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. Last Updated: 07/27/2016

Gazprom Board Finally Approves 2003 Plan

Gazprom's board Tuesday approved the firm's 2003 budget, investment and cost-cutting programs, the company said.

It was the third board meeting to discuss budget plans. The process of approval was held up as government officials pressed management for more cost cuts and transparency over spending.

Gazprom said in a statement that it saw its 2003 revenue at 1.04 trillion rubles ($31.66 billion) and capital expenditure at 179.8 billion rubles.

The repayment of 193.2 billion rubles of debt was approved, it said. Half of Gazprom's roughly $15 billion of debt is short term, with $6 billion due this year.

Gazprom last week placed a highly popular $1.75 billion Eurobond to improve its debt profile. This year's borrowing was approved at 130 billion rubles. Cost cuts totaling about $1.3 billion were also approved.

Analysts have voiced concern over the rift between management and the government over the 2003 budget.

"We believe that Gazprom's management should be more independent in business decisions, but see the emerging discontent between the company's executive and nonexecutive management as unconstructive and thus alarming," Alfa Bank said in a research note.

However, two brokerages, Aton and Brunswick UBS Warburg, upgraded Gazprom last week based on a new tax-depreciation law that should save the company billions.

Under the new tax law, the gas giant's 150,000 kilometers of pipeline, valued at $19.86 billion, can be depreciated by an average of $2.65 billion a year through 2011, as opposed to the $1.2 billion originally planned. "Gazprom is going to generate several billion dollars in additional cash flow that the market had not previously factored in," Brunswick said in a research note. (Reuters, MT)