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Tatar-Bashkir Report: May 4, 2000


4 May 2000
WEEKLY REVIEW FROM TATARSTAN
Tatarstan's Prime Minister In Netherlands
Tatarstan's Prime Minister, Rustam Minnikhanov, participated in the 15 (superscript: th) international conference 'Transition to the Market Economy: Current Problems in Bank and Finance Spheres' in Amsterdam, Netherlands on 1-2 May, the press service of the Ministers Cabinet reported. The conference was organized by the Russian government and State Duma, business circles of Russia and Netherlands and was devoted to the current political and economic situation in Russia, development of bank legislation, financing and collecting taxes. The Tatarstan prime minister spoke at the conference about the main directions of reforms in the system of state management and support for the real sector of economics in the republic. Minnikhanov stressed that some elements of Tatarsan's experience in state building may be used in Russia's other territorial entities and at a federal level.

KamAZ Increases Export
The KamAZ truck concern General Manager, Ivan Kostin, told a press conference about plans to bring profitability of the company up to 12-15 percent. Kostin said a more active market search will allow the company to produce this year 24,000-25,000 trucks instead of the 20,000 scheduled -- a volume which was earlier expected to be achieved in five years. Last year, KamAZ produced 14,400 trucks.

In Kostin's words, KamAZ will make efforts to publicize in other Russian regions, first of all in neighboring republics and oblasts, its experience of cooperation with Tatarstan's government in the renovation of its automobile plant. Kostin said connections with 60 of the largest enterprises of Perm oblast were made during a visit of the KamAZ delegation to the oblast last week. Udmurtia and Bashkortostan are next on the list. Payments will be in cash, though Kostin didn't exclude barter arrangements. He said KamAZ is currently holding negotiations with Sberbank on large-scale cooperation in crediting of automobile purchases.

In 1998, KamAZ exported 107 trucks while its main competitor in the Russian market, Belarussian MAZ, increased its sales in Russia by 57 percent. Last year, however, the trend changed and shares of KamAZ and MAZ sales in Russia comprised correspondingly 43 and 35 percent.

The concern's high-ranked managers plan to make several foreign visits to negotiate prospects of to export its production. General Manager of the trade-finance company, Anatoly Samarenkin, is currently on a trip to Iraq and plans to visit Libya. Kostin himself has already visited the United Arab Emirates. Kazakhstan and Azerbaijan will also be visited by KamAZ officials to negotiate projects on trucks assembly in these countries.

A KamAZ assembling plant was opened in Ethiopia on 3 May, the republican press reported. Kostin discussed with the local authorities during the opening ceremony a wide range of issues aimed at increasing cooperation, including deliveries of "Oka" small cars, and buses from Tatarstan. According to an agreement signed earlier with the KamAZ' distributor in the Eastern and Central Africa, the Mesfin Industrial Engineering Share Company, over 500 trucks will be assembled in Ethiopia in 2000. Over the last four years, KamAZ has sold a total of about 700 trucks in Africa.

KamAZ has major experience in assembling its automobiles abroad. During the Soviet period, a car assembly production plant was opened in Cuba. In the late 80's, similar production facilities were created in Hungary and Botswana, but were closed in the middle of 90's, due to losses and the low quality of automobiles. Now KamAZ officially plans to return to export deliveries of assembly sets.

During his news conference, Kostin said that Russian President-elect Vladimir Putin signed a decision on 15 April on restructuring KamAZ debts and that money from the federal budget be allocated for this purpose. As a result of this decision, KamAZ liabilities are decreased by at least $120 million. The second part of the company's debt to the European Bank for Reconstruction and Development ($70.5 million) will not be converted into company bonds, and a part of the KamAZ debt due under a Japanese credit will be also repaid. Kostin also indicated that the issue of choosing a strategic partner among foreign automobile companies is again on the agenda. He said the KamAZ stock has recently increased in value four-fold.

Kostin said significant changes should be occur in the current year in the management of the corporation. He said most likely the Directors' Board will be replaced with managing company. Most of the concern's divisions will be given juridical independence, and the concern's structure will turn closer to a holding company.

State Security Committee Concerned With Poisonous Chemicals
The Tatarstan State Security Committee considers that the large quantity of poisonous chemicals stored in the republic may become an object for interest by terrorists, as reported at a 26 April session of the republic commission on emergency situations. One of the republican district interior bodies is investigating a case on misappropriation of several tons of saltpeter ammonia, the chemical used in a December explosion of the gas pipeline in neighboring Kirov oblast. Last week, two women in Tatarstan's Chistai town were sentenced to 2 years of imprisonment conditionally for the attempted sale of strong poison gases.

Over 10,000 tons of chemical remedies for plants diseases are accumulated in Tatarstan. The most dangerous toxic substances are those which if mixed can create strong toxins similar to poison gases. There are some 160 tons of such mixtures on the republic's territory. Most of these poisonous chemicals were accumulated in 80's when pesticides were widely used in agriculture. Nikolai Borozdnov, the Deputy Environment and Nature Resources Minister, reported at the meeting that numerous violations were discovered during a check of the chemical storage conditions. There is a total of about 1200 repositories for poisonous chemicals in the republic, of which only a third meet standards. Improper protection of some repositories was also reported.

Agreement was not reached at the meeting on how the stockpiles of these poisonous chemicals can be destroyed.

Kazan Telephone Station Repays Debts and Dividends
The leading Kazan telephone company, KGTS, announced at its annual shareholders meeting on 28 April that an agreement had been signed the same day to restructure the $1.5 million's debt KGTS owes the Finnish company Nokia. KGTS, which controls over 80 percent of the telephone communications market, since 1996 has been purchasing from Nokia digital automatic telephone stations and equipment for modernization of communications. The General Manager of KGTS, Akhmat Fakhriev, told the meeting that $500,000 was paid to Nokia last year, and, according to the agreement, $1.185 million will be paid over 2000, with $200,000 of interest payments and $100,000 of main debt being forgiven. KGTS, which has an initial capital of about 4.5 million rubles, was reported to get more than 10,000 rubles' profit last year (1998 was completed with a loss of 45,000 rubles). Tatarstan's Communications Ministry is the main shareholder of KGTS which owns 40 percent of the initial capital.

Compiled by Gulnara Khasanova.

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