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. Last Updated: 07/27/2016

Business in Brief

MDM Stake Sold

MOSCOW (MT) -- Sergei Popov has become 50 percent joint owner of the MDM empire.

Under a deal announced last week, Popov bought 50 percent of MDM Financial Group. Popov already owned MDM's Industrial Group in a 50-50 partnership with Andrei Melnichenko,

Popov's Portuguese company Metano-Servicos E Marketing bought the stake from Melnichenko's Austrian-registered MDM Holding.

The sum of the deal was not disclosed, but a top official with the group said it is estimated at 50 percent to 70 percent of the company's capital, which stood at $330 million as of June 30, Prime-Tass reported.

Blue Stream Open

ANKARA, Turkey (Reuters) -- Turkey began purchasing natural gas from Russia on Thursday through the world's deepest pipeline, partially constructed under the Black Sea, Turkey's state pipeline concern Botas said.

The project, called Blue Stream, will supply Turkey with an initial 2 billion cubic meters in 2003, rising by 2 bcm a year and hitting 16 bcm by 2010.

The $3.5 billion project, developed by Gazprom, the world's largest gas producer, and Italy's energy group ENI, began in 1999 and was supposed to open in October 2001, but the date had been postponed several times.

Inflation Fears

MOSCOW (Reuters) -- Consumer price inflation will slip to below 2 percent in February month-on-month compared with 2.4 percent in January, First Deputy Finance Minister Alexei Ulyukayev said Friday.

He blamed higher money supply and budget spending at the end of the year for high inflation.

Most budget funds in Russia are usually spent at the end of the year, resulting in higher inflation figures at the start of the following year.

Norilsk Strike Halted

MOSCOW (Reuters) -- Trade union leaders at metals giant Norilsk Nickel decided Friday to end a hunger strike over pay that had lasted since Feb. 6, a union leader at the company's key Arctic division said.

"Today, we decided to end the hunger strike," said Valery Melnikov, chairman of the Federation of Trade Unions, the smaller of the two main unions at the division.

Tax Collection Up 25%

MOSCOW (Prime-Tass) -- The Tax Ministry contributed 2.33 trillion rubles ($73.6 billion) to the country's consolidated budget in 2002, up 24.9 percent on the year, Tax Minister Gennady Bukayev said Friday.

The consolidated budget includes the federal budget as well as regional and local budgets.

Of all the consolidated budget's revenues, 84 percent, or more than 2 trillion rubles, were revenues from five kinds of taxes: value-added, profit, income, royalty and excise taxes.

$7Bln Unreported

MOSCOW (Prime-Tass) -- Tax authorities contributed 220.6 billion rubles ($7 billion) in unreported taxes and fines to federal, regional and local budgets last year, Tax Minister Gennady Bukayev said at a ministry board meeting Friday.

Bukayev added that tax arrears to all the budgets declined 0.7 percent last year to 521.9 billion rubles as of Jan. 1.

Trade Surplus Falls

MOSCOW (Prime-Tass) -- The nation's foreign trade surplus fell last year to $46.42 billion from $47.85 billion, the State Statistics Committee said Friday.

Imports increased 12.6 percent on the year to $60.52 billion, while exports rose 5.2 percent to $106.94 billion.

Total foreign trade turnover rose 7.8 percent to $167.456 billion.

Imports from other CIS countries totaled $12.32 billion, down 5.5 percent on the year, while imports from non-CIS countries rose 18.4 percent to $48.2 billion. Exports to non-CIS countries rose 4.9 percent to $90.69 billion, while exports to other CIS countries rose 6.9 percent to $16.25 billion.

Svyazinvest Nixes Bond

MOSCOW (Reuters) -- State telecoms holding company Svyazinvest on Friday knocked down ambitious IPO and Eurobond plans by its biggest unit, saying it had no immediate plans to float bonds or shares in its recently consolidated subsidiaries.

The chief executive of Center Telecom, the Svyazinvest-controlled local wireline network serving central Russia, had said Thursday the operator planned to issue a Eurobond and Level 3 American Depositary Receipts in 2003.

A company's first Level 3 ADR placement is effectively an initial public offering and involves an issue of new shares, as well as requiring an issuer to meet stiff transparency requirements. Only a handful of Russian companies, like top mobile operators, have them.

Ilim Sales Hit $1Bln

MOSCOW (MT) -- Ilim Pulp, the country's No. 1 producer of pulp and carton, had sales of $1 billion in 2002 under international accounting standards, the company reported Friday.

The company boosted production by 71.9 percent in 2002, turning out 2.2 million metric tons of pulp, 647,000 tons of carton and 266,000 tons paper.

