Russian Economy General News: #6

AlfaT8 wrote:kvs and sepheronx, what are your opinions on the possibility of the BitRuble being used as a form of low interest "fund" backed by the state and not the CBR, is this feasible or do i just not know what i am talking about.

kvs wrote:1) Russia's domestic car industry is a victim of the CBR's loan-shark interest rates which are now 10.5% (a whopping
drop from 11% and 5% above the current inflation rate).  

Austin wrote:Nice Round Up Summary of SPIEF , You should also write about the discussion CBR head , Finance Minister and all other people had at SPIEF that kind of discussion on where the economy stands and where it will lead to and what needs to be done as important as the deals signed

Austin wrote:

kvs wrote:1) Russia's domestic car industry is a victim of the CBR's loan-shark interest rates which are now 10.5% (a whopping
drop from 11% and 5% above the current inflation rate).  

CBR is trying to to Save the Savers and Pensioners , Basically today they have more money in hand over and above the inflation because of high interest rates and some of the negative effects of Sanctions on Saving/Pension class is nullified , also an incentive to save Money in Roubles for the Russians.

West does have low interest rates but their Savings are effectively dead and all they have are piles of  debt and now moving to negitive interest rates means people who has saved their money working in 80 , 90 has effectively lost all the money.

As Greenspan has said in his interview a Good Balance between Saving Class and Low interest rate for Business Class is to keep Interest rate at 4-5 % long term , I think CBR would come to that figure in 4-5 years time.

Eventually the Putin government will have to come with a  seperate package for Business loans offering at 4-5 % and General Interest rates that can gradually match upto Business Loans interest at 4-5 %

I hate to say this but Russian CBR are prudent and are erring on the conservative side but the government has done a poor job of supporting the business class with special loans mechanism , Cant blame the CBR here.

I am pleased that we were able to support the president and our country in the documents that we signed," - said CEO of the company, Igor Sechin

MOSCOW, June 21. / TASS /. "Rosneft" has signed at the recent St. Petersburg International Economic Forum (SPIEF) contracts worth a total of $ 44-45 billion, he said in an interview to television channel "Russia-24" CEO Igor Sechin company.

"For our company to participate in SPIEF is held under the auspices of our President, -. It is an honor I am pleased that we were able to support the president and our country in the documents that we signed," - he said.

"I must say that the estimates made are preliminary and far beyond the settlements, announced at the forum Our company signed documents for $ 44-45 bln." - Said Sechin.

On the role of Russia in the oil and gas market

The head of "Rosneft" considers that the role of Russia in the oil and gas market will rise.

"Of course, it (the role of Russia in the oil and gas market - Ed..) Will be increased because, as I said, look:. Resource base - one of the best in the world, the technology is there, themselves produce 30-stage hydraulic fracturing, have mastered the technology . Recently, it was difficult to say, "- said Sechin, adding that this will help to attract and finance, and long-term export contracts.

On increasing oil production

According to Sechin, "Rosneft" is going to increase oil production this year.

"We are working on that every day I think that, given the capacity of drilling we will give a small plus at the end of the year in relation to last year.", - He said.

On the preservation of dividend payments

According to him, "Rosneft" is ready for dialogue with the government to maintain dividend payments at 35% of the IFRS.

Under-funding of the oil industry could lead to the emergence of a trend to reduce the effectiveness of its work, said Sechin.

About reduction of taxes

The economic situation of the oil industry becomes severe, you need to reduce taxes, said "Rosneft" top manager.

"Well, let's say, a lot of talk about big tax maneuver he expects for the price of $ 100. (A barrel - Ed..), But we have prices below $ 50 two years in a row, but the adjustment when the same has not come by itself Ministry of Finance recognized.. - yes, we counted up to $ 100 and further that if $ 50 -.?. is not $ 100, then we must take action to correct these approaches we understand the problems with the budget, we actively participate and contribute to the solution of these problems, but still. would like to note that the economic situation of the sector is becoming more difficult, especially in the processing is necessary to look for additional incentives, of course, "-. Sechin said.

He noted that the need to reduce the tax burden on the oil industry.

Sechin is also confident that the underfunding of the sector may cause the trend to reduce the effectiveness of its work. "It seems to me here - if we are talking about the fact that all have to pay 25% of net profit under IFRS - we all have to pay, and not to come up with 10% of the RAS or 50% of the RAS -. Means, let us all pay an equal the level of dividend payments, "- said Sechin.

The CEO said that "Rosneft" would like to see other companies have provided significant support to the state budget.

