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. Last Updated: 07/27/2016

Business in Brief

$6.3Bln From Abroad

MOSCOW (Reuters) -- Foreign investment amounted to $6.3 billion in the first quarter of 2003, 65.4 percent more than in the first quarter last year, the State Statistics Committee said Monday.

The figure included $1.03 billion of foreign direct investment, which rose 24.7 percent on the same period last year, the committee said in a statement.

Cumulative foreign investment since the fall of Soviet rule was $43.0 billion as of the start of March, a rise of 25 percent on the first quarter last year, it said.

The main investor countries remained Germany, the United States, Cyprus, Britain, France, the Netherlands and Italy, which accounted for nearly 77 percent of cumulative investment.

Tide Turns for Dollars

MOSCOW (Vedomosti) -- Central Bank data show that Russian banks set a record in March by bringing just $119 million into the country while sending $290 million overseas.

This is the first time since 1996 -- when the Central Bank first began publishing figures for the import and export of dollars -- that fewer dollars were imported than sent overseas.

The same volume of dollars left the country over the whole of 1999, while last year banks sent $93.5 million out of the country each month.

"Demand for the euro began to grow at the end of last year, and when its exchange rate jumped [in relation to the dollar] the population got worried about the dollar and started to change not only their rubles for euros, but their US currency savings as well," said Vasily Zablotsky, MDM Bank's deputy head of investment.

There was an excess of dollars on the internal market and, thus, no sense in seeking more from overseas, he said. "They only brought in dollars for clients who are working exclusively with new bank notes."

"Normally we only send overseas bank notes that are not in demand in Russia [due to wear and tear]; now we are sending good quality bank notes outside the country as well," said Dmitry Dolgopolsky of Alfa Bank.

Experts polled said that until the dollar began to strengthen against the euro, the situation would stay the same.

Airplane Shop Talk

KIEV (AP) -- Foreign Minister Igor Ivanov was expected to open discussions with Ukrainian officials Monday on a fledgling natural gas consortium to upgrade Ukraine's ailing pipeline network, which is used to transport some 90 percent of Russian gas supplies to Europe, and the future of a project to jointly produce a military plane.

Earlier this month, President Vladimir Putin and Ukrainian President Leonid Kuchma agreed to push ahead with joint production of the An-70 transport plane. Speculation had swirled that Moscow might pull out of the aircraft deal after a top Russian air force official criticized the project's costs and technical shortcomings.

Ukraine, Russia and Germany agreed last June to form the gas consortium, but the sides have not decided how the pipeline will be managed or what role Germany will play. Putin has called for finalizing the deal by the fall.

LNG Contract Inked

MOSCOW (MT) -- Tokyo Electric Power Co. said Monday it has signed a 22-year supply contract for liquefied natural gas with Sakhalin Energy Investment Co., Dow Jones reported.

Under a contract starting in April 2007, the country's largest power company will receive 1.2 million metric tons of LNG a year between 2007 and 2029 on a free-on-board basis, the company was quoted as saying in a statement.

LNG is natural gas cooled into liquid form for easy transportation.

The deal comes on the heels of a similar LNG long-term contract signed early this month between Tokyo Gas Co. and Sakhalin Energy.

Sakhalin Energy Investment Co., a joint venture between Royal Dutch/Shell Group, Mitsui & Co. and Mitsubishi Corp., expects this summer to start construction of two LNG plants at the port of Prigorodnoye in southern Sakhalin, with completion scheduled for 2007.

The joint venture will also build a 600-kilometer pipeline to transport crude oil and gas from the Sakhalin-2 offshore fields to Prigorodnoye.

New RusAl Smelter

NOVOSIBIRSK, Western Siberia (Reuters) -- Russian Aluminum, the world's No. 2 primary aluminum producer, will buy a controlling stake in a project to build a smelter in eastern Siberia, a manager of the project said Monday.

