At the end of March Prime Minister Vladimir Putin visited the AvtoVAZ car plant and promised it government support in the amount of $3 billion. It was a gesture of unheard-of largesse. When Vladimir Putin was planning his visit to Togliatti he is said to have intended to shell out just 10 billion roubles, and then not in hard cash but in state guarantees of AvtoVAZ future loans (for an enterprise that reports losses obtaining loans in times of crisis is highly problematic).
However, the Prime Minister was given a hearty welcome, he liked everything he saw and as an all-powerful man he promised more. Indeed, $3 billion would cover not only the plant's debts to its suppliers but pay for a renewal of the range of models, which has long been on the agenda.
Vladimir Putin's promise was immediately perceived as actual transfer of money to AvtoVAZ accounts where it would be lost. The first comment came from President Dmitry Medvedev who, even though he was away in London, warned that it was inadmissible to spend government budget money to pay bonuses to top managers. The President's words were not addressed to anyone specifically, but AvtoVAZ promptly issued a press release announcing that bonuses had been cancelled.
But it was not of much avail. The Audit Chamber promised to look into how AvtoVAZ would use the budget money before October 2009 (the plant will have to make do the sum until 2012). Finance Minister Alexei Kudrin suggested that the money be converted into a controlling stake in the plant's equity. But the Prosecutor General's Office was quicker off the mark: it has already demanded from AvtoVAZ a report on how it has used the budget money only to be told that the money had not arrived yet.
It is not surprising that the Government pays close attention to how AvtoVAZ will use its yet-to-be-delivered support: everybody remembers that the plant got repeated injections of government money before the crisis as a matter of special privilege, but the plant has stubbornly continued to produce the same obsolete models. Now it will be given another $3 billion.
Perhaps the public need not feel unduly concerned: there are fewer guarantees that AvtoVAZ will get the promised money than at any other time. Beginning from the autumn the plant has been begging government banks (VTB and Sberbank) for $1 billion to pay back its debts, but without success. And then Vladimir Putin comes and planks down $3 billion, with 90 billion roubles to come from the same state-owned banks which only yesterday refused to give money. Nobody is interested if the banks have such quotas for a single borrower, whether AvtoVAZ suppliers will be still around when money is supposed to materialise and how much the plant already owes them. So, the people who are familiar with the situation at the plant say that Vladimir Putin's promise belongs to the category of such promises as "you start frying and don't worry, I'll get you the potatoes later."
By our amused special business correspondent Dmitry Belikov