The company included 900,000 tons of pulp produced at the Kotlas pulp and paper mill in its production numbers.

Atlas Satellite Launch

WASHINGTON (Reuters) -- A joint venture of Lockheed Martin Corp. and two Russian firms on Friday said it would launch a U.S. Air Force communications satellite on an Atlas 5 rocket, under a multibillion-dollar program to develop new military booster rockets.

It will be the first of seven launches awarded under the Evolved Expendable Launch Vehicle program.

International Launch Services, a joint venture of Lockheed and Russia's Khrunichev State Research and Production Space Center and Energia, said the launch of Wideband Gapfiller Satellite No. 2 was scheduled for no earlier than December 2004 from Cape Canaveral Air Force Station, Florida.

The Air Force this month authorized ILS to begin work to integrate the Atlas 5 launch vehicle with the communications spacecraft.

IT Market Hits $4.2Bln

SAN-MATEO, California (Prime-Tass) -- The volume of Russia's IT market increased 10 percent on the year to $4.2 billion, Communications Minister Leonid Reiman told the second Russian-American IT roundtable on Friday.

The market is a long way from saturation point, and the growth rates in Russia were higher than the growth rates in many countries over the last two years, he said. He added that he expects Russia's market to retain its current growth rate this year.

Oil Production Up

MOSCOW (MT) -- Russia produced 34.14 million metric tons of oil in January, a 12 percent year-on-year increase

Yukos produced 6.65 million tons, followed by LUKoil's 6.56 million tons, Surgutneftegaz with 4.42 million tons, Tyumen Oil Co. with 3.37 million tons, Sibneft with 2.51 million tons and Tatneft with 2.09 million tons, Interfax reported. Russian-owned and partly foreign-owned joint ventures produced 2.31 million tons.

Liberal Insurance Bill

MOSCOW (Vedomosti) -- The Finance Ministry has drafted a law allowing insurers that are more than 49 percent foreign owned to offer life insurance, mandatory insurance and property insurance for state organizations.

The draft law proposes no change to the present 15 percent cap on total foreign participation in the insurance market. In October, Finance Minister Alexei Kudrin proposed that Russia raise the maximum to 25 percent to ease WTO accession.

No more than 10 foreign insurance companies have subsidiaries in Russia.

AvtoVAZ Seeks Partner

MOSCOW (Prime-Tass) -- Car producer AvtoVAZ intends to form a partnership with a major foreign car manufacturer by the year's end, its chairman Vladimir Kadannikov said Friday.

He said that such a partnership is important for establishing production of foreign cars and their components in Russia. He said foreign companies are more likely to invest in the production of car parts than in the production of whole vehicles because such investments are more profitable.

Hotel Sale Criticized

ST. PETERSBURG (MT) -- Audit Chamber head Sergei Stepashin has sent shock waves though the St. Petersburg city administration by announcing that the sale of its shares in the Grand Hotel Europe contained violations.

"The government stake of shares in the Grand Hotel Europe was sold for peanuts. The hotel's location alone probably costs 10 times the amount paid," Interfax quoted Stepashin as saying Feb. 10.

According to some analysts, the shares were sold for as little as one-fifteenth of their actual value.

Stepashin also said the Audit Chamber had sent the documents of its investigation into the share sale to the Prosecutor General's Office.

Tunnel Completed

MOSCOW (MT) -- A tunnel taking the Third Ring Road under Moscow's eastern Lefortovo district was completed Thursday.

Drilling on the tunnel began on Jan. 4, 2002, at the Serp i Molot, or Hammer and Sickle, factory and moved at a rate of 6 millimeters to 15 millimeters per minute, finally reaching a total of 2 kilometers, 222 meters, Interfax reported.

The tunnel comes out on Spartakovskaya Ploshchad.

The Lefortovo tunnel will be opened to traffic at the end of the year, at which point cars will be able to drive 56 kilometers on the Third Ring in one direction, the report said.

St. Pete Metro Plans

ST. PETERSBURG (MT) -- The St. Petersburg city government is pushing a 12-year, 87.4 billion ruble ($2.7 billion) program to revamp the city's metro system.

The program includes building several new stations, including three on a new "purple" line to serve the southeast of the city.

Metrostroi, the company responsible for building the northern capital's metro, is to receive 2 billion rubles (about $62.5 million) from federal and local budgets this year -- an increase of 237 million rubles (about $7.4 million) from 2002.

The largest chunk of the money is earmarked for a detour around a collapsed portion of tunnel on the Kirovsko-Vyborgskaya line and to complete a new station, Komendantsky Aerodrom.