MOSCOW, October 13 (RIA Novosti) Communists being pushed out of politics / Gazprom eyeing blocking stake in Canada's Rabaska Project / Icelandic bank bought Norilsk Nickel shares for Usmanov / Russian oil companies to profit from financial crisis / Foreign investors rush to Deripaska's rescue / Mobile phone half-yearly sales grow 22% /
Communists being pushed out of politics
The Russian Communist Party has lost in elections to two out of five regional legislatures. The party claims the authorities are doing everything in their power to squeeze it out of politics.
United Russia won Sunday's elections to the legislatures of the Sakhalin, Irkutsk and Kemerovo regions, as well as the Trans-Baikal Territory and Chechnya. The pro-presidential party received a majority in the five legislatures, while the Communist Party will have no seats in Chechnya in the North Caucasus and the Kemerovo Region in southwest Siberia.
Second place in two elections where United Russia won over 80% of the vote went not to the Communist Party, as it had happened during the elections to the federal parliament, but to the loyalist A Just Russia party, which ended last in several other regional polls.
The Communist Party did not win a single seat in Chechnya and the Kemerovo Region, but received 13% in the Trans-Baikal Territory and 22% in Sakhalin.
This Communist Party is not surprised by its unprecedented defeat. Communist Party MP Vadim Solovyov said: "This was bound to happen."
The election campaign in the Kemerovo Region was marked by such high-profile scandals that last week Communist Party leader Gennady Zyuganov had to appeal for help to Prime Minister Vladimir Putin, leader of United Russia.
Communists say Putin had agreed to call Kemerovo Governor Aman Tuleyev, whom the Communist Party held responsible for the election campaign, but his interference has not improved the situation.
"This is a signal to the Communist Party and society showing that the regional election commissions and administrations are going all out to please United Russia, thereby turning the elections into a farce," Solovyov said. "The opposition has been routed. Only the Communist Party has so far survived, but the results all over Russia will be the same as in Chechnya and Kemerovo in the next campaign."
He said: "The authorities have been lined up to fit the vertical structure of power, which is a carbon copy of the Soviet Communist Party's system."
"We will keep fighting, although the balance of forces between the authorities and us is like between a special operations fighter and a 12-year-old boy," Solovyov said. "So, it will be a life or death battle."
RBC Daily, Kommersant
Gazprom eyeing blocking stake in Canada's Rabaska Project
Russia's gas giant is poised to participate in the construction of a planned regasification terminal, Rabaska, in Canada. It has been offered a 27% stake, said Jean-Francois Cirelli, vice-chairman and president of GDF Suez S.A., a French-based energy company.
The Russian holding was reported to have contracted 100% of the planned terminal's capacity to transport liquefied natural gas from the Shtokman gas condensate deposit in the Barents Sea. Analysts say that a stake in the Rabaska project would provide Gazprom with a foothold on the North American market even if production at Shtokman does not begin on schedule.
Gazprom's consent would reduce the current Rabaska shareholders' stakes from 33.3% to 23% (GDF Suez) and to 25% (Canadian Gaz Metro and Enbridge Embreg each).
Maxim Shein from BrokerCreditService suggested Gazprom would have to pay as much as �300 million for the 27% in Rabaska, which would also include a "fee" for entering the American market, in addition to covering the construction proper.
Mikhail Korchemkin, director of the East European Gas Analysis consultancy, said gas prices in Canada had been 45% lower than in Europe last year. Yet, Gazprom is compelled to make forays into less lucrative markets because the European market is oversaturated.
Cirelli said Gazprom could either acquire a stake in Rabaska's share capital and supply LNG to the terminal, or choose to be the supplier only. The terminal will receive LNG from several sources including Shtokma, he said. The terminal is to be completed in 2014, which should coincide with Shtokman going onstream.
The Canadian project already has the go-ahead from the federal and local authorities. It will accept, store, and regasify LNG, and forward to pipelines up to 500 million cu m of liquefied gas daily.
Gazprom Marketing & Trading USA (GM&T), a subsidiary of the gas giant, was reported in May to have contracted 100% of the planned terminal's capacity to supply LNG it would produce as part of the Shtokman project.
Pavel Sorokin, an analyst at the UniCredit Aton, part of the international Unicredit Group, said it would be better for Gazprom to buy the stake than just to contract the terminal for its Shtokman gas. It would guarantee LNG sales even in the event that Shtokman's commissioning is delayed.
"27% in the project is a very good offer. Therefore, it is hardly a gift - some European company will probably get a good share in a Russian project as well," Sorokin added.
