Moskovsky Komsomolets
Mystery millions
There’s a new member of the “friends of Putin” club. These individuals’ rapid accumulation of wealth often makes the headlines, and the new-boy now is “Putin's teacher.” Journalists have discovered that the rector at the university that gave the Russian prime minister his PhD has suddenly become a multimillionaire.
Chairman of the board of directors of Fosagro and rector of the St. Petersburg Mining University Vladimir Litvinenko, as it turns out, owns a 5% stake, worth $350-450 million, in the chemical company, Vedomosti reported. Litvinenko has headed up the mining university since 1994 and was in charge of the university's academic council in 1997, when the future prime minister defended his thesis.
Fosagro is one of the most secretive holdings in Russia. The company does not publish financial reports or disclose the identity of its owners. But yesterday it published a prospectus, converting preferred shares into ordinary ones.
Although the document did not disclose the identity of company’s principal owner, it says that Litvinenko has owned preferred shares totalling 5% of Fosagro's share capital since November 2007. Yelena Guryeva held another 5.01% from the same period.
Litvinenko and Guryeva were last mentioned as shareholders in November 2010. Their names do not appear in the list for December. But the section of Fosagro’s prospectus detailing information about members of the board of directors, listed Litvinenko as still owning 5%.
In the spring of 2010, Litvinenko became chairman of the board at Fosagro. Whether Litvinenko has ever been a businessman is unclear. In any case, he would need considerable funds to purchase such a stake. RMG analyst Konstantin Yuminov values Fosagro at approximately $7-9 billion. Accordingly, Litvinenko's stake could be worth $350-450 million.
Experts were surprised to learn that Litvinenko is one of Fosagro’s co-owners. Theoretically, this could have been his reward for lobbying in the company's interests. Last year, it became known that Litvinenko wrote a letter to Putin asking for help in Fosagro's bid to purchase the Canadian company Potash.
Izvestia
Bathing elephants return to St. Petersburg
St. Petersburg will soon be welcoming some elephants home. Artist Nikolai Kopeikin plans to build a sculpture depicting a family of bathing elephants in the Fontanka River in the very heart of St. Petersburg.
The installation will be life-size, with the elephants partly immersed in water, and a fountain spouting from one of their trunks. When completed, this will be the largest statue in St. Petersburg and will stand in sharp contrast with the smallest one, of Chizhik-Pyzhik, on the nearby Fontanka embankment.
“I had this idea about four years ago, when I was working on an exhibition ‘Elephants of St. Petersburg’,” says the project’s designer, Nikolai Kopeikin, whose ancestors fought bravely during the Napoleonic war of 1812. “A family of bathing elephants, one clambering ashore, another pulling his tail, and the third one playfully spouting water, will arouse as much tourist interest as Chizhik-Pyzhik.”
The statues will be installed in a historical place near Anichkov Bridge. Real elephants bathed there in the mid-18th century, when the Elephant Yard with stables for 15 animals and the Persian Caravan Serai were located nearby. The first stable was built for the elephant sent to Empress Anne as a gift by Persian Shah Nader, who signed a treaty with the Russian Empire in March 1735. In 1741, he sent a caravan of 14 elephants. The animals were frequently taken for walks around the area. The old ramp they probably used to go down to the river is still there.
Kopeikin says the project is quite a challenge. For the statue to look realistic, he needs real animals to pose for him. Luckily, a visiting Indian circus can provide some elephants when the shows close in mid-May, exactly of the kind that Shah Nader sent from Persia in the 18th century. African elephants have bigger ears, and different heads and posture. However, the Fontanka water will probably be too cold for them to bathe.
The organizers have not disclosed the cost of the project, although they have admitted that installing the statues will present some technical difficulties. To restore the historical ramp, part of the stone embankment will have to be dismantled and several trees uprooted. The architects have applied for planning permission. To actually install the statues in the water, part of the river will probably have to be temporarily drained. There is no information yet about the potential environmental consequences of this decision, such as flooding in the northern part of the Fontanka.
It is difficult to say how long the project will take. Kopeikin will have to sculpture the animals on the spot because they will be too large and heavy to transport them from elsewhere.
But it is certain that navigation on the Fontanka will be disrupted and traffic along the banks cut off during the time when Kopeikin and his team will be working on the installation.
Nezavisimaya Gazeta
Gasoline prices in Russia to rocket by 80%
The authors of Russia’s Strategy-2020 propose to dramatically raise domestic prices on all energy sources and at the same time to abolish export duties. This reform, economists believe, will create price incentives for economic modernization, and both the Kremlin and the White House are fascinated with the concept. However, estimates released on Thursday show that if export duties on oil and petroleum products are lifted, gasoline will go up by 80%, diesel fuel by 60%, and aviation fuel and fuel oil by 40%.
Valery Mironov, deputy director of the Higher School of Economics development center and member of an expert group on macroeconomics, explained in an interview to Nezavisimaya Gazeta that the energy intensity of Russia’s GDP is today unacceptably high, with export duties subsidizing producers and keeping prices unrealistically low on the domestic market.
“One should not forget Russia’s upcoming accession to the World Trade Organization, where any of its members can take issue with Russia for maintaining low domestic prices,” he said.
The macroeconomic group experts have suggested their own action plan. First, they say all export duties on crude oil and refined products must be abolished. Calculations show that the export customs duty on crude oil in 2010 contributed 1.67 trillion rubles (3.8% of GDP) to the budget, while the export duty on oil products, brought it 0.6 trillion rubles (1.4% of GDP). Simultaneously, the mineral resources extraction tax must be raised by at least 5.2% of GDP. This, however, will result in additional revenues for producers from the external market – thanks to the abolition of duties – and from the internal market – through the growth of domestic prices.
Second, oil producers must be stripped of extra profits through the extraction tax, keeping the standard profit rates in production. As a result, the higher resources extraction tax will compensate for the loss of the export duty on the external market, keep the budget balanced, and remove the resource rent from the home market, which used to reach consumers directly through reduced prices. This will create additional budget revenues. The third step is to distribute the resultant revenues to meet current social needs – by lowering taxes, investing in the economy, etc.
The results of the reform look equally awe-inspiring. Gasoline prices are expected to shoot up by 80%, diesel fuel by 60%, aviation fuel by 40% and heating oil by 40%. The combined rise in prices on products will be between 5% in trade and logistics services and 40% on chemicals and petrochemicals. The consumer price index and utilities prices are expected to rise by 10% to 20%. The authors of the report warn that the effects of the move are fraught with destabilizing society and should be spread over 10 to 15 years.
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