"And the tax and dividend burden on us - big enough and our auditors accurately counted, that each sold a barrel of oil, we pay at current prices of $ 25 per barrel of fiscal exemptions, but, unfortunately, we were the only such company in this country.. nobody so much does not pay. For us it is a great honor, of course, but given the fact that the tax burden on the company is significant, we would like to see we are not alone supported the budget and drew attention to other sources, including . to market the company, successfully working I think it would be fair and would support and our enthusiasm, "- said Sechin.
On the sale of the package

Sale of "Rosneft" package on the stock exchange would be extremely inefficient and can lead to the breakdown of sales opportunities, Sechin said.

"In the context of price volatility, in terms of political instability in the capital raising market under shortfalls associated with various causes, public sale, stock sale will be extremely inefficient, and perhaps even lead to a breakdown of sales opportunities," - he said he.
About borrowing

"Rosneft" plans to borrow this year, said Igor Sechin.

"We do a lot of attracting attracts mainly in the framework of project financing for the implementation of those projects which have economic viability We will involve, of course.." - He said.

On the purchase of a stake in Essar Oil Refinery

"Rosneft" expects that the completion of the deal to buy 49% stake in Essar Oil refinery in India will be held by October. "We have the main documents signed, go through various procedures, bilateral, obtain the necessary permits and are working to complete the deal here. (In the completion of the transaction - Ed.). Is not only up to us to think that by October about complete.", - He said, Sechin.

The head of "Rosneft" did not mention the amount of the transaction to complete the signing of documents.

"In general, we are talking not only about 49% of the refinery, we have included in the transaction perimeter of the second phase of the plant, it all requires a little clarification. In general, all major decisions were held, including on the issue of evaluation. Just have additional assets that we have included ", - he said.
In July 2015, "Rosneft" and the shareholders of Essar signed the basic conditions for entering the Russian company in the authorized capital of Essar Oil refinery in the city of Vadinar with a share of up to 49%.

"Rosneft" and Essar Oil have also signed a long-term contract for the supply of crude oil to India. The contract includes the supply of a total of 100 million tons of oil for 10 years. It was noted that "Rosneft" will start oil supplies to the refinery Essar refinery after entering the capital. Refinery capacity is currently 20 million tons per year. The parties intend to increase the capacity of the plant, bringing the annual volume of oil refining to the level of 45 million tonnes by 2020.

The transaction perimeter includes also retail network of 1.6 thousand. Gas station on the territory of India. The party plans to bring the total number of petrol stations up to 5 thousand. For the next two years.

Essar Oil - a division of diversified Essar Group, owns the second largest private oil refinery in the city of Vadinar India.

The deal with a consortium of Indian companies

The amount of the transaction with a consortium of Indian companies - Oil India, Indian Oil and Bharat Petro Resources - for the sale of 23.9% stake in "Vankorneft" is more than $ 2 billion.

"It is true (value of more than $ 2 billion - ed.). Indeed so However, we managed to convince partners that the fundamental value of the mining project does not depend on the current situation, and even improve the original proposal What I would like to thank... our partners who trust us and who understand the value of our resource base, and now have the opportunity to participate in our work ", - said Sechin.

According to him, the Indian partners are convinced that "all this work will be aimed at including in the energy security of India."

"The fact that the Indian partners are increasing their share in the capital of" Vankorneft "allows, in turn, we have to take a decision on the development of East Siberian cluster We will develop oil production in this region and to organize new projects." - Said Sechin.

"Rosneft" and a consortium of Indian companies - Oil India, Indian Oil and Bharat Petro Resources - within past St.Petersburg International Economic Forum signed a purchase contract - the sale of 23.9% shares of "Vankorneft 'and shareholders' agreement.

After closing, the consortium will join the board of directors "Vankorneft". At the same time, "Rosneft" will retain a majority stake in the project, the majority of the board of directors, control over the operations, as well as complete control over common infrastructure cluster (including pipeline Vankor - Purpe).

Vankor field is located in the north of Eastern Siberia in Turukhansk district of the Krasnoyarsk Territory, 142 km from the town of Igarka. 2P reserves of hydrocarbons in accordance with PRMS classification at January 1, 2016 amount to 265 million tons of oil and condensate and 88 billion cubic meters. m. gas.

In 2015, at the Vankor field produced 22 million tons of oil and 8.71 billion. Cubic meters of gas.

On the Venezuelan project

"Rosneft" will be sure to implement the project on gas production offshore Venezuela and build a LNG plant, Sechin said.

"We will definitely implement large gas production project offshore Venezuela and it will definitely put a liquefaction plant and I think that will be a key market, of course, Europe for us.." - He said.

Earlier, in an interview with Tass head of Venezuela's state oil company PDVSA Eulogio del Pino said that "Rosneft" and PDVSA in July to sign an agreement on joint gas production at fields Patao and Mejillones.

"Rosneft" and PDVSA signed a memorandum of intent to establish a joint venture on the St. Petersburg International Economic Forum in 2015. The joint venture plans to produce at two sites 25 million cubic meters of gas per day.

