MOSCOW, May 29 (RIA Novosti)
Amnesty International wants Medvedev to uphold human rights/ Russia-Germany undersea gas pipeline hits another snag/ Norilsk Nickel and Metalloinvest suspend merger talks/Failure of Gazprom-SUEK transaction is good news for electricity market/ Potential investors may be disappointed with AvtoVAZ/ Power Machines gets $1.7 billion order
Gazeta.ru, Kommersant
Amnesty International wants Medvedev to uphold human rights
Amnesty International has published a "Russian Federation Human Rights Memorandum to President Medvedev."
Medvedev said freedom is better than non-freedom last February, before he won the March 2 presidential election. He has also several times expressed his readiness to fight legal nihilism in the country.
Amnesty International writes in a recently published memorandum that he "should take action" on these issues now.
Russian human rights advocates are surprised, however, by the organization's naivety.
According to Amnesty International, Russia as a self-confident country with abundant oil revenues has made only a minor contribution to the protection of human rights worldwide. It claims that Moscow is giving a poor example in this sphere, and the new president should take this into account.
A source in the Russian presidential administration said yesterday they had not received the text of the memorandum and therefore were unable to make any comment.
Lyudmila Alekseyeva, head of the Moscow Helsinki Watch Group, said: "In the past, the presidential administration never replied to our appeals and never acted on its fine words. We have some hopes for the better now, but are very cautious about them."
Pavel Krasheninnikov, chairman of the parliamentary committee on civil, criminal, arbitration and procedural legislation, said the memorandum spotlighted some acute problems, but said its recommendations, notably on "an urgent review of the NGO law" and "the law to combat extremist activities," should not been seen as an action plan.
"I believe interference of international organizations in individual states' lawmaking is absolutely unacceptable," Krasheninnikov said.
Lev Ponomarev, leader of the movement For Human Rights, said the memorandum is "worded too diplomatically."
Eduard Limonov, co-chairman of The Other Russia opposition coalition, said the appeal of Amnesty International is naive.
"I don't know why they think Vladimir Putin's successor may pursue a different policy," Limonov said. "The same group has remained in power, and their goals have not changed."
Nezavisimaya Gazeta
Russia-Germany undersea gas pipeline hits another snag
The European Parliament's Commission on Petitions has joined the Baltic States in protesting the construction of Russia's gas pipeline to Germany as one threatening the Baltic Sea's ecological balance. By a majority vote it approved a report urging to stop the building of the Nord Stream gas pipeline unless the project received the backing of all the Baltic States.
Project operators do not consider the new problems critical and are sure they will be resolved. Experts are pointing to Europe's dependence on Russian gas, which will ultimately enable Russian energy giant Gazprom to make its plans become a reality.
A vote on the resolution which is not mandatory and was drafted on the initiative of Polish members of the European Parliament is expected to take place in July during a full meeting of the parliament. However, Nord Stream AG (project operator) believes the grievances of European MPs could be solved in the very near future. "The problem is not critical for us," said company spokeswoman Irina Vasilyeva. The operator plans to inform the European Parliament of the pipeline's effects on the environment before next July.
According to expert estimates, Nord Stream, the first stage of which is to be completed in 2011, will meet 25% of the European Union's requirements for additional natural gas imports by 2015.
According to analyst opinion, the legal case against the project has not got a leg to stand on. "According to the UN Law of the Sea Convention, adopted in 1982, states are entitled to lay gas pipelines on the continental shelf of coastal countries. They can not set conditions for pipeline laying," said Kamil Bekyashev, head of the international law department at the Moscow State Law Academy.
According to Roland Goetz, an expert on oil and gas contracts in the CIS/Russia division of the Science and Politics government fund in Berlin, firms constructing the pipeline have already carried out 200 environment safety checks. He is surprised about talk of the pipeline's ecological risks when hundreds of tankers ply the Baltic's waters.
Alexander Shtok, head of the due diligence division at 2K Audit - Business Consultations, said Russia's search for new gas transportation routes may be a possible outcome of the punitive ban on the construction of Nord Stream. "Gazprom could opt for alternative ways of transporting gas, perhaps by building a natural gas liquefaction plant," he said. "The result might be that gas from the South Russian deposit will be rerouted from Europe to other markets, such as North America."
