According to the report presented May 27 to the meeting of Uganskneftegas shareholders, last year the company extracted 26.8 mn tons of oil, which is 0.6 mn tons more than in 1996. The company's accounts receivable grew by 2,359 bn rbls and reached 6,331 bn rbls on January 1, 1998. The company's accounts payable shrank to 8,548 bn rbls. Despite of growing oil extraction, one of the company's main problems is overdue salary. Ukos Oil Company owes the local budget about one billion rubles, salaries are overdue since February. During the meeting oil-miners surrounded the building of the city administration and Uganskneftegas and blocked all the entrances. If Ukos does not pay back its debts in the nearest future, oil-industry workers will act the same way miners do", said the riot participant.
General Director of Gazexport Company (Gazprom's Export/Import Enterprise) Yury Komarov talked about hard-currency revenues. He said, that this year Gazexport would earn at least $8 bn on natural gas exports. Last year the figure was at $8.5 bn. We expect 15-17% gas price reduction by the end of the year. That is why we are looking for ways to compensate our potential losses, Yury Komarov pointed out. Some of the ways, he mentioned, are increase of exports to about 118 bn cubic meters in 1998 versus 116.8 bn cubic meters in 1997, as well as additional services for consumers.
The famous company's products are An-124 and Tu-204 planes. Last year the company suffered losses of 37 mn rbls. Nevertheless, Aviastar Company is still willing to take part in the joint project with European consortium Airbus Industrie. During the project the companies will create a new super liner A3XX.
President's Temporary Emergency Commission for Tax and Budget Discipline Strengthening ordered Omsk Oil Refinery, Chernogorneft, Varieganneftegaz and Kndpetroleum to pay back overdue taxes by July 1. The overall arrears of 7 biggest companies (considered at the meeting of the commission) reached 8.63 bn rbls on May 1. The figure is 4.3 times as high as in the beginning of the year.
In June ministry will complete construction of data-transmission digital network between Moscow and Nizhny Novgorod, as well as Chelyabisk and Sverdlovsk. By early 1999 Railroad Ministry's network will reach 7,000 km. Supposedly, about 30,000 km of fiber-optic communication lines will be laid along the main railroads. After that railroad authorities will start to expand regional networks through radio-line and satellite communication systems. The total project cost is about $1 bn. Railroad Ministry and Russian railroads, as well as Russian and foreign investors, such as Siemens, GPT, etc, will finance it. Digital communication network will be created to solve internal problems of the railroads. But the ministry also plans to rent out part of the network facilities, allegedly up to 75%. The project is a direct threat to long-distance communication monopolist Rostelecom.
The biggest debtors are metal and engineering (14.9 bn rbls), construction (12.7 bn rbls), agricultural (12 bn rbls) metal engineering (6.1 bn rbls) and coal-mining (4.4 bn rbls) companies. The arrears are already above the Fund's half-year limit. By May 26 Russian Pension Fund managed to pay back a 3.7 bn rbls debt to pensioners. However, in 18 regions of Russia pensions are overdue since April. The worst situation is in Voronezh, Ulianovsk and Orenburg regions, as well as in Kabardino-Balkaria.
The first lot exported to London contained 12 tons of silver and over 1 ton of gold, the head of the bank's Precious Metals Department Evgeny Ivanov reported. Private banks got a chance to export precious metals after Russian State Customs Committee signed an order last week regarding the procedure for precious stones export. The order is following the government's February 18 resolution about silver and gold export by crediting establishments. Rossiisky Credit bank is almost finished with customs clearance of its export precious metals.
Accounts payable reached by 1,826.1 bn rbls April 1, 1998, including overdue payments of 998.3 bn rbls (54.7%). The latter include 455.9 bn rbls in payables to suppliers, 205.8 bn rbls in taxes and 180.7 bn rbls in deposits to state non-budget funds. By early April Russian business accumulated 262,2 bn rbls in loans, including 47.3 bn rbls (18%) in overdue ones. The overall receivables reached 1,198 bn rbls by April 1, 1998, including overdue accounts of 620.1 bn rbls (51.8%).
Annual bond interest is 11.75%. The bonds will be paid back on June 10, 2003. The success of Russian Eurobonds is due to high interest rate - it is almost twice as high as that of the previous bonds.
As of June 5 the CB's annual key interest rate will be reduced from 150 to 60%. The decision is due to a tendency to normal situation at the country's financial market. Annual interest rate for 3-20-day fixed-interest pawn loans will be 60% as of June 5.
Thus, the agency was the last of the biggest rating agencies to acknowledge decline in Russia's financial situation after crisis at the world market. Fitch-IBCA's rating is still higher than that of Moody's and Standard and Poor's. British analysts are more optimistic about situation in Russia, than their US colleagues.