"We have an agreement according to which we will retain a blocking stake of a little over 25 percent, while RusAl will have a little less than 75 percent," a manager with Alyukom-Invest said, adding that the formal deal would be signed shortly.

Alyukom-Invest, a firm owned by former managers of Bratsk, the country's biggest aluminum smelter and now part of RusAl, started the Alyukom-Taishet project to build a 250,000 metric-ton per year smelter in the energy-rich Irkutsk region in 2000.

But it only built a test capacity capable of producing 11,200 tons of aluminum per year, still idle. Earlier this year it started talks with RusAl on building a smelter jointly.

RusAl spokeswoman Eugenia Harrison confirmed RusAl had an agreement with Alyukom-Invest to acquire a stake in Alyukom-Taishet. She declined to provide details of the deal.

The Alyukom-Invest manager said the two companies planned to finance the Alyukom-Taishet project in a proportion corresponding to their stakes in it.

Last month Irkutsk region Governor Boris Govorin said the two companies had come to an agreement to jointly start building in 2004 a smelter with a capacity of 500,000 tons of aluminum per year.

New Nuclear Fuel

MOSCOW (AP) -- The country's nuclear power plants are expected to start using plutonium fuel extracted from nuclear warheads later this decade, the nation's nuclear authority said Monday.

The nuclear power plants are expected to begin using mixed-oxide, or MOX fuel, in 2008-10, the state-run Rosenergoatom consortium said in a statement posted on its web site.

It said five to eight of Russia's 30 civilian nuclear reactors would use the fuel processed from plutonium contained in nuclear weapons that are to be dismantled.

The United States and Russia agreed in June 2000 that they will each dispose of 34 tons of weapons-grade plutonium extracted from nuclear warheads. Washington has been carrying out its program, but Russia had dragged its feet on the project, citing financial difficulties and asking for Western financial assistance.

Nuclear Power Ministry officials were quoted by Itar-Tass as saying that Western nations had pledged to raise $1 billion to help the country launch its MOX fuel program.

A plant to convert plutonium into MOX fuel was set to be built in the city of Chelyabinsk in the Ural Mountains, Itar-Tass reported.

Call to Preserve Hotel

MOSCOW (MT) -- Culture Minister Mikhail Shvydkoi has said it would be a grave mistake for the Moscow city government to demolish the Moskva hotel, calling the Stalin-era hotel a part of Russian history, Kommersant newspaper reported Friday.

The city has already decided to close the massive 68-year-old hotel in July and tear it down.

In its place, the Mayor's Office plans to construct a five-star hotel, office and retail center, incorporating some of the early ideas of architect Alexei Shchusev.

Shvydkoi said the city should consider another option for the Moskva, one that would preserve its outward appearance.

"A compromise could be to retain the exterior of the hotel, because it is the outside view of this building that is not only part of the city landscape, but also represents a unique monument of Soviet life, reflecting the pleasures and fears of that time," he was quoted as saying.

New Valuation List

MOSCOW (MT) -- The Moscow city government has produced a new list of valuations for city land ranging from $300,000 per hectare for land near the Moscow Ring Road to $15.7 million per hectare for land in the central administrative district.

The valuation is not intended for land sales but in order to calculate land tax more accurately by dividing the city into 1,516 zones rather than the previous 100 zones.

Each zone was assessed according to 14 different variables.

The valuations, to be used starting in 2004, increased the valuation of the capital's land by 90 percent, local media reported.

Parizh May Rise Again

MOSCOW (MT) -- The hotel that is rising from the site on lower Tverskaya Ulitsa where the Intourist hotel stood until last year may be called Parizh, Deputy Moscow Mayor Iosif Ordzhonikidze was quoted as saying by Interfax.

A small hotel called Parizh stood on the site until the 1917 Revolution, Ordzhonikidze said.

The new building will be operated by Hilton International and will be eight to 10 stories high. It is due to be completed by the end of next year.