New president bound to consult Putin / National projects to be curtailed / UES to make biggest private investment deal in Russian energy sector / GM will help GAZ enter the world budget car market / Suspect in Litvinenko's murder case to be elected to parliament
MOSCOW, September 17 (RIA Novosti)
Novaya Gazeta
New president bound to consult Putin
Every year, Putin appears different at the Valdai Discussion Club, an annual affair organized by RIA-Novosti news agency. This year he played a friendly and solicitous host obviously unconcerned about the future, writes Nikolai Zlobin, director of Russian and Eurasian Programs at the Center for Defense Information in Washington D.C.
"I haven't been slaving for eight years to hand Russia over to a weak president," the president said.
He looked less worried about who would eventually succeed to him than about the popular expectations and support of specific policies. "People," Putin said, "do not care about foreign policies and macroeconomic indicators. They care about their pensions and wages, about education and health care - that is why they support what we are doing, and the next president will have to continue the same social policy."
The president agreed he would largely retain his political influence after 2008. He said the next president would have to take his opinion into account and ask his advice.
Whoever his successor is, Putin doesn't want "to give Russia to a weak president." He must be self-sufficient and effective, capable of meeting the challenges emerging in society, Putin added.
President Putin indicated he would try to return to power in 2012, but as a normal politician, could not answer the question when asked directly. He said he hoped to find something interesting to do before 2012, something he would want to continue doing after 2012.
"Do you think it is so amusing to sit in the Kremlin reading all the dirt spilled about me by the media?" he asked.
Vedomosti
National projects to be curtailed
The possible resignation of First Deputy Prime Minister Dmitry Medvedev may lead to the transformation of priority national projects into state programs.
"When progress is made in a project, it should be turned over to branch agencies, which will address it as part of their routine work," Russian President Vladimir Putin said late last week.
Priority national projects will be most likely tackled as federal target programs, said a source connected to the Kremlin administration.
The four priority national projects were unveiled in the autumn of 2005. Allocations to them totaled 433 billion rubles ($17.1 billion), including 84.7 billion of allocations and 49.6 billion of state guarantees for the housing project in 2006-2007. Medvedev said about the latter project that it was progressing "not as fast as we expected, without spectacular breakthroughs."
Even those responsible for the priority national projects cannot say how they will be transformed. It is only clear that the agriculture project will become a target federal program, said a source in the government staff.
Last July, the government approved a state program of agricultural development, which stipulates the allocation of 551.3 billion rubles ($21.77 billion) in 2008-2012, compared with 83 billion for the agricultural development project in the 2008-2010 budget.
National projects were designed for three years, but the three-year budget stipulates allocations for them, said an informed source. However, the budget could be amended.
Sources in the lower house of parliament (State Duma), the government and the business community said Dmitry Medvedev, who is in charge of the national projects, would most certainly resign, but would likely be offered a comparable post.
A manager from Gazprom said Medvedev could be promoted from director of the energy giant's board of directors to the post of head of its Management Committee, replacing Alexei Miller, currently suffering from ongoing health problems.
Business & Financial Markets, Gazeta
UES to make biggest private investment deal in Russian energy sector
German power utility E.ON has submitted the best offer price for one share of OGK-4, or Wholesale Generation Company, 3.35 rubles ($0.13), which adds up to 100 billion rubles ($3.95 billion) for the 47.7% stake and corresponds to an estimate of $753 per 1KW of the company's installed capacity.
Experts have been pleasantly surprised, saying it was the best bid ever offered for Russian generating assets.
The deal is to be completed on September 24-26.
E.ON said it planned to acquire all of the OGK-4 shares put up for sale, including the additional issue worth 46.5 billion rubles ($1.84 billion). Therefore, there is the possibility that E.ON will end up the holder of a 69.5% stake in OGK-4, while UES's stake might decrease from 89.6% to 22.5%.
Experts are convinced the German company will eventually control the Russian generating asset.
"E.ON's offer is extremely tempting, as it means a 40% premium on the OGK and TGK evaluation and 10% on the OGK-4 quotations," Alfa Bank analyst Alexander Kornilov said.
"The previous record price, $1.5 billion, was paid by Italian Enel for a stake in wholesale generator OGK-5 this past June," said Semyon Birg, chief strategist at the Finam investment company. "The price represented a premium of 13% on the auction level, as the company was evaluated at $664 per 1KW. However, the latest tender put evaluation of Russian generating companies into a new perspective."
Enel plans to purchase the remaining 70% of OGK-5 shares to take full control of the company.
