Tatar-Bashkir Report: December 24, 2003

LG To Take Part In Construction Of Oil Refinery, Petrochemical Productions In Tatarstan
Companies LG International Corp. and LG Engineering and Construction signed on 20 December a protocol on intentions with the Tatar government and Tatneftekhiminvest holding, Tatneft, and Nizhnekamskneftekhim, Tatneftekhiminvest holding General Director Rafinat Yarullin told a briefing in the cabinet of ministers on 23 December. The protocol is aimed at agreeing terms of joint developing technical and economic substantiation of the construction of a refining and petrochemical complex in Tatarstan. The facility will include an oil refinery capable to process 7 million tons of oil a year on the ground of the base complex of the Tuben Kama oil refinery, an ethylene plant capable to produce 600,000 tons a year, and plants on production of polymers and polymer-made goods. Ethylene production will be a key one in the complex, Yarullin said. A special joint-stock company uniting the Tatar government, Tatneft, Nizhnekamskneftekhim, and LG will be established to work on the project, in which Tatneft will be a major shareholder, while LG will control at least 10 percent. �Vedomosti� quoted on 24 December an unidentified manager of Nizhnekamskneftekhim as saying that company�s capital will total $220 million. Company�s constituent meeting is slated for 31 December. The beginning of the construction is scheduled for 1 October. The first stage including the construction of facilities and preparation of raw materials is to be fulfilled within six years and will cost $1.3 billion, while the entire project will cost $2.5 billion. In February, LG and Nizhnekamskneftekhim plan to sign first contracts on construction of a foamed polystyrene plant capable to produce 40,000 tons a year. The project will cost $40-50 million. In November, the companies signed a cooperation protocol.

�Vedomosti� on 24 December quoted analyst with the Zenit bank Sergei Suverov as commenting that the announced project has no analogues in post-soviet Russia as no one company constructed oil refinery of such capacity and arranged so large-scale petrochemical productions. Analyst with the Russian Chemical Consulting chemical portal Amin Seidov commented that after a project on production of 600,000 tons of ethylene a year is launched, Nizhnekamskneftekhim will control some half of Russian ethylene market.

Tatneft, Russia�s sixth-largest oil company, made 6.3 billion rubles profit in 2002. Nizhnekamskneftekhim, one of largest petrochemical facilities in the Eastern Europe, had 2.1 billion rubles profit the previous year. LG International, an LG Group subdivision with the $80 billion turnover involved in exports of equipment, imports of raw materials, is one of leading manufacturers of lubricants and petrochemicals in Asia. Its profit totaled $78.7 million the previous year.

Citibank To Provide $150 Million Credit To Nizhnekamskneftekhim
Nizhnekamskneftekhim will obtain a $150 million credit for construction of polypropylene plant, �Vedomosti� reported on 23 December, citing Interfax. Nizhnekamskneftekhim is about to sign a corresponding agreement with the U.S. Citibank. The credit will be used for the purchase of equipment produced by the Italian Tecnimont and the Italian state insurance agency SACE will be one of guarantors of the credit alongside the Tatar government. Under the project on polypropylene production, Nizhnekamskneftekhim plans to launch by 2006 a plant of 120,000 tons capacity that will let it occupy 30 percent of the Russian polypropylene market. In August, Nizhnekamskneftekhim and Italy�s Basell and Tecnimont signed a corresponding trilateral memorandum (see �RFE/RL Tatar-Bashkir Report,� 5 August 2003). Analyst with the Prospekt think tank Dmitrii Tsaregorodtsev commented that no Russian petrochemical company has ever been provided such a big credit as the largest sum attracted in the sector was $50 million. Tsaregorodtsev added that Nizhnekamskneftekhim is a leader among Russian petrochemical companies in terms of issuing ruble bonds and the only company that publishes international accounts.

