Interfax: Moscow press review for May 15, 2014

MOSCOW. May 15 (Interfax) – The following is a digest of Moscow newspapers published on May 15. Interfax does not accept liability for information in these stories.

POLITICS & ECONOMICS

Ukraine is preparing to place $1 billion in Eurobonds on the open market that will be guaranteed by the U.S. Agency for International Development, the country’s transition government announced Wednesday. However, if the economic situation in the country deteriorates further, the promised aid might not be enough, analysts warn (Kommersant, p. 1).

The Russian Union of Industrialists and Entrepreneurs and Natural Resources Ministry have endorsed a bill intended to base environmental regulation in industry on best available technology. The bill, expected to be passed by July 15, will not lead to an absolute reduction of negative environmental impact, but will become a tool to force companies to modernize, analysts believe (Kommersant, p. 6).

Crimea and Ukraine are close to agreeing on the resumption of water supplies to the Black Sea peninsula. Ukraine is demanding payment of $146,500 in debt for water, the agreement of new price conditions and the return of old equipment (Kommersant, p. 12).

Interview: Kamal bin Ahmad Muhammad, Transportation Minister of Bahrain (Vedomosti, p. 8).

OIL & GAS

Gazprom CEO Alexei Miller could have been included in the European Union’s sanctions list, which was expanded on Monday. However, the Russian gas giant’s European partners, including German, French and Italian oil and gas companies, persuaded the authorities not to do this (Vedomosti, p. 1).

The operator of Russia’s Sakhalin-1 project, Exxon Neftegaz and its contractor for construction of platforms at the Arkutun-Dagi field, Sakhneftegaz Engineering, which is partly owned by U.S. firm WorleyParsons, are suing one another in international cour ts. Exxon Neftegaz is unhappy with the work done and is trying to cancel its contract, while Sakhneftegaz Engineering is demanding payment of $20 million (Kommersant, p. 11).

UTILITIES

The Russian government has decided to finance RusHydro’s international projects with money from Rosneftegaz. The power company will get 17 billion rubles from the state holding company for hydropower projects in Kyrgyzstan and Abkhazia. Rosneftegaz might also finance Inter RAO’s hydro project in Kyrgyzstan (Vedomosti, p. 12; Kommersant, p. 12).

BANKING, FINANCE & INSURANCE

Preserving their business in Russia in the face of changing legislation intended to shield the country from sanctions will cost Visa and MasterCard far more than leaving this market and sacrificing profits: at least $1.9 billion and $1 billion compared to $350 million-$470 million and $160 million respectively, Morgan Stanley estimates. However, the international payment systems have less c ostly, though less transparent options (Kommersant, p. 1).

The dollar and euro fell to new three-month lows on the Russian market Wednesday, sliding to 34.72 rubles and 47.70 rubles respectively as tensions over the Ukrainian crisis eased and exporters’ demand for rubles grew. But the ruble’s appreciation in the long-term is unlikely until the Ukrainian crisis is resolved (Kommersant, p. 10).

REAL ESTATE & CONSTRUCTION

The Moscow city government is prepared to part with one of the most valuable pieces of real estate in the city center – 3 hectares on Sofiyskaya Naberezhnaya across from the Kremlin. The authorities are willing to allow construction of luxury housing on the property, the sale of which could generate over $1 billion for the potential investor (Kommersant, p. 1).

The average amount of the new Russian tax on residential real estate could triple over five years, according to the final version of the bill on the real estate tax on individuals and Federal Tax Service calculations. But government officials insist that it is no longer possible to postpone the introduction of the tax (Vedomosti, p. 4).

Prices on the Moscow residential real estate market have begun to climb as people are moving savings from banks into apartments. However, prices are mainly rising for inexpensive apartments on the secondary market, where prices increased 4% in the first quarter, while prices for new properties are still flat (Vedomosti, p. 10).

France’s Vinci Construction Grands Projets might lose the contract to build the Dinamo stadium in Moscow. The client, VTB Arena Park is accusing the company of failing to meet construction deadlines. Just the cost of work to build the stadium and sports infrastructure, according to the contract, was estimated at 26 billion rubles (Vedomosti, p. 11; Kommersant, p. 13).

TRANSPORTATION

The system for collecting fees from heavy trucks using Russia’s fe deral highways still cannot get off the ground. Following several delays, the investor who will install and service the system was supposed to be selected Thursday, but the deadline for submitting bids has again been postponed, to June 30, this time due to red tape in the State Duma (Vedomosti, p. 10).

The Economic Development Ministry has drafted the document setting out the conditions for concession agreements on the development of airports in the Moscow air hub. Airport operators have managed to fend off the idea of repaying government investment in construction of runways (Vedomosti, p. 11).