MOSCOW, February 26 (RIA Novosti)
New Russia can agree with new U.S. / ESPO project requires more investment / Crisis helps Russian magnate save on acquiring U.S. asset / Russia's defense companies to seek foreign loans
Kommersant
New Russia can agree with new U.S.
The most intriguing part in President Barack Obama's first address to a joint session of Congress was his view of post-crisis United States. The global dictator of the Bush era must give way to a country offering an attractive development model and in this way affirm its global leadership, a Russian analyst writes.
Nikolai Zlobin, director of the Russia and Eurasia Project at the Washington-based World Security Institute, writes that Obama has delivered his address not only to Americans, but also to the rest of the world, including Russia, even though he has not mentioned it directly.
The new global vision and the new U.S. imply that the Obama administration should talk seriously with Moscow, the analyst writes. Russia will be one of the main partners of the United States, because President Obama will be unable to attain his goals without Russia. Russian-U.S. cooperation should embrace a broad range of issues, from the environment to education and global disarmament.
Many people are now repeating the words of Vice President Joe Biden, who said Washington should "press the reset button" on its relations with Russia. Such signals made by the new U.S. administration are being interpreted as Obama's readiness for big unilateral concessions, Zlobin writes.
However, we must understand one very simple thing, unless we want to be bitterly disappointed: a new quality of bilateral relations will be achieved only if both sides press the reset button.
Russia will also have to make big concessions to the United States, including on Iran, ABM and disarmament. But the main thing for Russia is to change its view of America.
Russia, which has pretended to be a besieged fortress and blamed all its problems on "the American enemy," must be let go together with the politicians and ideologists who advocated that approach.
President Barack Obama and President Dmitry Medvedev, representing a new generation of politicians who grew up after the Cold War, can achieve what their predecessors failed to accomplish.
Gazeta.ru
ESPO project requires more investment
Planned investment in the construction of the first leg of the East Siberia-Pacific Ocean (ESPO) oil pipeline has been upgraded to 390 billion rubles ($10.9 billion) from 361 billion ($10.1 billion), Russia's Transneft said, citing growing costs of building materials.
Analysts, however, express concerns over insufficient transparency of the pipeline monopoly's cash flows, and possible political games around ESPO.
Alexei Sapsai, director general of the project's management center (part of Transneft), argues that the rise was provided for by the project's feasibility study, because the growing cost of materials was taken into account then. The good part is that the first leg will be completed on time, in December 2009, Sapsai added.
Analysts do not doubt that the oil link will be commissioned on schedule, but they do not see why its costs should rise. Dmitry Alexandrov, senior analyst with the Financial Bridge investment company, said most prices are going down, including pipes, cement and workers' wages, in the face of the economic crisis. "It is hard to understand why ESPO estimates are being upgraded while everything else is going down," he said.
"This does look strange, all state companies are now cutting costs, including on investment projects," said Alexander Razuvayev, Moscow-based analyst with Sobinbank. "China has opened Transneft a $10 billion credit line, but this is not a good reason to squander the money."
"The current increase in the ESPO estimate happened because its costs were underestimated," said Vyacheslav Bunkov from Aton. "It looks like the estimate will keep growing until the construction is finished."
Transneft should have improved transparency long ago. "Even with its international reporting practice, the pipeline monopoly's transparency is far below that of Gazprom or Rosneft. It is unclear how the funds are distributed," another market expert said.
Political games are another reason here, said Dmitry Abzalov, an analyst with the Center for Current Politics think tank. "Even the Chinese loan facility will not be enough to complete the project. Upgrading the project estimate is an attempt to pressure the Finance Ministry for more money," he said.
Vedomosti
Crisis helps Russian magnate save on acquiring U.S. asset
The Mechel mining and metals company has been able to cut by several times the sum of a deal to purchase a 100% stake in the U.S. company Bluestone Coal. Instead of the planned $4 billion, Mechel will pay $425 million and give its preferred shares - 15% of the increased authorized capital.
Mechel (70% controlled by its general director Igor Zyuzin) has held talks to purchase a U.S. asset since the beginning of 2008. The company counted on selling 55 million shares (11.7% of the increased authorized capital) to bring in more than $3 billion. A road show was launched on July 7, but bids for the required price were few and so Mechel moved the closing of the deal to mid-August.
But at the end of July, Prime Minister Vladimir Putin publicly accused the company of inflating coal prices and using transfer pricing, promising "to send a doctor" to Zyuzin. Mechel's capitalization plummeted by $5 billion overnight. The placement of preferreds had to be postponed indefinitely.
In the fall, Mechel registered a new scheme for issuing an estimated 138.75 million preferred shares. Of them, the Bluestone Coal owner (the family of U.S. businessman James Justice) will receive 80 million shares. Vedomosti sources do not say what dividends the family will be receiving. The company has promised to divert 20% of net profit to cover the full issue. It has also undertaken to place the remaining papers on the stock exchange at the earliest opportunity so that the new shareholder could sell his, said an investment banker working with the company.
Tata Steel and Severstal were among the bidders for Bluestone Coal. According to Dow Jones, Tata offered $2 billion and Severstal, according to a source close to the company, still less.
Before Mechel, none of the Russian companies was able to reduce the sum of a deal by several times. Severstal in October bought the PBS Coal company in the U.S. at a price driven down from $1.3 billion to $1 billion. Novolipetsk Steel (NLMK) meanwhile has refused to buy the U.S. company John Maneely for $3.5 billion. Its owner - Carlyle Group - has gone to court to demand that the deal go through.
The new buy will enable Mechel to increase coal output by one quarter in several years' time. Bluestone is currently producing 3 million metric tons, but is planning to increase the production to 6.8 million metric tons.
Gazeta.ru, Gazeta
Russia's defense companies to seek foreign loans
One-third of Russian defense companies are tottering at the brink of bankruptcy, said Sergei Chemezov, head of the Russian Technology state corporation. They may negotiate loans on foreign markets, but are unlikely to get much there.
Inspections of the 440 companies, including 340 defense enterprises, whose stakes have been turned over to the corporation showed that only 36 of them can be described as stable, while some 30% are facing bankruptcy.
The situation is most difficult in the sector of munitions and chemical warfare agents, as approximately half of companies producing them are potential bankruptcies.
"The stability and viability of the defense sector is almost exhausted," Chemezov said in the State Duma, the lower house of parliament.
The debts of Russian Technology's companies total 625 billion rubles ($17.5 billion), and the loan terms offered by Russian banks are unacceptable, Chemezov said. This is why the corporation is in talks with Western banks, which offer much lower interest rates.
Anatoly Aksakov, president of the Russian Association of Regional Banks, has recently said that Russian banks offer loans to corporate clients at 18%-40% interest rates.
"Chemezov has clearly hinted that unless Russian Technology receives loans at home, it will appeal to the West," said Konstantin Makiyenko, deputy director of the Center for Strategy and Technology Analysis.
Analysts have warned that if this blackmail fails the corporation is unlikely to get what it wants in the West, because foreign banks have no reason to finance a Russian state corporation.
"It is difficult to imagine Western banks financing the Russian defense sector, so they are unlikely to issue large loans," Makiyenko said.
Dmitry Abzalov, senior analyst at the Center for Current Politics think tank, said: "Russian Technology as a state corporation cannot pledge its shares or the shares of its defense companies."
The only solution in this situation is to take out loans against the pledge of the corporation's civilian companies such as titanium producer Avisma or carmaker AvtoVAZ, the analyst said.
RIA Novosti is not responsible for the content of outside sources.
