MOSCOW, January 31 (RIA Novosti) New PM to have more tools to influence investors/ European observers trade with Russian election commission/ NorNickel to sell off its energy assets/ CNPC rejects Gazprom's price conditions/ Deutsche Boerse proposes a common exchange in Germany/ Poland lures away Russia's migrant workers
Gazeta
New PM to have more tools to influence investors
The government will approve tougher measures against companies violating environmental standards, President Vladimir Putin and First Deputy Prime Minister Dmitry Medvedev said at a meeting of Russia's Security Council.
Experts say the move indicates they are planning to restructure the environmental agencies. Transferring control of Russia's environmental watchdog Rosprirodnadzor to the future prime minister will give him more power over Russian industry.
Alexei Makarkin, deputy head of the Center of Political Technologies, said: "The statement by Putin and Medvedev is part of reforms of the environmental control system. Rosprirodnadzor is to be turned into an environmental committee independent of the Natural Resources Ministry."
The current situation is paradoxical, the expert said, as "a controlling agency (Rosprirodnadzor) is controlled by the department (the Natural Resources Ministry) it should control."
"The planned environmental committee is designed for a new government and is to be controlled by the new prime minister," Makarkin said.
Putin, who agreed to become prime minister if Medvedev is elected president, is the main candidate for the post.
Russia has a well-oiled mechanism for putting environmental pressure on companies, above all in the oil and gas sector.
Rosprirodnadzor took part in the government's attack on TNK-BP's subsidiary, Rusia Petroleum, which holds the development license for the Kovykta gas condensate field in the Irkutsk Region, Eastern Siberia.
As a result, the Russian-British venture agreed to hand over a controlling stake to the state-owned energy giant, Gazprom. Although the deal has not been concluded and additional talks may be held, the government got the desired result.
Environmental agencies also took part in the offensive against RussNeft, whose owner, Mikhail Gutseriyev, opted to give up his company and flee abroad.
But Rosprirodnadzor's biggest victory was in the battle for the Sakhalin II oil and gas PSA project in Russia's Far East. Foreign investors succumbed to pressure from the environmental agencies and, threatened with the loss of their development licenses, sold their controlling stakes to Gazprom.
Analysts argue that the new prime minister will most certainly use environmental controls as effective instruments to pressure industry.
Gudok.ru
European observers trade with Russian election commission
The OSCE Office for Democratic Institutions and Human Rights (ODIHR) has responded to Russia's invitation to observe the upcoming March 2 presidential elections by making its own demands. The organisation insists that a larger number of observers should take part in a longer mission, Russia's Central Election Commission (CEC) said.
Some experts think the OSCE is looking for an excuse to boycott the vote.
The ODIHR official spokesman Curtis Budden said the CEC had set a limit of 70 observers, which would prevent them from fulfilling their role.
"We will cancel the election monitoring mission if we do not obtain permission for a group of 20 observers to travel to Russia next week," he was quoted as saying.
The CEC's decision to limit the number of election observers and the three-day timeframe of their mission before the election ballot caused the European election monitoring body to pull out of monitoring Russia's parliamentary elections in December.
The CEC said the ODIHR letter was being "studied carefully."
Mikhail Vinogradov, head of the Center for Current Politics, a think tank in Russia, said the OSCE was working toward two key goals: "On the one hand, they are searching for an excuse to boycott the vote if it could bring them some political advantage. On the other, they are trying to squeeze as much authority for their observers from the Russian regulator as possible if they decide eventually to send observers."
The expert said that different political elites in Europe were viewing the goals of the election monitoring differently. Some believe observers should only monitor the process of voting. Others see it as their job to provide the broadest monitoring of all aspects related to the elections, that is, to obtain as much intelligence as possible. In this case they certainly need more time. As for their numbers, it isn't of any crucial importance, because the observers never visit the provinces but only work in big cities.
Vedomosti
NorNickel to sell off its energy assets
Russia's largest nickel producer Norilsk Nickel (NorNickel), co-owned by business oligarch Mikhail Prokhorov, CEO of Onexim investment fund, and Interros president Vladimir Potanin, plans to sell off its energy assets in order to buy back a share parcel worth up to $5 billion.
An official from a global investment bank and a source close to the world's largest aluminum producer United Company Russian Aluminum (UC RusAl), owned by Russian billionaire Oleg Deripaska, said they had heard about the plans.
A source said Prokhorov could spend as much as $5 billion on the deal. Under the law on shareholding companies, NorNickel can only buy back a 10% stake that was worth $4.6 billion on Wednesday, Artur Rokhlin, a partner with Yust law firm, told the paper.
A source close to a NorNickel co-owner said the company planned to transfer the shares to a subsidiary account.
Alexander Yakubov, metals analyst at Trust investment bank, and Deutsche Bank analyst Alexander Pukhayev said this could prevent a possible takeover by UC RusAl.
According to Rokhlin, NorNickel would be able to buy over 10% of voting shares.
RusAl, which has agreed to buy a blocking stake in NorNickel, is planning a merger. However, Potanin, who will profit from the share sale, opposes the deal.
NorNickel, which has sufficient funds to buy back its shares, has not yet spent the $2 billion it received last fall for the sale of treasury shares. In addition, the company plans to sell energy assets, including a controlling stake in the wholesale generating company OGK-3.
Prokhorov refused the allocation of energy assets last fall.
Sources close to NorNickel said the corporate board of directors would discuss the future of energy assets worth $7 billion on February 4.
