Russia 100715 Basic Political Developments

Xinhua: Half Russians have no savings for rainy day

http://english.peopledaily.com.cn/90001/90777/90853/7067006.html

09:33, July 15, 2010

About fifty percent of Russia's residents spend their wages to the last ruble and do not save for a rainy day, Moscow's RBC Daily reported on Wednesday.

Only one quarter of the Russian population have sufficient savings, while eight percent of the respondents said they have enough savings to survive for a year in case they lose a job, according to a poll conducted by the National Agency for financial research.

According to the same research conducted in fall 2009, thirty percent of respondents said they kept some money "under futon."

The residents of the bigger cities are generally more well-to- do. Eighty percent of the residents living in the Russian cities with population over one million make savings.

Paradoxically, by the end of 2009 the amount of savings in the banks in Russia rose 26.7 percent against 2008 and exceeded the equivalent of 261 billion U.S. dollars by May 2010.

According to the RBC Daily, nearly 50 percent of all savings have been accumulated in Russia's biggest financial institution, Sberbank.

Source: Xinhua

Business, Energy or Environmental regulations or discussions

Bloomberg: Novolipetsk, Veropharm, MTS, Rosneft: Russian Equity Preview

http://www.businessweek.com/news/2010-07-15/novolipetsk-veropharm-mts-rosneft-russian-equity-preview.html
July 15, 2010, 1:37 AM EDT

July 15 (Bloomberg) -- The following companies may have unusual price changes in Russian trading. Stock symbols are in parentheses and share prices are from the previous close.

Russia’s ruble-based Micex Index dropped 0.7 percent to 1,358.60, its first loss in four days. The dollar-denominated RTS Index rose 0.2 percent to 1,412.14.

OAO Novolipetsk Steel (NLMK RX): Russia’s largest steelmaker by market value is scheduled to release a trading update. Novolipetsk fell 0.8 percent to 88 rubles.

OAO Veropharm (VFRM RX): The drugmaker unit of OAO Pharmacy Chain 36.6 is scheduled to report first-quarter earnings. Veropharm added 0.1 percent to 1,001.15 rubles.

OAO Mobile TeleSystems (MTSI RX): Russia’s largest mobile- phone company’s offer for OAO Comstar United TeleSystems is “unfair” and should be rejected, Prosperity Capital and East Capital, the two largest managers of Russia-focused funds, said. Moscow-based MTS, which owns about 62 percent of Comstar, dropped 1.2 percent to 239.73 rubles.

OAO Rosneft (ROSN RX): Crude oil rose to a two-week high after a U.S. government report showed that inventories declined three times as much as expected last week and refineries bolstered operating rates. Russia’s largest oil producer fell 1 percent to 192.91 rubles.

--Editor: Glenn J. Kalinoski

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at [e-mail]

To contact the editor responsible for this story: Will Kennedy at [e-mail]

Reuters: Russian grid firm says pricing reform on track

http://af.reuters.com/article/energyOilNews/idAFLDE66D1MF20100714
Wed Jul 14, 2010 4:12pm GMT

* Economy Minister's statement rattled investors

* Grid holding CEO says no changes to RAB tariffs move

* Analysts welcome CEO statement

By Anastasia Lyrchikova and Ben Judah

MOSCOW, July 14 (Reuters) - Russian state-controlled regional grid holding firm MRSK (MRKH.MM) sought on Wednesday to calm investors' fears over possible changes to a grid pricing reform plan flagged by the economy minister.

Dozens of regional grid firms which require about $100 billion for equipment upgrades are currently moving to the Regulatory Asset Base (RAB) system, which will allow them to recover investment costs and make profit.

Under the system grid tariffs were due to rise up to 40 percent in some areas but Economy Minister Elvira Nabiullina said last month the government may cap tariff growth for the Federal Grid Company FSK and local grids by 15 percent in 2011.

Analysts have said Nabiullina's statement rattled investors, making them "fear the worst".

"I think that for those decisions that have already been taken changes are unlikely because loans have already been raised, business plans written and this (the changes) will be taken seriously," MRSK CEO Nikolai Shvets told reporters.

In 2010 MRSK is seeking about 30 billion roubles ($981.3 million) in loans and 12 billion roubles in bonds. The company also plans an additional share issue worth 8 billion roubles which the state is expected to buy. The RAB system, which had been implemented in the European utilities sector in the 1990s, was piloted in nine Russian regions in 2009.

All Russian grid firms are due to move to the system, which links tariffs to capital investment and cost of capital, starting next year.

The government, which owns 55 percent of MRSK, plans to merge MRSK's assets into a single entity once the move is completed. MRSK also flagged plans to create a joint venture with France's utility firm EDF (EDF.PA).

Gas firm Gazprom (GAZP.MM) is the largest minority shareholder in MRSK with 10 percent.

The Russian power sector is chronically underinvested and is in dire need of investment to update Soviet-era equipement and improve safety conditions. Analysts estimate losses in the Russian grid at 8.7 percent.

"The (MRSK CEO) comments show that the government is still committed to the new regulatory regime and this is good for the market," said Deutsche Bank analyst Dmitry Bulgakov at told Reuters. (Reporting by Ben Judah and Anastasia Lyrchikova; editing by Keiron Henderson)

DJ: Novolipetsk 2Q Steel Output 2.9 M Tons, Sees Price Drop In 3Q

http://www.automatedtrader.net/real-time-dow-jones/5146/novolipetsk-2q-steel-output-29-m-tons--sees-price-drop-in-3q

First Published Thursday, 15 July 2010 08:03 am - © 2010 Dow Jones

MOSCOW -(Dow Jones)- Russian steel producer OAO Novolipetsk Steel (NLMK.RS), or NLMK, Thursday said it produced 2.90 million metric tons of crude steel in the second quarter of 2010, a 26.5% increase from the same period of 2009.

The company said since mid-May an increase in the supply of steel products coupled with unstable demand from trading companies and end-consumers primarily in a number of export markets resulted in a price softening.

Russia's fourth-biggest steel producer by volume, said it expects its sales volumes to be comparable with that of the second quarter, but at prices between 10% and 15% lower.

Novolipetsk forecasts second-quarter revenue to have grown to about $2.2 billion, and earnings before interest, taxes, deprecation and amortization, or Ebitda, margin to be between 25% and 30%.

Novolipetsk said, that in the second quarter its high value-added product sales increased, with the largest growth accounted for by thick plates, color-coated and electrical steel.

The company said output of dynamo steel was up more than twofold while for transformer steel its was up 71.0%. Both products are used to make electricity plants and are priced at a premium.

-By Alexander Kolyandr, Dow Jones Newswires; [phone]; [e-mail]

July 15, 2010 10:14