Pikalyovo Factory Is Bankrupt

Pikalyovo Factory Is Bankrupt

Published: May 16, 2012 (Issue # 1708)

Three years after it last made the headlines, the town of Pikalyovo in the LenOblast is back in the news.

The St. Petersburg and Leningrad Oblast Arbitration Court approved the claim of VestPromResurs company last week, recognizing the BaselCement Pikalyovo plant as officially bankrupt, RIA Novosti news agency reported. 

The Thirteenth Arbitrary Court of Appeal came to the same conclusion that the first court that heard the case on March 16, 2012 did, saying BaselCement Pikalyovo owes VestPromResurs 2.33 million rubles ($77,000) for deliveries made starting Dec. 29, 2007.

BaselCement’s holding company, however, said it would not let the company go bankrupt and would pay the debt in full by the court hearing, Kommersant daily reported.

The hearing is scheduled for June 19.

Pikalyovo, one of Russia’s single-industry cities, is home to three plants, all of which directly depend on the others to continue production.

Vyacheslav Shmatov, general director of the holding company, said the company was in so much debt because it had still not received the compensation it was promised for the high cost of transporting cargo by rail from the Leningrad Oblast budget.

“Despite Vladimir Putin’s statement and the agreement signed with the Leningrad Oblast in March 2012, the sum of 421 million rubles ($13.9 million) allocated for the company by the Russian Finance Ministry has not yet been received,” Shmatov said, Kommersant reported.

“In this situation we have had to prioritize the payments we owe our employees, primary suppliers and Pikalyovo ground partners,” he said.

BaselCement Pikalyovo is one in a chain of companies that manufactures elements used in the production of sodium carbonate and potassium carbonate.

BaselCement Pikalyovo produces alum earth from the nepheline concentrate that its gets from the company Apatit. After processing the alum earth, nepheline slime is produced and the Basel plant then sends the slime to the Pikalyovo Cement company to make cement and a carbon solution, which are then sent to the Metakhim plant to produce sodium carbonate and potassium carbonate.

BaselCement Pikalyovo transports nepheline concentrate from the town of Apatity in the Murmansk region to the Pikalyovo station by rail. In 2009, Putin declared that the companies involved in the Pikalyovo chain would get an annual 421 million-ruble ($13.8 million) stipend for the money spent on railway cargo shipments. In early 2012 it was decided that the direct subsidies granted to BaselCement Pikalyovo would be taken from the Leningrad Oblast budget, Kommersant reported.

The situation unfolding in Pikalyovo became a prominent case in Russia during the global economic crisis. In 2009, plant workers blocked a federal highway in order to draw attention to their plight, as BaselCement had not paid them for months and had been closed at the beginning of the year. Then-prime minister Vladimir Putin visited the town and famously threw a pen at oligarch Oleg Deripaska, who owns the business, telling him to pay workers everything he owed them.

Up until that time, a total of 50 lawsuits had been filed against BaselCement. Most of those who filed lawsuits were business owners seeking to recoup the debts incurred before Deripaska shut down the factory.

At Putin’s prompting, the BaselCement factory then reopened.

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