a source close to the Energy Ministry said Friday. (Prime-Tass)

Gasoline exports rose 28.7 percent on the year in January-August to 2.4 million tons, a source close to the Energy Ministry said Friday. (Prime-Tass)

Diesel fuel exports rose 25.1 percent on the year in January-August to 18.2 million tons, a source close to the Energy Ministry said Friday. (Prime-Tass)

Sport utility and commercial vehicle maker UAZ produced 44,973 units in January-August, 5.8 percent more than in the same period last year, the company's press service reported Friday. (MT)