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Russia: Reformers Increase Pressure On Gazprom

Moscow, 11 April 1997 (RFE/RL) - Russia's revamped government has moved toward exerting more control over the country's natural gas giant, Gazprom.

First Deputy Prime Ministers Anatoly Chubais and Boris Nemtsov yesterday called for a "review" of an agreement under which Gazprom manages 35 percent of the state's shares, which the company holds in "trust." Chubais ordered the Cabinet to completely rethink the agreement, while Nemtsov called the arrangement "inexpedient."

Efforts to rein in Gazprom are part of the new Cabinet's attempt to restructure Russia's mammoth monopolies, which control the country's gas, electricity and transportation networks. The government says the monopolies are a major source of the wage and pension arrears crisis crippling the country.

The International Monetary Fund has urged the Russian government to reform monopolies and introduce competition to promote economic growth. But the politically powerful monopolies have close links with the cabinet's old guard, notably Prime Minister Viktor Chernomyrdin, who was head of Gazprom before entering the government.

The government's move towards regaining control over Gazprom, the world's largest natural gas producer, comes just a day after the company's powerful chairman Rem Vyakhirev attacked the government's plans to reform monopolies in an address to the State Duma.

Vyakhirev told deputies that foreign interests were clearly behind the new drive to restructure Russia's monopolies.

"The main source (of the pressure) is from U.S. oil and gas companies, who are working through the Ministry of Finance and the IMF," he said. Duma deputies responded to his nationalist rhetoric with a thunderous round of applause.

The Duma later passed a non-binding resolution calling on the government to halt "attempts taken under the influence and direct orders of international financial institutions to break up Gazprom and destroy the unified system of gas supply to Russian consumers."

Deputy Prime Minister Alfred Kokh, who is in charge of privatization, dismissed Vyakhirev's comments as "absurd." He told a press conference yesterday that the government needs to reassess what he called Vyakhirev's personal control over the state's stake in Gazprom. If the government takes back control over its shares in Gazprom, Vyakhirev's influence over the management of the company would be scaled back considerably.

The government has in the past indicated that restructuring Gazprom is not a top priority. Instead, it has concentrated on the national power company Unified Energy Systems (UES). Earlier this week, Nemtsov, who has been put in charge of structural reforms, announced that the government plans to increase control over the giant power utility, in which it owns a majority stake.

But the government's intention to win back control over its shares in Gazprom indicate the company is no longer off limits. With the government experiencing a revenue crunch due to the shortfall in tax collection, Gazprom is under increasing pressure to restructure and pay the $2.6 million dollars it owes in back taxes. Chubais met with Vyakhirev yesterday and said the company had been given one month to work out a reform plan.

Analysts say the fate of Gazprom is wrapped up in power struggles within the Kremlin, which pit the old guard led by Chernomyrdin against the newly-appointed reformers, led by Chubais and Nemtsov.

Andrei Piontovsky, an analyst with the Moscow Center for Strategic Studies, says Vyakhirev's vitriolic attack on the government in the Duma Wednesday must be seen as part of the waning influence of Chernomyrdin in the government. He said Vyakhirev had made a pre-emptive strike against cabinet reformers by turning to the communist-dominated Duma for support.

Other analysts speculated that Vyakhirev may have sensed that his job was on the line. As one market watcher, who asked not to be named, put it "There's a sense that Gazprom has the government in its pocket, but that is slowly changing. He (Vyakhirev) is just a bit more powerful than they (the government) want him to be."