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. Last Updated: 07/27/2016

Business in Brief

Gangs Blamed for Inflation

Rapidly developing retail chain stores and criminal rings at local food markets are stoking inflation in the country by driving up fruit and vegetable prices, the Economic Development and Trade Ministry said Thursday.

Lower food prices in the third quarter usually gives the government a break in its struggle against inflation, which the Central Bank fights by allowing the ruble to strengthen. But instead of falling in August to September, retail prices rose by 0.2 percent in August and by 0.1 percent in September.

"Despite growing supplies of fruit and vegetables, the tempo of price growth [for these products] remains high," the ministry said in its monthly report on the state of the economy. (Reuters)

Railroad Needs $40Bln

Russian Railways needs to invest 1.07 trillion rubles ($40 billion) over the next three years to upgrade its network to cope with the growing demand for travel and cargo shipments, its chief executive officer said.

The railway needs to invest 625 billion rubles ($23.3 billion) to upgrade and expand rail infrastructure and 447 billion rubles for new freight and passenger cars, CEO Vladimir Yakunin said Thursday at a government meeting.

A copy of his remarks was e-mailed by the company's press office. (Bloomberg)

Ukraine Blamed in Gas Hike

Ukraine ruined its chance to keep last year's rock-bottom gas price from Russia for five years, the deputy premier said Thursday, placing the blame on officials who came to power after the 2004 Orange Revolution.

"If the government of [Prime Minister Viktor] Yanukovych had worked in 2005, there wouldn't have been the price of $95," First Deputy Prime Minister Mykola Azarov told reporters, referring to the nearly twofold increase in price that Ukraine was forced to swallow this year after a bitter New Year's gas dispute with Russia.

Azarov said that in 2005, Ukraine had every basis to continue paying a price of around $45 for five years more.

He criticized the country's post-Orange Revolution governments whose "thoughtless, shortsighted policy ruined old agreements with the Russians." (AP)

TNK-BP Income Up 76%

TNK-BP said net income gained 76 percent in the first nine months after it sold an oil-production unit to state-controlled Rosneft and China Petrochemical.

Net income rose to 111 billion rubles ($4.14 billion) under Russian accounting standards, said Uvat, Tyumen region-based TNK-BP said on its web site Thursday.

The company sold Udmurtneft for 87 billion rubles, the venture said, and revenue rose 3 percent to 496 billion rubles ($18.4 billion). (Bloomberg)

RusAl Expansion Plan

The world-leading aluminum producer to be formed from the merger of Russian Aluminum and SUAL is likely to sell bonds to fund an expansion that would include acquisitions, a SUAL executive said.

"The merged company will be actively tapping the capital markets," SUAL senior vice president for Finance Iosif Bakaleinik said on Thursday.

"The first step must be in Eurobonds, then the equity markets," he said. (Bloomberg)

Gas Trading Deregulated

Industry and Energy Minister Viktor Khristenko approved a plan Thursday to begin unregulated gas trading in the country starting in November.

Khristenko signed a decree for Mezhregiongaz, the distribution arm of Gazprom, to operate an electronic trading platform that will initially aim to sell 10 billion cubic meters of gas at free-market prices.

Fuel from Gazprom, the world's largest gas producer, will account for half of that amount, with the rest coming from independent producers. (Bloomberg)

Center Telecom Rating Up

Center Telecom, a unit of fixed-line telephone operator Svyazinvest, had its credit rating raised one level by Standard & Poor's, which cited the company's "improved operating performance."

S&P raised Center Telecom's long-term corporate debt rating to B, five steps below investment grade, from B-, the ratings company said Thursday in an e-mailed statement.

S&P cited the company's increasing free cash flow, tightened cost control, and robust growth in earnings before interest, taxation, depreciation and amortization. (Bloomberg)

Poland Seeks Gas Deal

Polskie Gornictwo Naftowe i Gazownictwo, Poland's gas monopoly, wants to sign a contract with RosUkrEnergo to supply a fifth of its annual natural gas for about three years.

The company, known in Poland as PGNiG, has been negotiating with RosUkrEnergo since July for a new contract.

A 16-month contract with the company expires at the end of this year.

RosUkrEnergo, a Swiss-registered company 50 percent owned by Gazprom and 50 percent by two Ukrainian businessmen, currently provides about 20 percent of PGNiG's natural gas. (Bloomberg)

Sistema in Greek Talks

Sistema is in talks to buy a fixed-line telephone operator in Greece, Interfax reported Thursday, citing chairman Vladimir Yevtushenkov.

A deal may be announced in two months, Yevtushenkov told the Russian news agency, declining to name the company. He said that it is not Hellenic Telecommunications Organization.

"We are buying an alternative operator, it is cheaper and has more modern equipment,'' Interfax quoted Yevtushenkov as saying. Moscow-based Sistema controls Mobile TeleSystems, eastern Europe's largest mobile phone company by subscribers.

Sistema in June acquired a 51 percent stake of the telecommunications unit of Greece's Intracom Holdings for 120 million euros ($155 million). (Bloomberg)

Economy Grows 6.9%

The economy grew an annual 6.9 percent in the third quarter, the Economic Development and Trade Ministry said in a preliminary report on its web site Thursday.

Gross domestic product expanded an annual 7.4 percent in the previous quarter, the Federal Service of State Statistics said on Sept. 11. The ministry today said full-year growth may be between 6.6 and 6.7 percent.

The economy is poised to record the longest period of economic expansion since the fall of the Soviet Union, boosted by high oil prices.

Growth may reach 6.8 percent this year, Deputy Prime Minister Alexander Zhukov said on Tuesday. (Bloomberg)