MOSCOW, November 26 (RIA Novosti)
Mineralnye Vody Worth 400 bln Rubles – McKinsey
This is the amount the government needs to invest in the Mineralny Vody resort to catch up with Baden-Baden and Karlovy Vary, says a McKinsey project for the Vnesheconombank spin-off the North Caucasus Development Corporation (NCDC), and presented by the Regional Development Ministry.
The NCDC also analyzed the funding needed for the “most urgent actions for social and economic development.” They will require some 395 billion rubles until 2025, including 110 billion for tourism, 25 billion for trade and logistics, 40 billion for agriculture and 220 billion for transport, housing and amenities, and the environment.
According to the McKinsey project, the Caucasus resort-destination of Mineralnye Vody is famous for its mineral wells and therapeutic mud, which attract 700,000 holidaymakers annually. The resort, which can accommodate up to 30,000 tourists at any given time, has a greater capacity than popular spa resorts such as Baden-Baden and Karlovy Vary.
But low investment is the region’s main problem. The resort receives just 7,000 in government money and 11,000 in private funding per capita (in comparison: the Krasnodar Territory gets 10,000 and 28,000 rubles respectively).
Environmentally, the region is not without problems. The region suffers from dioxin emissions that exceed the European norm by three times for emissions that come from a waste burning plant. Wastewater treatment facilities and sewage systems are overloaded. About 20% of the mineral waters are polluted. McKinsey reports that water deposits risk being lost within 20 to 30 years if no action is taken.
It is also reported that many health resorts in the region have not been renovated for over a decade. There is a lack of leisure and sports facilities. Meanwhile, Baden-Baden hosts over 300 top selling concerts a year, and Karlovy Vary hosts an international film festival.
Mineralnye Vody is a well known brand in Russia but poor marketing and booking systems do not help boost sales. The resorts are mostly popular with seniors who stay there out of habit.
The project includes measures to develop the location’s popularity, to develop trade and logistics, and launch organic food production. That would require over 300 billion – managed by a yet unknown organization.
The Regional Development Ministry has proposed a state corporation to be a cornerstone investor or a department within the presidential envoy’s office to manage the region’s development.
According to the NCDC, the region largely reports to the Stavropol Territory administration. There could be problems unless the administration acquires an inter-regional status.
“A major part of the region’s health resorts is in fact located in the Stavropol Territory,” the CEO of a local travel agency said. “It would be wrong, however, to consider that Kabardino-Balkaria and Karachayevo-Circassia are less popular destinations. These republics are quite good for active leisure like alpine skiing.”
Thus, the popularity of the region depends on the consistent development of the travel infrastructure of both health resorts and alpine skiing facilities.
Medvedev Proposes Increase in Drunk Driving Fines to 500,000 Rubles
Prime Minister Dmitry Medvedev has proposed increasing drunk driving fines to 500,000 rubles ($16,060) in Moscow and St. Petersburg and to 250,000 rubles in other cities. This is five to ten times more than United Russia and the traffic police have proposed. In response, the experts suggest that the higher the fines, the more precise must be the criteria for judging who is drunk.
Medvedev said in his video blog on Saturday: “We plan to increase the penalties for speeding, driving through red lights or in an oncoming lane and other major traffic violations. Penalties will vary. For example, up to 500,000 rubles in Moscow and St. Petersburg and up to 250,000 rubles in other cities.”
The current fine for perhaps the most serious of the above violations – driving in an oncoming lane – is 5,000 rubles. Medvedev clarified his notion a few hours later on Facebook: “The fines of 500,000 and 250,000 rubles I mentioned are only for drunk driving.”
Work to amend the Code of Administrative Procedure and the Criminal Code began after a drunk driver going 190 km/h (118 mph) killed seven people on September 22. The parliament has proposed suspending an offending driver’s license for up to three years (currently two years) and fining them 50,000 rubles. It is likely that this fine will be increased by five or ten times, to 250,000-500,000 rubles.
