MOSCOW, February 6 (RIA Novosti) Kyrgyzstan to bargain over Manas base / Bulgaria talks Russia into removing gas intermediary / Federal Anti-Monopoly Service set to abolish overflight royalties / Hundreds of Russian fighter planes fit for scrap /
Kommersant, Nezavisimaya Gazeta
Kyrgyzstan to bargain over Manas base
The Kyrgyz parliament has postponed a hearing on the U.S. Air Force base at Manas airport indefinitely. The base is a vital hub for military supplies and personnel for U.S. and NATO forces in neighboring Afghanistan.
Sources in Kyrgyzstan say President Kurmanbek Bakiyev is doing this deliberately, so as to force the U.S. to make new proposals. However Washington, although it wants to talk with Bishkek, thinks it will eventually have to discuss the issue with Moscow.
Kyrgyz Prime Minister Igor Chudinov made a sensational statement at a news conference in Bishkek yesterday. He said Kyrgyzstan and the U.S. were continuing talks on the base.
"The sides may agree to change the base's status, or to cut troops, or to make some other changes," a high-ranking Kyrgyz diplomat told business daily Kommersant, explaining the postponement.
In the 24 hours since Bakiyev announced the termination of the Manas agreement, the U.S., the EU and NATO have made important statements showing that they need the base and are prepared to discuss the issue, but would pull out from it if Kyrgyzstan raised the fee steeply.
According to The New York Times, a "State Department official said it was still possible that the United States might offer Kyrgyzstan more compensation for the base." This is probably why Bishkek is in no hurry to close the base.
"We're having discussions with the Kyrgyz about this and we'll continue to do so," U.S. State Department spokesman Robert Wood said on Wednesday, adding the United States was also engaging Russia over the issue. (IHT)
This would seem to imply that the U.S. has no doubts as to the key player in the Manas game, and that it would like to continue using the base and is ready to discuss a price to settle the issue with Moscow.
Vremya Novostei
Bulgaria talks Russia into removing gas intermediary
Bulgaria, which was hit hardest in Europe by the recent Russian-Ukrainian gas conflict, has eventually profited on the situation by making Moscow agree to change the supply scheme.
After a meeting with his Bulgarian counterpart, Georgi Parvanov, in the Kremlin Thursday, Russian President Dmitry Medvedev said he had agreed to remove the intermediary, adding that the situation was the focus of discussion between Gazprom and Bulgargaz.
A high-ranking source in the Russian gas export monopoly said a basic decision was made to remove Overgas Inc. (a joint venture between Gazprom and a consortium of private investors) from the supply chain.
Russia's natural gas exports to Bulgaria are regulated by three contracts. Gazprom sells nearly the entire amount supplied, 3.1 billion cubic meters a year, to two intermediaries on the Bulgarian border - 2.5 billion cubic meters to Overgas Inc. and around 600 million cubic meters to WIEE, a Gazprom-Wintershall joint venture.
WIFE's future is not under discussion at the moment, a source told VN, as the Bulgarian officials are rigorously attacking Overgas Inc. The country's current government is not happy with the company's private beneficiaries. However, before the Russian-Ukrainian gas row which resulted in disrupted supplies last month, Bulgaria could not find a good reason to ask Moscow to change the supply scheme.
Moscow's decision to stop using the services of RosUkrEnergo, an intermediary in its trade with Ukraine, provided Bulgaria with an example to follow.
However, it is certainly clear that to announce this decision, even at the top political level, is only half a victory, as a lot of commercial and legal issues still need to be settled. Moscow faced this problem earlier as it changed the scheme of supplies to Ukraine.
Gazprom might also demand direct access to Bulgaria's retail market in exchange for removing the intermediary. The Russian monopoly could even claim a bigger share of that market than the intermediary controls now.
Gazeta.Ru
Federal Anti-Monopoly Service set to abolish overflight royalties
The Federal Anti-Monopoly Service (FAS) may soon draft a government resolution on abolishing Siberian overflight royalties, the main source of income for Russia's largest airline, Aeroflot.