Russian Deputy Premier Promotes Corporations Of Russia�s Aircraft Manufacturers
Establishment of a unified corporation in Russian aircraft production sector is one of the major aims of the branch, Russian Deputy Prime Minister Boris Aleshin said in Kazan on 23 December, ITAR-TASS reported. Aleshin visited the Kazan Gorbunov aircraft plant (KAPO) and the Kazan helicopter plant. At the first stage, separate corporations will be established in aircraft and helicopter branches, while at the next stage they will merge in a single corporation, Aleshin said. He said Ulyanovsk and Kazan aircraft plants issue liners of almost the same kind, so it is necessary to optimize their capacities, while producers of aircraft engines in Moscow, Perm, Lipetsk, and Kazan may continue competing with each other. The first test flight of a Mi-38 helicopter produced by the Euromil joint venture uniting the French-German Eurocopter, the Kazan helicopter plant, and the Moscow Mil helicopter plant was shown the same day. Euromil General Director Vladimir Yablokov said the project on production of Mi-38 equipped with a Pratt&Whitney engine and Eurocopter-produced devices cost totally $500 million, $50 million of which was allocated by the Russian budget. The aircraft is expected to be certified in 2007.

Aleshin also visited the Kazan motor plant and took part in a ceremony of passing a Tu-214 liner produced at KAPO to the Dalavia airline. This is the third Kazan-produced aircraft leased by Dalavia. Finance Leasing Company General Director Yevgenii Zaritskii said the first payment for the aircraft will total $1 million, while the other $29 million will be repaid within 15 years. In 2004, Dalavia will lease another three Tu-214s, while by 2010, KAPO is to produce totally 10 liners for the Finance Leasing Company.

Compiled by Gulnara Khasanova

Political Researcher Claims Rakhimov�s Victory Demonstrated Moscow�s Weakness
Stanislav Belkovskii, general director of the non-governmental Council for national strategy-making, Moscow told Rosbalt on 23 December that in his opinion, Murtaza Rakhimov�s victory in recent presidential elections is explained by that Moscow �was afraid of destabilization� in Bashkortostan, �where currently [Rakhimov�s] family has total control over all regions.� Belkovskii added that Kremlin�s blessing to Rakhimov�s third presidential term demonstrated �inconstistency of its policies.� The political researcher emphasized that �if fair elections were provided for, Rakhimov would not succeed in becoming the republic�s president.�

Rakhimov Backs Off From His Pre-electoral Pledges To People Of Bashkortostan�
President Murtaza Rakhimov told the reporters in Ufa on 23 December that in his opinion, it would be premature to grant an official status to Tatar language in Bashkortostan, an RFE/RL Ufa correspondent reported today. Rakhimov said that the Tatar language issue was �uneasy, because later the same issue will be raise by Chuvash, Mari and Udmirt peoples [residing in the republic].� He noted that the �situation with Bashkir language has been considered for 7 years. Besides, in Rakhimov�s opinion, granting of an official status to Tatar language �would not change anything, since our main language is Russian.�

During his recent presidential campaign Rakhimov had admitted that he would consider the possibility of altering the status of Tatar language in his republic (see �RFE/RL Tatar-Bashkir Report,� 12 December 2003). Despite the fact that Tatar is spoken by some 1 million people in Bashkortostan, only Russian and Bashkir are currently recognized as state languages.

Speaking of his third inauguration ceremony to be held on 27 December, Rakhimov mentioned that there will be a limited number of official guests, including but not limited to Sverdlovsk oblast governor Eduard Rossel, deputy head of Russian presidential staff Vyacheslav Surkov and Russian presidential envoy to Volga federal district Sergei Kirienko.

�Celebrates Bashkir Constitution Anniversary
Speaking at the special meeting of State Assembly on 23 December dedicated to the 10th anniversary of the Bashkortostan�s Constitution, Murtaza Rakhimov stated his gratefulness to the people of the republic for supporting him �and the course of Bashkortostan�s development� in the recent presidential elections, an RFE/RL Ufa correspondent reported the same day. Repeating his traditional words about political and economic stability in Bashkortostan, he said that the major share of the republic�s population was attracted by the �ideas and the program of Unified Russia party,� which has 91 representatives in 119-seat Bashkir parliament.

The first Bashkir Constitution was adopted on 24 December, 1993. In 2000 it was substantially revised on the initiative of the republican authorities, which this way responded to the criticism of Russian Prosecutor-General�s Office, claiming that the fundamental law contradicted to federal regulations. Nevertheless, due to the remaining drawbacks in Bashkir Constitution it was again revised and brought in conformity with Russian laws in 2002.

City Prosecutor Assassinated In Sibay
Sibay city prosecutor Khenif Karachurin was shot dead in his own apartment on 23 December, republican media reported the same day. According to the investigators, the murder is considered to be committed by a professional hitman, possibly hired by local criminal groups, irritated by Karachurin�s professional activities. No detainees have so far been reported.

Compiled by Iskender Nurmi