MOSCOW, June 5 (RIA Novosti) Longer presidential term proposed again in Russia/Russia to build second floating NPP in Vladivostok/Suzuki, Itochu set to build car plant in St. Petersburg/Norilsk Nickel to pay out record-high dividends for 2006/Gazprom export earnings down $10 billion in 2007
Vedomosti, Izvestia
Longer presidential term proposed again in Russia
Vladimir Putin's remarks on lengthening the presidential term from four to five or even seven years have elicited an immediate positive response from Kremlin loyalists, and skepticism from political analysts.
Experts said the move would come handy for the incumbent president in 2012 if he decides to stage a comeback. But the Kremlin said Putin was only thinking aloud.
The Kremlin's line is that the president was just musing in public, and that his administration has no plans to change the Constitution.
"The president made it clear that the idea has the right to be aired, but that its practical implementation is not on the agenda," said a Kremlin official.
"There are no plans to alter the Constitution, either before or after the presidential election in March," he said.
His view was echoed by another official: "The procedure involves recalling the parliament and obtaining a go-ahead from the two houses of the Federal Assembly. It all will take no less than a year, so no one is going to change the Constitution before Putin steps down."
"All forces loyal to the Kremlin are interested in a campaign to extend the term ahead of Duma elections," said Dmitry Badovsky of the Institute of Social Systems.
"A promise not to adopt the new norm before 2008-2009 is aimed at voters and tells them that the parties are working for Putin's return after 2012. Such amendments would allow him to claim a longer term four years later," said Vitaly Ivanov, of the Center for Current Politics.
Vladimir Pligin, chairman of the State Duma's committee on constitutional legislation and state development, said: "There is enough time before the presidential election to introduce such amendments to the Constitution. Such a bill can be examined by the next State Duma, too, but it would be more logical to pass such changes to the Constitution before the president ballot."
Gleb Pavlovsky, president of the Effective Policy Foundation, said: "Society and political generations take less than seven or especially 14 years to undergo a change. Russia cannot physically have a president tolerated by society for 14 years. It is an insoluble political problem."
Vyacheslav Nikonov, president of the Polity Foundation, said: "It will happen during the next political cycle, if at all, because no one knows whether the next Russian president will take to the idea or not."
Kommersant
Russia to build second floating NPP in Vladivostok
Nuclear power producer Rosenergoatom plans to build a second floating nuclear power plant on Russky Island, near Vladivostok in the Russian Far East, the venue of the 2012 Asia-Pacific Economic Cooperation summit.
On Monday, Rosenergoatom deputy CEO Sergei Krysov said the decision to build the floating NPP on Russky Island would be made by the fall, and the NPP itself would be completed by 2011.
Another floating NPP is to be constructed in Pevek, Chukotka (northeastern Russia), in order to cope with power shortages due to extensive electricity demand generated by operations at two local gold deposits.
Rosenergoatom plans to launch seven floating NPPs over the next decade, and construction of the seventh facility will be financed through the operation of the previous six NPPs. It will take 10 years to recoup the cost of building one floating NPP.
A Rosenergoatom source said $4,500-$5,000 would be required to commission one kW at the first 70-MW floating NPP, whereas one kW of electricity at a conventional NPP costs $2,000-$2,500. Construction costs will be reduced to $4,000 per kW after serial production begins.
Rosenergoatom plans to attract money out of the government's Investment Fund or to find investors willing to sign long-term power-supply contracts.
On Monday, Rosenergoatom said an export-oriented floating NPP would be ready by 2014. About 20 countries are now interested in buying such facilities. On June 5, a Rosenergoatom delegation will unveil a similar project in Cape Verde.
Moreover, Indonesia and China have repeatedly said they are interested in floating NPPs and seawater desalinization plants.
Vremya Novostei
Suzuki, Itochu set to build car plant in St. Petersburg
Japanese company Suzuki will become the fourth foreign automotive giant to build a plant in St. Petersburg.
On June 8-11, St. Petersburg is to host the 11th International Economic Forum, and President Vladimir Putin is to meet with CEOs from the largest foreign companies later in the week.
Russia's Economic Development and Trade Ministry is to sign a contract with Suzuki and Itochu, Japan's fourth-largest trading company, during the summit.
According to some sources, Itochu would co-own the plant, supply equipment and help expand and promote retail store chains in Russia.
All-out construction of automotive plants in St. Petersburg has both positive and negative aspects.
Foreign investors have to bring in some skilled automotive experts and employ the rest locally, which has inherent problems as demonstrated by the Ford Motor plant in Vsevolozhsk, near St. Petersburg, which has been plagued by strikes.