Experts from Social Research Institute of Boston University's State Service Academy polled three thousand Russian families. Families with different income, number of members, living in big and small cities, towns and villages took part in the poll. The aim of the research was to find out how much Russians actually spend on medical treatment. Official statistics states that overall medical costs of Russian families are below 5% of the entire healthcare budget. The poll revealed that an average family spends 232 rubles monthly. If the figure is applied to the whole population of the country, the spending will equal to 72 bn rbls. Last year's overall healthcare budget of Russia was 92 bn rbls. That means that the state compensated only 55% of people's healthcare costs.
A unique situation has formed at the Russian market of fruit juices. About half of the market is controlled by Moscow company Wimm-Bil-Dann (J-7, Rio-Grande, Gold and Dr. Fresh brands). The shares of the rest market participants are below 5%. Moscow company gained such a strong position at the market because it was the first to start operations in Russia and managed to create the biggest production facilities. The situation is very unlikely to last for long. Many regional companies capable to compete with WBD become more and more active. Big international businesses also join the fight for the market. A $1.5-1.7 bn market lures them. To push WBD one would need a strong Russia-based production, as locally bottled juice is 30-40% cheaper than imports.
Each 1000 Russians now own an average of 110 cars (vs. 80 two years ago). According to the existing forecasts the market will be developing quite actively for the next 5 years. After that annual car sales will stabilize at 3 mn cars. If Russian carmakers keep their production tempos at the same level as now, they will be able to satisfy about 50% of the demand. The rest will go to foreign companies. Those foreign companies, who will have Russian-based production will take over this part of market. Car importers will be far below car-assemblers due to customs and tax privileges, Russian government promises to grant to big joint car-production projects.
The average tariff cut will be 25% (the total amount of 5 bn rbls). The previous tariff cuts were held on July 1 and October 1, 1997 and reached an average of 10%. Passenger tariffs would not be raised for a while.
Deputy Chief Designer of Mill Helicopter Plant (Moscow) Leonid Babushkin announced, that India is considering a possibility of purchasing Mi-17 helicopters from Russia. It may also order modernization of 200 Mi helicopters presently used in the country. Moreover, Leonid Babushkin said, that the plant has recently sold 10 helicopters to Columbia and 20 - to Egypt. Egypt as well confirmed their purchase order for at least 7 helicopters. The company is also negotiating helicopter supplies to Algeria and modernization of over 100 Mi helicopters presently used in this country. The maximum commercial loading of a Mi-17 helicopter is 4 tons. Mi-17 has several models designed for cargo, military and passenger transportation, as well as "salon" and hospital models. Basic price of Mi-17 is $3.5-4 mn.
The republic also reduced taxes levied on small-size businesses and farms.
The decree prohibits federal boards of executive power "to borrow assets through state bonds, loans, unless such a borrowing is fixed by the government of the RF". State non- budget funds (except for the Pension Fund) were also prohibited to borrow assets through bonds and loans.
According to the approved second reading of the amendments to the RF State Border Law, to go abroad a Russian should pay a border registration fee equal to 0.8 of a minimum salary (66.79 rbls). When travelling outside Russia by car Russians would pay 2 minimum salaries (166.98 rbls) as border fee. Owners of railroad, air and sea transport will also pay border-pass fee when going outside Russia. The fee equals to 3-10 minimum salaries depending on loading capacity of a vehicle/vessel.
The government's resolution signed by Sergey Kirienko will reduce by the end of 1998 import duties on cars and trucks, tyres, leather goods. The list also includes duties on parquet, synthetic fabric, natural pearls, rubies, sapphires and emeralds, as well as piezo-electric quartz.
Tatarstan president Mintimer Shaimiev signed a law, which had been earlier approved by the Republican State Assembly. The law is titled "On the Free Economic Zone "Alabuga". A 16.5 sq. km zone will be organized in the territory of Elabuzhsky Carmaker production. A privileged business regime is to be announced there. The zone will supposedly open about 18,000 vacancies in Elabuga and will initiate investments into car production.
The law limits participation of foreign states, international organizations, as well as foreign individuals and legal entities in authorization capital of RAO EES of Russia to 25%.
Now the minimum bid is $1.6 bn. This is the exact figure potential tender bidders insisted on since the moment the state announced the sale. So far three companies have expressed a desire to bid for the stake. They are Lukoil, Sidanko- ONEXIMbank tandem and Sibneft. The head of the fourth potential bidder UKOS Mikhail Khodorkovsky said the announced minimum bid is reasonable. However, he did not announce directly if his company would participate in the tender. The bids will be accepted till July 16. The tender results will be summed up on July 21.
The moratorium may be prolonged. Lawmakers ruined the plans of executive power, which intended to create a corporation that would manage Russian property abroad. They planned to give the controlling interest in the corporation to President's Office. President would obviously refuse to sign the bill even if both houses of parliament approve it. However, Duma has now a formal reason to stop the CB's plans of selling Donau Bank in Austria and East-West Bank in Luxembourg.