RAO UES management is supporting the arrival of foreign investors in Russia's energy market in every way. UES CEO Anatoly Chubais assured foreign investors during a recent road-show that Russia planned to have around 25% of its generating assets controlled by foreign companies, and invited all the interested parties to take part in the forthcoming additional issues and sales of government stakes.
As of now, Enel's 30% in OGK-5 and the stake in OGK-4 just acquired by E.ON have added up to 17%-18% of Russia's power generation sector controlled by foreigners.
Birg expects territorial generating companies TGK-2, TGK-6 and TGK-10 to be sold soon as well. After that, foreign investors will be able to accumulate around one fourth of the sector.
Kommersant
GM will help GAZ enter the world budget car market
On Friday, before a moratorium went into force on the signing of agreements regarding the industrial assembly of foreign cars in Russia, the country's Ministry of Economic Development and Trade hurried to sign memoranda with foreign car companies.
Six new projects with a cost of $1.7 billion have been announced. One of the most ambitious projects will be a joint venture between General Motors (GM) and Russian automaker GAZ Group to produce budget cars.
The project will allow GAZ to become one of the main players not only on the Russian, but on the world car market.
Kommersant's sources say that GM and GAZ, which is controlled by Oleg Deripaska's Russian Machines Company, plan to produce budget cars on "a principally new base." In March, GM's chief executive said the company would develop a budget car especially for Russia with a price tag of $7,000-$8,000.
Initially, GM and GAZ will produce about 50,000 cars, but this number could be increased to 200,000-300,000 later on. Some of the cars will be sold under the brand name of GAZ. It is likely that cars will be exported to emerging markets, in particular to India. The site for the plant has not been chosen yet. An official announcement about the GM and GAZ project might be made at the end of the year.
GAZ Group repeatedly said that they are interested in the budget car segment and that the company was looking for a partner to produce them. In particular, Russian Machines applied to purchase the Romanian car plant Daewoo Automobile Craiova (which produced Daewoo cars) but later backed out of the project.
If there is a partnership between GM and GAZ, the latter will become a new player on the Russian car market, according to Mikhail Pak, an analyst at the Kapital Investment Group. Earlier, GAZ worked only in the segment producing D-class cars, but now it will probably work in the C, B and even in the A segment, he said.
He added that Russian Machines will be a co-owner of the Canadian auto parts manufacturer Magna. This will mean the deeper localization of GM budget cars in Russia at a lower price.
GM and GAZ will not be able to enter the $7,000-$8,000 price segment, according to Kirill Chuiko, an analyst at Uralsib. Nonetheless, he said that the project was of interest, especially if aimed at exports.
Vremya Novostei, Gazeta
Suspect in Litvinenko's murder case to be elected to parliament
Andrei Lugovoi, a Russian businessman who the U.K. suspects of poisoning ex-security officer Alexander Litvinenko last November, will run for parliament. He may be approved as the number two candidate at the congress of the ultranationalist Liberal Democratic Party (LDPR) today.
Experts say this will attract more voters to the party, which has decided to play the ultranationalist anti-Western card at the elections, and give Lugovoi parliamentary immunity protecting him from possible charges at home.
LDPR leader Vladimir Zhirinovsky said yesterday about Lugovoi's possible involvement in the Litvinenko case: "It is nothing more than a provocation against a Russian citizen."
Politicians and political analysts are critical about the idea of making Lugovoi one of the top three candidates of the Liberal Democratic Party.
Iosif Diskin, a political analyst and co-chairman of the National Strategy Council, said: "This [decision] will discredit the house, which will be viewed as an asylum for persons who have problems with the law. This could also increase confrontation with the West."
Alexei Mitrofanov, former member of the LDPR, said: "There will be major problems after the elections."
Communist Viktor Ilyukhin, deputy chairman of the house's committee for security, said: "Debates with the West are one thing, and spitting at it is quite another thing. If the U.K. provides reliable proof of his [Lugovoi's] involvement in murder, which is a grave crime, the house will have to approve bringing him to book."
The current State Duma has not yet stripped anyone of parliamentary immunity, and there is slim chance that the Russian authorities will admit Lugovoi's guilt and initiate court proceedings against him.
On the other hand, Zhirinovsky is a political pro who would not pull the British tiger's whiskers on his own. He would only support the Kremlin's tough statements.
Therefore, he opened his cards on a weekend so as to see the reaction in Russia and the West before making the final decision. He alone may choose the top three candidates to run for this party, and he can change his decision at any time, even though the party congress begins today.
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