By buying a stake in a terminal which is expected to be entirely dependent on Gazprom's LNG deliveries, the company secures itself a reliable and solvent customer, whose demand is bound to grow, agreed Alexander Nazarov, an analyst at the Metropol investment and financial company.
Icelandic bank bought Norilsk Nickel shares for Usmanov
According to Moscow and international banks' traders, Kaupthing Bank, the largest recently nationalized Icelandic bank, bought 5% of shares of mining giant Norilsk Nickel for Russian billionaire Alisher Usmanov last July.
The stock, worth about $2 billion, has been transferred to the accounts of the businessman's companies with other banks.
The Icelandic bank started buying Norilsk Nickel shares on the London Stock Exchange (LSE) in July. A source said the acquisitions lasted two or three weeks and were monitored by Kaupthing Singer & Friedlande, a British unit of the bank.
The bank bought the mining giant's stock for Usmanov and his Metalloinvest partners, Vasily Anisimov and Andrei Skoch. Two sources from the businessman's team have confirmed this information, saying that Kaupthing bought approximately 5% of Norilsk Nickel and issued a loan of $400 million to cover the $2-billion transaction.
The acquisitions were made when Norilsk Nickel was worth $35-$38 billion. Last Friday, its value on the LSE was only $10 billion, but no margin calls have been made for the securities, according to sources from Usmanov's team.
A margin call is a broker's demand on an investor who uses margin to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin.
When the Icelandic bank was hit by the global financial crunch, it transferred 3.5% of Norilsk Nickel shares (3%, according to other sources) to the companies owned by Metalloinvest shareholders. The remaining part of the stock has been moved to other banks and will soon be re-registered to the new beneficiaries.
UC RusAl and Interros, two major beneficiaries of Norilsk Nickel, as well as Benedikt Sigurdsson from Kaupthing Bank's Investment and Media Relations department, have declined to comment.
It is not the first time Usmanov is tottering at the brink. In 2007, he deposited approximately $700 million with Sviaz-Bank, which nearly collapsed last September. It was bailed out by the state-run Vnesheconombank (VEB), which bought the bank, together with Usmanov's money, for a symbolic sum of 5,000 rubles (about $192).
VEB said it would invest considerable funds "to provide uninterrupted current payments and help meet all of Sviaz-Bank's obligations to its clients and partners."
Traders and investment bankers say it was not a coincidence that Russia has promised to lend 4 billion euros to Iceland, but sources close to Usmanov say the decision is not connected with Kaupthing's actions.
The Russian Finance Ministry has declined to comment.
Sigurdsson said Kaupthing Bank did not expect to gain from the Russian bailout loan, which will be managed by Iceland's central bank. Urdur Gunnarsdottir, press secretary of Iceland's Foreign Ministry, said the Russian loan would be used above all to support the national currency.
According to Sigurdsson, the bank is sustaining losses not because of bad investment moves, but because the clients of Kaupthing Edge, the bank's British unit, started withdrawing their money when Iceland's Icesave online savings bank suspended all deposits and withdrawals from customers' accounts after the Icelandic authorities had stepped in to rescue its parent company Landsbanki.
Russian oil companies to profit from financial crisis
Russia's largest oil company, LUKOIL, the largest national state-owned oil company Rosneft, the Russian-British venture TNK-BP, and energy giant Gazprom have asked the Russian government to finance strategic projects and to refund loans through state credits backed by corporate collateral.
In their letter to the government, Russian oil companies, now owing $80 billion in debts, said the current tax regime prevented them from accumulating the same liquid-asset volumes as Western corporate giants.
The four companies told the government that rocketing inflation, rising production costs and less cost-effective oil-field yield were their main problems against the backdrop of the financial crisis.
Potential liquidity shortages and the lack of investment did not prevent TNK-BP shareholders spending all their January-June 2008 profits on dividend payments.
Dividends and investment are miles apart. Now that global capital markets have vanished into thin air, oil companies are requesting state assistance, all the more so as the government is ready to set aside trillions of rubles to bail out Russian banks and the entire economy.
"Companies do not finance lucrative investment projects at their own expense. The more reliable the project, the more credit it gets. Our projects are highly reliable," Gazprom CEO Alexei Miller said.
Although Gazprom gets enough loans, Miller has joined the other three corporate CEOs requesting federal allocations.
The letter said the largest state-owned and private companies were now vying for energy resources. However, oil and gas major Surgutneftegaz has $20 billion in spare cash, a sum exceeding corporate capitalization.
