St. Petersburg International Economic Forum in Brief

St. Petersburg International Economic Forum in Brief

Published: June 20, 2013 (Issue # 1764)

Rosneft to Supply Additional Oil to China

Rosneft will sign an agreement to supply additional oil to China, Energy Minister Alexander Novak said.

The minister said the government will have the final word on the issue of increasing oil supplies to China via the Eastern Siberia-Pacific Ocean pipeline, as well as Rosneft’s plans to build a petrochemical plant in the Primorsky region to process 30 million tons of oil, Interfax reported.

The agreement forsees the supply of an additional 800,000 tons of oil to China in 2013 and two million tons the next year.

Rosneft said it would be able to cope with the increase and provide the appropriate production volume. (SPT)

Shipbuilders Seek Foreign Partner

The government, prompted by the inability of Russian shipbuilders to produce ships on time, is looking into finding a strategic foreign partner for the Russian shipbuilding industry, Deputy Prime Minister Dmitry Rogozin said.

“It is an unacceptable situation. The country has lost a lot of money building ships in France, Germany, Finland, Korea and so on,” he said.

A search is already underway to find investors, with the government and the United Shipbuilding Corporation discussing how best to enter into negotiations with potential suitors.

According to Rogozin, any such partner should be willing to transfer technology to Russia or else invest money in the creation of a new shipyard. (SPT)

Russian Railways to Sell Aeroexpress

Russian Railways is planning to sell its share in Aeroexpress by the end of this year, company vice president Valery Reshetnikov told journalists.

Russian Railways currently holds 50 percent of shares in Aeroexpress. Reshetnikov had previously said the company would sell only half of its stake, Interfax reported.

Olga Dergounova, head of the Federal Property Agency, said an auction or a tender would be held for the Aeroexpress shares.

“We believe that the method of competitive negotiation will maximize value,” she said.

Andrei Bokarev, one of the owners of Aeroexpress, estimated the value of a 50 percent share at 600 million to 700 million rubles (about $18 million to $20 million). (SPT)

Sistema Mulls Buying Investlesprom

Sistema may buy forestry products group Investlesprom from VTB for over $500 million, Sistema’s chief owner Vladimir Yevtushenkov said at the St. Petersburg International Economic Forum, Interfax reported. (SPT)

RusAl, Israeli Firm to Produce Car Parts

RusAl and Israeli company Omen High Pressure Die Casting have signed a memorandum to produce automotive components in a $12 million joint venture, Interfax reported. (SPT)

Privatization of Rostelecom Not Up For Discussion

Communications and Mass Media Minister Yury Nikiforov said that reforms of Svyazinvest and Rostelecom are being brought to a close at the present time, but that privatization of the latter company is not on the table, Interfax reported. (SPT)

VTB Not Planning to Move Into Foreign Loan Market

VTB does not plan to follow the Finance Ministry and move into the foreign loan market if the ministry decides to place sovereign eurobonds in July, the deputy CEO of the bank, Herbert Moos, told Interfax.

“There is currently no need,” he said. “There is a huge excess in currency liquidity.”

Earlier, it was reported that a number of partly state-owned issuers were studying the foreign borrowing market, in particular Sberbank and Vnesheconombank.

Vnesheconombank’s chairman, Vladimir Dmitriyev, said on Thursday that his bank would make a move into the foreign borrowing market in the near future. (SPT)

Government to Keep Personal Income Tax Rates Flat

The government will not revise the personal income tax schedule in the foreseeable future, Finance Minister Anton Siluanov said Thursday at the St. Petersburg International Economic Forum.

“Tax policy objectives do not provide for a change [of the tax schedule]; the goal is not to change it in the middle run,” Siluanov said.

The government is not planning the introduction of a progressive schedule for personal income tax, the minister said, although he did not rule out that it could be done at some point in the future.

He recalled that keeping the personal income tax rate flat has been the fundamental policy shared by the Finance Ministry, the government and the president.

“It is one of our main achievements, one of the advantages of the Russian tax system, [to have] a low rate of taxation for personal incomes,” Siluanov said.

Raising income taxes now would be counterproductive, he said, citing the business community’s reaction to a recent decision to raise employers’ insurance payments, which resulted in a higher share of unofficial “gray” salaries on the job market and reduction of tax revenues.

The government has since lowered the rates in the hopes of bringing more employees in “from the shadows.”

Siluanov stressed that the issue of fairness in taxation stipulating higher taxes for wealthy people and a progressive tax scale is addressed through additional taxation for real estate property and purchases of luxury goods.

The minister also hinted that the government may revisit the country’s tax system “in five years,” Interfax reported. (SPT)

Fall in Gas Tariff Growth Rates Could Lead to $1.6Bln Loss for Budget

Russia’s budget could lose about 52 billion rubles ($1.6 billion) in three years if the growth rate of gas tariffs falls from 15 to 5 percent, Finance Minister Anton Siluanov said.

If this decrease does happen, the formula for calculating the mineral extraction tax rate will need to be revised or loses will follow, the minister said.

He added that specialists will look for a solution to this problem during the discussion of the second draft of the bill that determines the tax rate, Interfax reported.

The bill was drafted by the ministry at the end of May.

The new rates have been discussed at government level and will be submitted to the State Duma for approval during the autumn session.

The new mineral extraction tax rates are expected to be implemented beginning Jan. 1, 2014. (SPT)

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