RBC Daily
Norilsk Nickel and Metalloinvest suspend merger talks
Vladimir Potanin and Alisher Usmanov, who have been discussing merger options for their Norilsk Nickel and Metalloinvest for several months now, have decided to reframe their deal. The partners believe their efforts could finally lead to the establishment of Russia's largest mining and metals group able to claim global leadership. Actually, their plans to merge are most likely directed against Oleg Deripaska's growing influence in Norilsk Nickel.
It was decided to put the merger talks on hold for a while. Instead, the businessmen agreed that Usmanov's Gallagher Holding Ltd would buy 10% of Norilsk Nickel, while Potanin's Interros would, in turn, purchase a blocking stake in Metalloinvest.
Metalloinvest plans to look into the possibility of listing its shares on the stock exchange. A source familiar with the situation said, that the listing would increase the capitalization of Usmanov's company and give the billionaire the edge over Deripaska's UC RusAl, which likewise is seeking a merger with Norilsk Nickel, but, like Metalloinvest, is a non-public company. UC RusAl could at best hold an IPO at the end of 2008. Metalloinvest is poised to do so earlier - in the fall.
Usmanov and Potanin expect their joint efforts will produce a global leader in mining and metals within five years. But that is a long way off yet. The capitalization of today's largest mining company, BHP Billiton, is $235 billion, while the capitalization of a tentative company combining Norilsk Nickel and Metalloinvest is estimated by experts at $70-80 billion. Usmanov and Potanin, however, plan to invest heavily, with the sides estimating their joint contributions at $50-60 billion and targeting the Udokan copper field as their first shared project.
Oleg Petropavlovsky, of BrokerCreditService, says it is difficult to clearly assess a possible merger pattern. "On the one hand, their merger could dilute Deripaska's hold and give them an advantage," he said. "On the other, a large metals company could emerge but only when all three join forces. In the absence of UC RusAl, the merger makes no sense." But to achieve that each of the businessmen will have to give up control of such a giant. It looks as though Potanin and Usmanov are prepared to go that way, but whether or not Deripaska is able to rein in his pride is anybody's guess.
Vedomosti
Failure of Gazprom-SUEK transaction is good news for electricity market
Gazprom may fail to become a "hyper monopoly." The Russian gas monopoly has suspended talks with the Siberian Coal Energy Company (SUEK) on the merger of assets. The world's largest gas company and one of the world's largest thermal coal producers have failed to reach an agreement on the principles of managing the joint company.
Two sources in Gazprom talked about problems that arose in the talks on establishing the joint company. A source familiar with preparations for the transaction told Reuters that indirect evidence of the problems lay in Gazprom's refusal to vote for Vladimir Rashevsky, SUEK's director general and Gazprom's own candidate to the energy holding's board of directors, at the last meeting of RAO UES held on May 28.
Gazprom and SUEK had to sign a corporate agreement on how the joint company was to be managed on April 30, a Gazprom manager told Vedomosti. However, this was not done. Gazprom sent the draft agreement to SUEK which contained about ten objections attached to it. One of the objections concerned the question of who would head the power generating facilities (wholesale and territorial generating companies - OGKs and TGKs) - Gazprom or SUEK managers, the Gazprom source said.
Another disputable issue is the adoption of strategic decisions at SUEK's board of directors when Gazprom becomes its main owner, the manager continued. Gazprom wanted the decisions to be adopted by a simple majority and SUEK wanted them to be taken unanimously. This was not acceptable to the concern.
No compromise has been reached so far and it is not clear when it will be reached, another Gazprom manager says. In any case, the transaction is unlikely to be closed by September 1, as was originally planned. In the best case scenario, this will be done by the end of the year, he added.
Gazprom and SUEK's spokesmen refused to comment.
Gazprom and SUEK agreed on the main terms and conditions of the transaction in February, after nearly a year-long negotiation. The terms were as follows: SUEK will hold an additional share issue; Gazprom will pay for it using its energy assets and receive a 51% stake in SUEK, with the remaining 49% to be kept by SUEK's present shareholders (Sergei Popov and Andrei Melnichenko). As a result, SUEK should have become the country's largest energy holding worth $16 billion, with capacities for 30,000MW.
The failure of the transaction to go through is bad news for Gazprom, but it will not be a lasting failure, says Maxim Shein, head of the analytical department at BrokerCreditService. It was not for nothing that Gazprom had such long talks with SUEK.