Surgutneftegaz would defeat debt-ridden rivals if it decided to purchase increasingly cheaper assets in Russia and abroad, now that a barrel of oil costs about $80. Most importantly, it should not miss the bus.
Foreign investors rush to Deripaska's rescue
Two key investors of the Strabag construction holding, Raiffeisen and Haselsteiner, issued a �500 million loan to billionaire Oleg Deripaska to refinance his Deutsche Bank loan and enable him to keep his stake in Strabag.
Strabag group spokesman Christian Ebner said the funds will be used to refinance the earlier Deutsche Bank loan taken for the acquisition of the Strabag stake. Deripaska's company Rasperia Trading bought 30% in Strabag in spring 2007 for �1.2 billion. Later the two main holders' stakes equalized to around 25% after Strabag held an initial public offering.
Although the exact amount Deutsche Bank lent to Deripaska is unknown, a year ago Reuters quoted a banking source as saying that En+ Group (part of Deripaska's BasEl) planned to raise $700 million for partial refinancing of a debt owned to Deutsche Bank.
Strabag's stocks lost 59.04%, from �47 to �19.25 per share after the IPO, bringing the company's capitalization from �5.2 billion to �2.19 billion, which, in turn, puts Deripaska's stake at around �547 million at present.
Ebner said the decision to lend money to Deripaska was made by Raiffeisen and Strabag CEO Dr Hans Peter Haselsteiner. He did not cite the interest rate for the two year loan.
"If Deripaska fails to keep the stake, we have an agreement to split his stake between the other two shareholders," Ebner added.
A Raiffeisenbank spokesman confirmed the information, but declined to comment. Both Deutsche Bank's head office and BasEl also declined to comment.
BasEl CEO Gulzhan Moldazhanova said earlier that the company was not planning to sell the Strabag stake: "It is a strategic investment, we do not just own the asset, but are a partner in Strabag's development."
"It is indispensable for Russian projects' development," echoed Ebner.
The company is concerned over Germany's plummeting market, as the country accounts for 38.4% of Strabag's turnover, and Russia for 2%, Strabag said in its IPO memo. It also said it planned to increase operations in Russia, especially in Moscow, St Petersburg, Yekaterinburg and Sochi.
Strabag will be better off arranging a loan for a shareholder it is interested in, than having to face an unknown investor who might obtain the stocks as a result of a margin call, said Ivan Manayenko, chief of debt market analysis at the Veles Capital brokerage.
Mobile phone half-yearly sales grow 22%
In the estimation of Euroset, Russia's largest cell phone retailer, 16.4 million cell phones were sold in the Russian market at a total cost of $3.62 billion in the first half of the year. Compared with the same period last year, it means a 22% increase in quantitative terms, and 28% in real terms.
According to experts, 38-40 million cell phones will be sold in 2008, which is 17-23% more than in 2007. However, both a slowdown in growth rate and a decrease in the number of dealers are possible in 2009.
The growth is connected with an increase in the replacement rate (replacing an old phone with a new one), Euroset representatives explain. According to the company's press secretary, Natalya Aristova, earlier the replacement period lasted for two years and a half, whereas now it is declining and will soon be a little longer than a year. Dixis press secretary Nadezhda Zakharova agrees that replacement accounts for some 90% of the phones sold.
Earlier experts would not rule out that cell phone sales could even drop in 2008. The market showed the first negative dynamics in 2006: in the first quarter sales fell by 13% - to 7.5 million items, compared with the fourth quarter of 2005. At that time ACM-Consulting explained that the penetration of mobile communications (the number of SIM-cards per 100 people) in the Russian market was as high as 105%. Euroset and Mobile Research Group experts predicted that the negative dynamics could keep in the forthcoming years. However, the results of 2007 surpassed their assessments - 32.45 million cell phones were sold.
The market growth is this year's key mystery, Mobile Research Group leading expert Eldar Murtazin believes. In his estimation in the first half of this year even more phones were sold in Russia than Euroset managed to trace - some 18.5 million items, totaling $3.53 billion; and 38-40 million phones will have been sold by the end of the year. "Phone delivery rate may drop in the fourth quarter because it is more difficult for retailers to receive goods credits. But the demand is still high and it will be satisfied at the expense of trademarks," Murtazin says.
The crisis's negative impact will only manifest itself in 2009, ACM-Consulting managing partner Mikhail Alekseyev and Mforum Analytics analyst Dmitry Deyev forecast. Some retail chains won't be able to survive it because "they have almost reached the state when their debt service funds equal EBITDA, and the growth of cell phone sales won't exceed 5%".
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