Alfa Capital portfolio manager Semyon Birg said the price was acceptable, but that the assets were unlikely to be sold as one package. He said OGK-3 could only attract foreign strategic investors.
A source close to a RusAl co-owner said the sale of energy assets would negatively affect corporate interests because the aluminum giant wanted to retain them.
Gazeta
CNPC rejects Gazprom's price conditions
Price talks between the China National Petroleum Corporation (CNPC) and Russian energy giant Gazprom have stalled. China said it would not accept Gazprom's price formula, which means higher gas prices for China than Europe.
Experts say that a compromise solution is possible if Gazprom is given access to end consumers in China.
Russia and China signed a memorandum on gas supplies in early 2006. They were to coordinate the price and start implementing the agreement by the end of the year, starting with designing and building the Altai gas pipeline. The deadline for first deliveries was set for 2011.
But commercial talks have still not been completed to this day. According to Gazprom, deliveries will begin four years after the partners reach an agreement on prices.
Experts say the situation is not a tragedy. The East usually bargains according to the "yes-no-yes" scheme, said Agvan Mikaelyan, head of the Russian audit and consulting group FinExpertiza.
"Prices have not been set so far, and gas prices differ throughout the world," he said. "So I think today's statement is only part of the bargaining diplomacy."
Mikhail Feldman, head of the department of major transactions at Russia's 2K Audit - Business Consulting, said China was trying to link gas prices to the cost of coal, which is currently the main source of its fuel (70%).
"Gazprom is trying to link gas and oil prices, which makes gas more expensive," Feldman said adding that Gazprom's position was better because gas prices are traditionally linked to oil prices in other countries.
"If Beijing agrees to sell some of its gas distribution assets to Gazprom or set up a joint venture with it, the Russian company may agree on price concessions, at least at the initial stage of cooperation," the analyst said. "Otherwise, it is unlikely to agree to sell gas to China cheaper than to Europe."
Kommersant
Deutsche Boerse proposes a common exchange in Germany
One of the world's largest trading floors - Germany's Deutsche Boerse - is proposing establishing a European platform for trading the securities of Russian companies.
DB, which ranks second in the world for capitalization, has proposed to Russian officials that they establish a common trading floor in Germany with the Moscow Inter-Bank Currency Exchange (MICEX).
Analysts said political factors could influence the acceptance of the proposal. The establishment of such an exchange could weaken the positions of the London Stock Exchange (LSE), which concentrates trade in Russian securities abroad.
In a letter addressed to presidential aide Sergei Prikhodko, top German managers pointed out they were prepared to help strengthen Moscow as a financial center and proposed altering the ratio between the sales of Russian assets in Russia and their sales overseas by creating a multi-national trading system.
Deutsche Boerse proposed that control over that structure should be handed over to Russia's MICEX.
Currently, most of Russian securities abroad trade at the LSE, making up 75.87% of the average daily turnover, with American exchanges accounting for 18.3% and DB, 5.83%.
Russian officials are cautious about the prospects for the DB project. Vladimir Milovidov, head of the Federal Financial Markets Service, said: "Deciding such matters is outside the authority of individual trading floors, it is a conceptual issue of state policy."
Analysts understand the reasons forcing DB to form an alliance with MICEX. Renaissance Capital CEO Alexander Pertsovsky said: "The Germans want a slice of a promising and growing Russian market because last year the issuers from Russia were placed third in the world for the primary capital attracted."
But, in his view, securities of the Russian companies should trade mostly on the domestic market for more liquidity.
Some analysts are not ruling out that DB's proposals could be accepted. The head of a large investment bank said: "In the current political situation, such a decision could be made to spite London."
Viktor Pleskachevsky, chairman of the State Duma's property committee, agrees. "There are fears that the proposal could go ahead reportedly to create competition for the British exchange. Its leadership is unlikely to be challenged, but a considerable part of the Russian market could move to the newly established floor," he said.
Nezavisimaya Gazeta
Poland lures away Russia's migrant workers
Poland, which is experiencing a shortfall in its workforce, has opened its doors to migrant workers from Russia, Ukraine and Belarus. A simplified regime for entering Poland will come into force for migrant workers tomorrow.
Russia, which also has a shortage of workers, will have to make up for the outflow of skilled workers by inviting more laborers from Asia.
Migrant workers from the eastern Slavic countries may now work in Poland for up to six months (previously they had to return home every three months to renew their visas). Warsaw mainly needs Russian, Belarusian and Ukrainian workers, the majority of whom have a good education with the skills in demand in Poland.
The decision by the Polish authorities is a double blow for Russia, as skilled Russians as well as Ukrainian and Belarusian migrants could leave for Poland.
Nikolai Tulayev, who represents the Kaliningrad region in the Federation Council, the upper house of Russia's parliament, said: "We cannot stop them leaving, but we must draw the right conclusions and start creating a competitive environment attractive for workers."
He said it is a challenging task because the average wage is between 600-700 euros in Poland and only 200 euros in the Kaliningrad region.
According to the Russian Ministry of Healthcare and Social Development, Russia will need 2 million migrant workers this year.
The problem of labor migration from the European countries of the CIS to the European Union will become more serious with time, because Poland's neighbors may follow its example.
For example, more than 300,000 Lithuanians have left the country since Lithuania joined the EU in May 2004. The problem is so acute in Estonia that its department of labor market has recently proposed hiring alcoholics and bums. Ukrainians and Russians are the most sought after workers in Estonia.
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