“The stronger the punishment for driving under the influence, the more important it is to define exactly what intoxicated is,” said First Deputy Chairman of the State Duma Committee on State Development, Vyacheslav Lysakov, who is supervising the drafting of the law. “Currently, anyone smelling of alcohol is considered drunk, although driving only becomes impaired when the blood alcohol concentration (BAC) is above 0.05 percent, while a breath analyzer detects alcohol if the concentration exceeds 0.03 percent.” Lysakov said that according to the courts, 12 percent to 15 percent of drivers whose licenses were suspended had a BAC level of only 0.02 percent, which means that their driving skills were not really impaired even though they smelled of alcohol. Lysakov has been trying for over a year to restore the breath test standard, which Medvedev cancelled in 2010. The traffic police and the Healthcare Ministry support his stance. Lysakov personally forwarded the conclusions of alcohol and drug abuse therapists to the prime minister. Yet the government is categorically against restoring this provision.
The State Duma planned to debate the new drunk driving bill in December 2012 after the concerned government agencies offered their input. The Supreme Court has submitted its support of the new law. The traffic police sent their conclusions to the government two weeks ago, and now the government should complement them with their proposals before forwarding the draft to parliament. Regional authorities are to contribute their input as well. But this will take time, which Lysakov believes will push the hearing of the draft law back until spring.
Potanin May Make Peace with Deripaska and Head Norilsk Nickel
Vladimir Strzhalkovsky may step down as chief executive of Norilsk Nickel, to be replaced by its majority owner, Vladimir Potanin, sources said. Shareholders are still debating the change.
Potanin controls just under 30 percent of the nickel producer through his investment vehicles, a source said.
A Norilsk spokesman confirmed the possibility that Strzhalkovsky might be replaced by Potanin. The current CEO seems rather understanding of the main shareholder’s insistence on heading the company. “This is a widespread practice in the metals industry, used by Severstal and others,” a spokesman said, adding it is too early to discuss Strzhalkovsky’s further employment.
A spokesman for Potanin’s company Interros confirmed the planned reshuffle in Norilsk leadership but declined to say more.
Norilsk shareholders are discussing with Strzhalkovsky the conditions for his resignation and the size of his compensation, one of the sources added. The owners have been considering his replacement as one of the main conditions for their reconciliation. This was also strongly recommended by the government, according to a businessman familiar with Norilsk Nickel owners.
Another source close to the shareholders said Potanin and Rusal owner Oleg Deripaska would work out the settlement conditions themselves, while the government was not insisting on Strzhalkovsky’s resignation. The first option considered was a managing partnership. But later it was agreed that Potanin should head the company. The upcoming hearing of Norilsk shareholders’ mutual claims at the London International Arbitration Court has also played a role.
There are several reasons for replacing the Norilsk CEO, one of the sources said. Strzhalkovsky has failed to develop a satisfactory relationship with Deripaska, who once publicly accused Norilsk management of “incompetence.” Strzhalkovsky, in turn, said in an interview with Vedomosti in 2011 that Deripaska was trying to get operational control of Norilsk.
Strzhalkovsky headed Norilsk amid the first Potanin-Deripaska row in August 2008. He was seen at the time as a referee for the conflicting shareholders. Later he emerged as an independent figure who switched from dividend payments to a share buyback. Those shares were not cancelled, though, which led to a surge in quasi treasury stock to 16.54 percent that the Norilsk management voted. Rusal has not offered the shares it owns for buyback because they have been pledged to secure its loans.
Replacing Strzhalkovsky with Potanin would be a major step toward a new shareholder agreement between Interros and Rusal, VTB Capital’s Vadim Astapovich said. But the length of the truce will depend on whether Deripaska and Potanin agree on a long-term strategy for Norilsk. The former opponents might revive the idea of creating a mining and metals conglomerate.
Dividends may also grow, he added. If they grow to 50 percent of consolidated net profit from 25 percent, Rusal will be able to pay its loan interest.
Since Strzhalkovsky’s resignation is Interros’ way of meeting Rusal halfway, the aluminum giant might also agree to compromise, said Kirill Chuiko from BCS. It could halt all litigation against Norilsk and Interros.
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