Kommersant: "Government to invest in UVZ"
The Russian government says it will invest 64 billion roubles in UralVagonZavod, up 11 billion from what Prime Minister Vladimir Putin promised in June. The huge sum will allow the plant to develop its railway car business and increase the output of agricultural equipment, as well as to modernise the production of military hardware. Part of the money will be provided under a Russian defence industry development programme, which, however, has yet to be adopted.
On Friday, Vladimir Putin said in Nizhny Tagil that the federal budget would provide 64 billion roubles to develop the research and production corporation UralVagonZavod, which is 100% owned by the Federal Agency for State Property Management. The prime minister's press secretary Dmitry Peskov told Kommersant that the financing would be provided for nine years and that its mechanisms were still being worked out. However, the bulk of the money would come under the Defence Industry Development Federal Targeted Programme for 2011-2020. A UVZ spokesperson declined to comment, saying they did not have information about how the money would be distributed.
Vladimir Putin already said at the end of June that the government was "considering a comprehensive programme of UVZ's modernisation that totals about 55 billion roubles" and it should be adopted towards the year's end. However, judging by the company's financial statement for the fourth quarter of 2010, it intends to appropriate 41.15 billion roubles for production modernisation and development. Out of this sum, 10.4 billion will be used to reconstruct a metallurgical plant, 4.4 billion to modernise a car assembly plant, and 14.2 billion to overhaul a mechanical engineering plant. In May, it was announced that 13 billion roubles will go to modernise the Chelyabinsk Tractor Plant, of which UVZ owns 80%. Last week, the corporation's CEO Oleg Sienko announced its plans to invest about $3 billion roubles in the setup of a new car casting facility in Nizhny Tagil. The construction is scheduled to begin in 2012. As much as 80% of the sum will be provided by the state and 20% by the plant itself, Sienko said. The new facility will manufacture 185,000 tonnes of car casting a year, and will also produce special equipment. At the international weapons show Nizhny Tagil 2011 last Friday, Sberbank, Gazprombank, VTB and the Bank of Moscow announced that they intended to invest in the modernisation of the corporation's production facilities.
However, the defence industry targeted programme has yet to be adopted. In May, Russian President Dmitry Medvedev demanded that final proposals for it should be submitted "as soon as possible." A spokesperson for the Ministry of Industry and Trade told Kommersant that the programme was "being coordinated by government agencies." On July 21, Dmitry Medvedev signed amendments to the federal budget for 2011, which redistribute budget investment with consideration of contributions to the authorised capital of joint-stock companies that will receive government support under the targeted programme. Deputy Prime Minister Sergei Ivanov said at a meeting devoted to the defence industry's development at the rocket plant in Votkinsk last spring that the financing of the programme had been "finally agreed upon" and would "total 3 trillion roubles." The budget will provide 60% of the sum, and companies themselves will cough up the rest, he said.
CEO of the Chelyabinsk Tractor Plant Semyon Mlodik says the promised government financing will be used not only to develop the main plant in Nizhny Tagil, but also to modernise other UVZ enterprises, notably ChTZ and the corporation's suppliers. "We hope that this financing will allow us to develop both specialised and civil production, given that all of the corporation's basic technologies are dual-purpose," he said. Kommersant's sources in the industry said the money would first of all go to develop UVZ's military division, i.e. to modernise the production of tanks and armoured vehicles. Part of the sum may be invested in the corporation's authorised capital, and the rest will be provided for individual projects within the UVZ large-scale modernisation programme, they believe.
"Most likely, the money will be transferred as advance payments for specific projects; it will be used to renew the enterprises' fixed assets and to develop research," says Vladimir Bespalov, an analyst at VTB Capital. The huge sum will support not only UVZ's defence division, but also its car production businesses, since almost all of its products, both military and civil, can be manufactured on the same equipment.
By Yegor Popov