Automakers are also having trouble hiring and training local workers. The problem is becoming more serious because more plants are being commissioned each year.
Another problem is relocating production, because 30% of all cars must be assembled using foreign components in the first several years.
In 2006, Russian customs services began levying taxes on Ford Motor car components after deciding that the company had failed to meet production relocation standards.
All foreign carmakers operating in Russia and St. Petersburg say they will be able to produce components locally.
But foreign investors realize that Russia lacks a domestic car component industry and will either have to set up their own production facilities [like Toyota has done] or negotiate with major global players [as Nissan is doing].
Business & Financial Markets
Norilsk Nickel to pay out record-high dividends for 2006
The board of directors of Norilsk Nickel, Russia's largest metals and mining company, has recommended that $1.245 billion should be paid in dividends for 2006, or 82% more than in the previous accounting period.
More than half of that amount will be divided between Norilsk Nickel's main shareholders - Vladimir Potanin, president of the Interros holding company, and Mikhail Prokhorov, president of the Onexim Group holding.
Norilsk Nickel has already paid interim dividends to its shareholders for the first nine months of 2006 - 56 rubles ($2.16) per share.
With those payments taken into account, dividends will amount to 176 rubles ($6.8) per share.
In 2005, Norilsk Nickel paid 96.49 rubles ($3.73 per share with interim dividends included). Total dividend payments for 2006, with interim payments taken into account, may reach 32.231 billion rubles ($1.245 billion).
Since Norilsk Nickel's dividend policy provides for the payment of 20%-25% of the company's net annual profit (according to IFRS) in dividends to its shareholders, analysts came to the conclusion that the company's earnings should be no less than $5 billion.
"This matches our expectations," said Yury Vlasov, an analyst with the Renaissance Capital investment company.
Renaissance Capital is now revising its recommendations on Norilsk Nickel's shares in expectation of the transaction for the purchase of Canada's LionOre.
"Twenty-five percent [of the company's net annual profit] is a usual level of [dividend] payments at companies with good corporate management," said Vladimir Katunin, an analyst with the Aton investment company.
Aton recommends the purchase of Norilsk Nickel shares at the target price of $270 by the end of the year.
"If the transaction for the purchase of the Canadian company is concluded, we will revise the target price," Katunin added.
They will have to revise the target price quite soon, as on June 1 Switzerland's Xstrata PLC, Norilsk Nickel's main rival in the competition for LionOre, refused to continue bidding for the Canadian company.
On June 4, the Russian company received approval from the Australian authorities for the purchase of LionOre.
Vedomosti
Gazprom export earnings down $10 billion in 2007
An unusually warm winter and lower oil prices have forced Gazprom to revise its export plans. Instead of selling 1,000 cubic meters of gas to Europe at a price of $293.8, it will have to sell it at $241.5. As a result, Gazprom's earnings will be $10 billion lower.
Only last November, Gazprom planned to export 157.8 billion cubic meters of gas to countries outside the former Soviet Union and earn over $46 billion. It devised a budget, 14% above its 2006 plan, using the average weighted price of 1,000 cubic meters at $293.8 as its benchmark.
But by June it had become clear the plan was falling short of the target.
Gazprom was unlucky twice - first, because of an unusually warm winter, it had to revise its planned exports to Europe by more than 10 billion cubic meters, and its expected earnings from supplying countries other than the former Soviet Union by almost $10 billion, to $36 billion. And that was on top of a predicted exchange rate of 26 rubles per $1.
Gazprom spokesmen would not comment on details of the updated budget. Officially, the concern has only disclosed a plan for total gains in 2007 - $88 billion.
That is $11 billion less than the previous plan and almost $2 billion less than the actual 2006 earnings. The monopoly's costs should grow by almost 17% to $106 billion, and borrowings will cover the fund shortfall - by three and a half times, to $16 billion.
It is a long time since Gazprom has had such a bad year: in 2001 volumes fell, but not the price, and in 2002 prices dropped, but volumes partly made up for the losses.
Forecasts prepared by the Economic Development and Trade Ministry for 2007 put the average price of gas for countries outside the Commonwealth of Independent States at $237.3-$245.5 per 1,000 cubic meters.
Experts give even lower figures: MDM-Bank analyst Andrei Gromadin quotes $238, and Maxim Shein of Broker Credit Service, $230.
It now appears Gazprom's new budget is even better than market expectations, analysts said.
An official from the Ministry of Industry and Energy agreed: European prices are not dependent on Gazprom, and so there should be not complaints with the budget.
Nor did the new budget disappoint Gazprom investors: since last Thursday the concern's shares have been going up, together with the market, although compared with last year's peak Gazprom went down 17% on the RTS and almost 27% on the LSE.
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