Kremlin starts dividing budget between Russian billionaires
The Russian government has officially initiated a process of allocating billions of rubles of assistance to major businesses as part of several national projects that are meant to bring the economy’s growth rate up to world levels, fight poverty and bring about a technological leap.
The first on the list of billionaires, officials and state corporation directors is Novatek owner Leonid Mikhelson, the wealthiest Russian with an estimated net worth of $24 billion according to Forbes.
Russian Prime Minister Dmitry Medvedev has signed a decree to allocate 103.6 billion rubles (around $1.6 billion) from the federal budget to the construction of the Utrenny terminal in the Gulf of Ob for Novatek’s liquefied gas project “Arctic 2”.
Taxpayer funds will cover roughly two thirds of the total construction cost, which is estimated at 144.2 billion rubles.
The 3.8 billion first stage of the project should be completed this year. Work is being done to build an approach channel for icebreakers and cargo vessels to use when entering the port of Sabetta, part of which will be used for the Utrenny terminal.
Novatek also wishes to borrow another $5 billion (around 317 billion rubles) at a reduced interest rate to fund the construction of gas carriers for the Arctic LNG 2 project.
The vessels will be built at the Zvezda wharf, which is managed by a consortium between Rosneft and Gazprombank. Since both companies are under international sanctions, they are struggling to obtain western financing.
According to Novatek, the funds will have to be allocated either directly from the budget or from Russia’s National Wealth Fund (NWF). The NWF could make a deposit in Vnesheconombank, which will in turn provide the company with cheap loans.
Novatek’s proposal, which arrived at the Kremlin in the form of a letter from Mikhelson, is now being considered at Medvedev’s behest, reports the newspaper Kommersant citing sources familiar with the situation.
Igor Sechin is also on the waiting list for government funds, having requested 2.6 trillion rubles in concessions for developing the Arctic. Deputy Prime Minister Yury Borisov, who supervises the military-industrial complex, has also proposed that 700 billion rubles worth of loans to defense plants be written off. Billionaire Arkady Rotenberg is expecting 140 billion rubles to build a bridge across the Volga.
The state gas monopoly Gazprom could require $14 billion to build Russia’s largest gas processing plant in the Amur province. The plant, which Gazprom hopes to launch in 2021, was going to be financed through a loan from China. However, negotiations have fallen through with the China Development Bank, which is administered by China’s cabinet of ministers and is directly under the State Council, China’s chief administrative authority.
Over the next 6 years, the Russian government plans to spend a total of 25 trillion rubles (around $383 billion) on national projects.