At the same time, this is a very good piece of news for the electricity market as it does not need a powerful fuel monopoly, says Vladimir Milov, president of the Institute of Energy Policy. "I think this is not the end of the story: if Gazprom wants SUEK's assets, it will get them by other means, including by using the administrative resource," Milov added.
Business & Financial Markets
Potential investors may be disappointed with AvtoVAZ
AvtoVAZ, Russia's major automobile manufacturer based in Togliatti, will not have enough time to prepare an additional placement of shares for sale on the stock exchange.
Analysts think that the postponement of the company's SPO (secondary public offering) is down to by the lack of a plant development strategy without which the investors are unlikely to believe that the company has any prospects.
On May 28, Sergei Chemezov, chairman of AvtoVAZ's board of directors, announced the delay in the company's SPO and said that it would be held in the first half of next year. "We shall not be able to do this fall," he said.
Earlier, Ruben Vardanyan, chairman of Troika Dialog's board of directors, said that in September-October 2008 AvtoVAZ would be ready to place up to 25% of its shares on Russian stock markets.
Analysts explain the delay by the lack of the company's clear cut long-term development strategy. "This [the delay] is a forced measure. Organizers realize that they will not be able to successfully place the company's shares," says Ilya Makarov, an analyst at the UBS bank.
The AvtoVAZ-Renault alliance has created a positive informational background, but investors are waiting for a clear strategy now that includes a line-up of proposed models planned for production in the near future. It will be difficult to persuade them by this fall that AvtoVAZ is a promising and interesting company: at present, it is losing its share on the growing [automobile] market demonstrating slow growth of financial indicators, Makarov said.
Denis Sokolov, an analyst at the KIT Finance investment bank, is sure that next year AvtoVAZ will elaborate a joint strategy with Renault. However, the time delay is risky, he says. If the company fails to show good financial dynamics by next year, potential investors may get disappointed with it.
Konstantin Romanov, an analyst at the Finam investment company, recalls that AvtoVAZ and Renault are planning to buy IzhAvto by the end of August. This transaction and the development of the project to manufacture a new car at Renault's facilities will require substantial investment. Therefore, the delay in the SPO will negatively affect the plant, which will have to attract funds by loans, and postpone the project to manufacture its new model, the expert concludes.
Kommersant
Power Machines gets $1.7 billion order
Power Machines, the leading Russian manufacturer and supplier of power equipment, has begun receiving large orders from electricity companies, as its owner Alexei Mordashov hoped it would when he gained control of the company. The company and Atomenergoprom, part of the state Rosatom corporation (Russia's Federal Nuclear Power Agency), yesterday signed a contract for the supply of equipment worth a record $1.7 billion. The United Machine Building Plants (OMZ), controlled by Gazprombank, could also get in on the act.
Rosatom's investment program to build new nuclear generating units before 2015 was approved by the government as early as 2006 (it allocated $50 billion for the new plant). The Russian power manufacturers, however, did not get their orders until yesterday.
During 2010-2012, Power Machines will ship the industry turbines and generators for two new nuclear plants - Novovoronezh-2 and Leningradskaya-2.
Power Machines is not the only Russian producer anxious to get Rosatom orders. The other is OMZ, the monopoly supplier of nuclear reactors, which, as soon as the investment program was adopted, was purchased by a consortium of investors led by Gazprombank (the consortium's make-up is not being disclosed). The bank had spent two years negotiating with Rosatom for the placing of orders with the Izhora Plants (part of OMZ), but never received any (talks are still going on). OMZ planned to renew its capacities using Rosatom funds.
Failing to get firm commitments, Gazprombank itself financed part of the task of building two reactors for the Novovoronezh-2 NPP (Rosatom will buy them out later). Reactors for the Leningradskaya power plant are not contracted as yet and, as Atomenergoprom says, "the contract with Power Machines does not mean similar agreements will be signed with OMZ."
Unofficially, the sides say they cannot agree a price for the reactor: OMZ is insisting on $127 million, which the nuclear industry considers is too high.
Analysts think the agreement between Rosatom and Power Machines is a straw indicating that the industry is finding it difficult to obtain an import alternative to Russian equipment. This means, says Mikhail Pak, of Kapital Investment Group, that OMZ will receive orders, too. The company added they were expecting them in June.
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