The gas produced will be supplied to the region by pipeline or in liquefied form. The project involves the construction of an LNG plant. "Rosneft" plans to complete a feasibility study of the project before signing in July.

The second is young startups, paudie the first prototypes in the garage. They are forced to work in conditions of tough competition with the global market, is almost always less effective than the manufacturer of China, and often live in conditions of choice to go there, to get a job in any state holding company or continue to try to do something independently at home.

To support the activities of start-UPS in Russia now implemented multiple programs and there are foundations like SKOLKOVO or FIDI, parks and institutions such as the Innopolis trying to copy Silicon valley. (Fun fact: all the speakers Cipro called it Silicone).
However, to start is not a problem. The problems start when the company will last a few years, get some results, suitable for implementation in the domestic industry or to exit to the world market. Here it is waiting for young Russian studionow a big hole between “we made a prototype” to “we're ready to order you have a large party.” To overcome it need any serious investments, which are not always able to provide the Russian market, a major order from state-owned enterprises. But on large state-owned enterprises for young technicians look dismissive and almost always ready to order the technology abroad, as there is all established and ready for serial run, often with higher quality.

The solution here, in General are obvious: large government contracts, tax incentives, simplified procedures for the approval, licensing and reporting. Do that wherever they want to bring their large technology manufacturers in China that in the United States. Even here the examples are not far to seek - rocket company SpaceX would never have achieved such rapid success without a multimillion-dollar state grants and contracts for a few billion.

But this kind of logic in Russia is in conflict with the antitrust laws, procurement practices, and is contrary to the objectives of state enterprises. State-owned companies in their goal to fulfil the state order or international contracts, and its accountability to shareholders. Feeding some DIY in their purpose is not. As a result, the young startup has a chance to overcome the failure of the prototype to the series only if you are creating a really unique know-how which manufacturers simply can not refuse. But, as a rule, such a development will be able to easily find investments to access external market, and to understand the Russian, which is 2% of the world, will no longer make sense.

All these issues have been voiced on the Cipro, but in these moments of decision makers in the hall was not so incomprehensible perspective of all these discussions. In any case, glad that there is an understanding of the problem, and this is the first step to solving it.

Viktor wrote:Nice  

Ulyukayev proposed to raise the retirement age after 2018

sepheronx wrote:Interesting news. So speculators can attack Ruble based upon oil prices now.

kvs wrote:1) Russia's domestic car industry is a victim of the CBR's loan-shark interest rates which are now 10.5% (a whopping
drop from 11% and 5% above the current inflation rate).  

Austin wrote:
Eventually the Putin government will have to come with a  seperate package for Business loans offering at 4-5 % and General Interest rates that can gradually match upto Business Loans interest at 4-5 %

Austin wrote:
I hate to say this but Russian CBR are prudent and are erring on the conservative side but the government has done a poor job of supporting the business class with special loans mechanism , Cant blame the CBR here.

kvs wrote:

GunshipDemocracy wrote:

Austin wrote:

kvs wrote:1) Russia's domestic car industry is a victim of the CBR's loan-shark interest rates which are now 10.5% (a whopping
drop from 11% and 5% above the current inflation rate).  

CBR is trying to to Save the Savers and Pensioners , Basically today they have more money in hand over and above the inflation because of high interest rates and some of the negative effects of Sanctions on Saving/Pension class is nullified , also an incentive to save Money in Roubles for the Russians.

That is some peculiar generosity there.  Do you think pensioners get 11% on their bank rubles?  

http://russia.deposits.org/fixed-term-deposits.html

So 1 month term deposit gets you 6% interest.  A regular savings account will have lower interest than any term deposit.  Banks don't want
you to take out money on short notice.   So savers and pensioners are actually losing value from their savings since the interest they get
from banks is less than the current inflation rate (between 6% and 7%).

higurashihougi wrote:http://www.kommersant.ru/doc/3025002

ВЦИОМ claimed that:

42% of Russian households think that their financial condition is not better.

22% Russian think that their salary is reduced, 19% say that their salary are unpaid.

40% think negatively about labor market, 41% say they need goverment help, 38% say that they have to use cheap alternatives of consuming goods.

====

Personally I think these difficulties are temporary, just like when playing AoE you have to save money and reduce spending to move to next Age     .

Although almost half of respondents said the deterioration of their financial situation, the VTsIOM survey does not include data on the number of other responses. Rosstat also does not record significant fluctuations in the level of poverty in the first quarter - according to the agency, this rate seasonally adjusted increased from 15.9% to 15.7% of the population. Earlier expert CMASF Igor Polyakov explained by the fact that per capita income growth outstripped growth of a living wage, and this has allowed the agency to conclude a formal reduction of the number of poor. Note that after a few months due to a seasonal fall in prices on the share of subjective poor products can also be reduced.