The city will sell its shares in the hotels at the trades organized by the Property Fund. Property Fund ordered assessment of the property. Hanza-Alliance Company, representative of international group Hanza, will do the assessment. Hanza-Alliance recommended the city administration to merge the stock. Big stock is more likely to attract a strategic investor. St. Petersburg hotel stock to be sold in 1998-1999: Hotel Stock for Tender Stock for Auction Astoria - 35% Vyborgskaya 30% 20% Kievskaya - 55% Moscwa - 60% Oktyabrskaya 1% 49% Rossia 30% 20% Sportvnaya 30% 20% Turist 15% 45% Chaika 30% 20% Yuzhnaya 30% 20%
The minimum bid was fixed at $1.1 bn, investment program - at $400 mn. Everyone already knows one potential bidder. It is ONEXIMbank-MFK alliance. Last year they paid $1,875 bn for a 25% plus one share stake in the company. However, small list of potential bidders is rather dangerous for tenders. 10 days ago the government failed Rosneft sales due to lack of bidders. One of the ways to solve the problem is to cancel the rule prohibiting foreign investors to take part in the tender. The government discussed the offer, which was submitted in a form of presidential decree.
The number of new criminal lawsuits reduced last year by 13.3%. At the same time the number of civil court files grew by 28.7%. The total number of completed civil lawsuits equaled to 6,818,000 (11% growth) in 1997. A huge growth was registered in the number of labor disputes (96%), 98% of them were satisfied by court. The number of real estate suits came up to 90,000 (3.8% growth), land suits - 5,700 (22.6% growth). Courts proved that they are able to cope with illegal actions of state authorities. In 1997 1,654 court decisions declared various legal acts illegal (37.5% growth). 53,000 lawsuits against statesmen and ruling organizations were satisfied, 83% of cases ended in favor of plaintiffs.
They also recommended against any decisions regarding salary raise for federal statesmen and any decisions leading to increase of federal spending if not stipulated by law. The latter would spare some money to raise state employees' salaries. The Duma's resolution points out that in terms of salaries, the situation in healthcare, education, art and culture spheres in critical.
The document states that although Chechnya supports the position of the world community fighting for non-expansion of nuclear weapons, Chechnya Foreign Affairs Ministry believes it is important to keep nuclear parity in favor of Islamic world interests.
Boris Fyodorov's first order created a special department responsible for tracing 1,000 chosen taxpayers. Fyodorov is easy to understand. Tax Service is unable to collect information about incomes and spendings of all Russians - not enough money and equipment. Fyodorov decided to reduce the problem - to collect information about 1,000 Russians as a start. Candidates for the first "thousand" would be the most famous Russians with huge incomes.
He made the announcement in German magazine "Shpiegel". "Due to actions undertaken in our country and external support of, first of all, the G7 countries, we believe that at the moment we are past the peak of crisis", president said. He stressed out that foreign investors should not panic.
He announced that the number of crimes organized by criminal groups grew over the last seven years by 8.5 times from 3,315 in 1990 to 28,500 in 1997. Sergey Stepashin said that it is also important to "split crime and power" and convict both executives and bosses of criminal groups.
The draft critics are afraid that the city commitments will, thus, become very unreasonable. If the city administration takes EBRD loan ($100 mn) and guarantees loans for high-speed railroad construction, the city loan payback commitments will come up to 75% of its revenues.
Last year Customs Office returned over 150 mn rbls worth of art masterpieces to Russian museums and art galleries. St. Petersburg City History Museum received 24 mn rbls worth of art valuables, the Hermitage - 10 mn rbls.
This is the company's biggest project in CIS and Eastern Europe. The total investment is $300 mn. The factory construction will supposedly end in 1999. Boris Nemtsov came to visit the first stone ceremony.
Governor believes that in two years of wise budget and tax policy the city became an area of social and political stability compared to other regions of Russia. The city never delays pensions and social allowances, as well as salaries to state employees.
The city will get 20 mn rbls from the federal government as a reward.
Murderer of vice-governor Mikhail Manevich is still a mystery, as well as people responsible for a number of other murder-for-orders and terror acts. Several days prior to Ponidelko's resignation general director of St. Petersburg's biggest insurance company Interpolice Tomaz Kikacheishvili was shot dead in the middle of the day.
The event was initiated by St. Petersburg Municipal Youth Ecological Center and was held at the day of official opening of Toro Ecological Institute (USA). US president Bill Clinton took part in the program and thanked everyone involved in the work of St. Petersburg Ecological Center.
The company believes that Aeroflot's main base Sheremetievo airport (Moscow) has almost no potential for new flights. The company made the announcement at a press conference dedicated to opening of the company's new flights St. Petersburg-Tokyo and St. Petersburg-New York. Aeroflot also plans to open new destinations from St. Petersburg to Bangkok, Hong-Kong, UAE and Oslo.
© A&G Information Services Inc. 1998