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Russia: Nemtsov Heads Board To Increase Control Over Gazprom

Moscow, 13 May 1997 (RFE/RL) -- Adding to his portfolio of responsibilities, Russia's reformist First Deputy Prime Minister Boris Nemtsov has been appointed to head a new board of state representatives that will increase the government's control over natural gas giant Gazprom.

President Boris Yeltsin signed a decree yesterday creating the 10-member state board, which will exert greater control over the government's 40 percent stake in Gazprom. Headed by Nemtsov, the board will be composed of representatives of the State Anti-Monopoly Committee, the State Property Committee, Tax Service and the Energy and Finance Ministries.

Nemtsov, appointed in a government reshuffle in March, has been leading the new Cabinet's reform drive to restructure inefficient monopoly industries and bring more transparency to government spending. He was named last month to head Russia's powerful Fuel and Energy Ministry, and was last week slated to head a new federal commission overseeing all government agencies dealing with monopolies and competition policy.

In an interview on Russia's NTV television program last night, Nemtsov called the president's decree on Gazprom a "breakthrough, even a sensation." One of the biggest companies in the world "has finally been put under state control," he said.

Nemtsov said the state had never been able influence the management of the company, despite its controlling stake. The government's shares are currently held in "trust" by Gazprom chairman Rem Vyakhirev, who personally controls the state's interest in the company.

According to Nemtsov, the new state board would revise the "trust" agreement to reduce Vyakhirev's hold over the company. He said the Gazprom chairman would retain the right to vote under the new agreement, but his position must be coordinated with the board of state representatives.

Gazprom is also one of the largest debtors to the state budget. Vyakhirev has promised that Gazprom would pay most of its $2.6 billion in back taxes by the end of June.

Nemtsov said the government had received less than $4 million in dividends over the past two years from its 40 percent stake in Gazprom, which is believed to be the world's largest natural gas company.

"The state had totally lost control of the company," he said.

Most analysts agree that the state's dividends should have been much higher. Nemtsov gave few clues about where the remainder of the profits from the state's shares in the company went. He said only that it was up to the government to decide whether to re-invest its profits into Gazprom's operations.

While some analysts and Russian media have speculated that Vyakhirev merely pocketed the difference, others maintain that Gazprom's financial books are in a state of disarray and the funds may have been channeled into keeping the company afloat. Gazprom officials claim that the company is owed $11.7 billion from its customers, which include state organizations.

Creating transparency at Gazprom has been at the top of Nemtsov's agenda since he entered the government two months ago. Nemtsov said last night that the new state board at Gazprom would press for reduced gas prices and demand "timely" payment of its taxes. He added that the board would create "equal conditions for all producers of gas."

In the past Nemtsov has demanded that Gazprom allow other companies, notably Surgutneftegaz, use its transportation system. He has also said the development of new gas fields would be subject to competitive tenders.

Many analysts have speculated that the government's attempt to step up control over Gazprom is only in response to the company's massive tax debt and the government's budget crunch, which has caused millions of Russians to go for months without wages.