Although FAS Head Igor Artemyev called overflight royalties "absurd," Russia would not profit from their complete abolition.
In November 2008, Moscow Mayor Yury Luzhkov and Sergei Chemezov, CEO of Russian Technology, a state-owned industrial behemoth with assets in many sectors, from defense to automotive to civil aviation, proposed abolishing Siberian overflight royalties.
The Moscow municipal government and Russian Technology want to abolish such royalties because they are currently establishing Rosavia, a proposed new Russian state-owned airline.
The proposal to set up Rosavia was made after several airlines went bankrupt due to high oil prices and the global financial crisis. Rosavia will be the largest airline in Russia with a fleet of more than 100 airliners.
Overflight royalties being received only by Aeroflot infringe upon the interests of other air carriers, Andrei Rozhkov, an analyst with Center Invest Group, a Russian brokerage firm, told the paper.
However, the Transport and Economic Development Ministries oppose new royalty-payment mechanisms.
Mikhail Saino from the BrokerCreditService investment company estimated Aeroflot's annual overflight-royalty proceeds before EBITDA at $300-500 million.
Rozhkov said overflight royalties accounted for 70-80% of Aeroflot's annual net profits.
Finam analyst Konstantin Romanov said royalties now exceeded net corporate profits, and that their abolition could put Aeroflot in the red.
Industry analysts said the government was unlikely to abolish overflight royalties during the current global economic and financial crisis because such royalties provided additional incomes.
However, Russia will have to abolish such royalties in 2014 pending its accession to the World Trade Organization (WTO).
The European Union currently opposes Siberian overflight royalties stipulated by an agreement signed between Aeroflot and European airlines in the 1970s. The document which was signed on the initiative of foreign air carriers envisions royalties for more frequent overflights.
Kommersant
Hundreds of Russian fighter planes fit for scrap
The Russian Defense Ministry has admitted that some 200 MiG-29 high-performance combat aircraft, or nearly one-third of the total number of such planes, are unable to take off, let alone fulfill combat tasks.
The latest crash of a MiG plane, on December 5 in the Transbaikal Territory, happened because of heavy corrosion in the plane's load-bearing structure. Analysts explained the situation with reference to the planes' age saying they had been supplied decades ago.
In short, the time has come for the Russian Air Force to scrap jets by the hundred.
It was said in mid-January that the December 5 crash was blamed on "corrosion of tail fins and fatigue cracks." Several weeks later, General Sergei Bainetov, head of the Air Force flight safety department, said: "The reason for the MiG-29's crash was the breakdown of the plane's tail fin in flight because of corrosion, the reasons for which have so far not been established."
He also said inspection of the MiG-29 jets showed 30% of them were corrosion free.
The MiG-29 Fulcrum was designed in the 1970s and put on combat duty in 1983-1993. Alexander Novikov, head of the Moscow-based Chernyshov engineering plant, which supplies engines to MiGs, said Russia had 291 MiG-29s.
As many as 70% of them, or about 200 jets, are only fit for scrap now because of corrosion. This is the number of Russia's Su-27 fighters and more than the number of the MiG-31 interceptors.
The jet's deep modernization program was rejected. The Air Force is currently modernizing the Su-27 and MiG-31 planes, but very slowly. The manufacture of new fighter planes has been halted, with export contracts in 1990-2000 fulfilled only because there were enough Soviet-made component parts for assembling new planes.
The Defense Ministry expects to receive 34 re-export MiG-29SMT jets, which Algeria has rejected. But this is not enough to replace the 200 corroded jets. The main MiG production site, in Lukhovitsy near Moscow, has manufactured only two aircraft over the past few years, under a naval contract with India. And this is all it can do now.
The Russian government said fifth-generation planes, which are yet to be created, manufactured and tested, will be supplied to the armed forces no sooner than in 2020-2030.
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