Business in Brief

FSC 'Needs Teeth'

MOSCOW (Bloomberg) -- The country's securities market watchdog has too little authority and too few employees to protect people who invest in any of the 100,000 companies under its jurisdiction, the World Bank said Wednesday.

The Federal Securities Commission, which has never charged anyone with insider trading, lacks enough legal power to investigate issuers, and fines for breaking laws on securities and joint-stock companies are low, said Julian Schweitzer, the bank's country director for Russia.

"The enforcement capacity of the commission remains unsatisfactory," Schweitzer said at a news conference.

Countries such as Luxembourg, the seventh-largest country investor in Russia, consider Russia's market unregulated in part because it lacks laws on insider trading. That designation restricts the amount of funds the country can invest in Russia.

The market watchdog cannot perform its functions adequately because its roughly 250 staff members are too few to cover the approximately 100,000 companies it regulates, Schweitzer said.

It is also burdened by high staff turnover because the government-paid salaries are too low, he said. Information about statutory filings and required disclosure by companies on the commission's web site is also out of date, compromising its credibility among market participants, Schweitzer said.

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Toyota Eyes Russia

MOSCOW (Reuters) -- Japanese carmaker Toyota is looking at assembling cars in Russia, Vedomosti reported after Prime Minister Mikhail Kasyanov met Toyota Chairman Hiroshi Okuda on a visit to Japan.

Vedomosti quoted Kasyanov as saying they had discussed the project, and a Toyota spokeswoman in Moscow was quoted as saying the matter was "under consideration."

Trade Representative to Japan Robert Ruzanov was quoted as saying that Toyota was considering assembling Land Cruisers and Corollas in Russia.

Okuda has visited Russia's second-largest car factory, GAZ, and a glass factory in the Nizhegorodsk region, the press secretary to Sergei Kiriyenko, the presidential envoy to the Volga Federal District, was quoted as saying.

Ford assembles the Focus family sedan outside St. Petersburg and plans to make 12,000-15,000 cars this year.

General Motors makes a rough terrain vehicle, the Niva, in a joint venture with local car manufacturer AvtoVAZ, and the joint venture will start assembling Astras in 2005.

France's Renault also plans to start manufacturing cars at a plant in Moscow.

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$1Bln Ecology Project

MOSCOW (Reuters) -- LUKoil said Wednesday that it will spend over $1 billion in a four-year drive to make its production more environmentally friendly.

The 34-billion ruble ($1.16 billion) program, the largest ecological project of any Russian oil major to date, will focus on clean production and waste management, the firm said in a statement.

Ecologists have often criticized the production methods of some Russian oil firms, which they say have turned the country's main oil producing areas, mainly in western Siberia, into environmental disaster zones.

Environmental groups have threatened to sue LUKoil over its plan to start up a medium-sized offshore oil field on the Baltic Sea near the Curonian Spit, a United Nations World Heritage site. It is also actively developing reserves in the Caspian Sea, the world's main habitat for caviar sturgeon.

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Gazprom Cuts Payout

MOSCOW (Reuters) -- Gazprom agreed to a government order to limit its dividend rise in 2003 in order to cut borrowing next year and set the payout at 16 billion rubles ($547 million), newspapers reported Wednesday.

The company had planned to pay a total of 31 billion rubles in dividends for 2003 compared to 9.3 billion in 2002, as its net profit is expected to double this year to 180 billion rubles due to strong export gas prices.

But the government, which controls Gazprom, ordered the world's largest gas producer to halve the payout plan to reduce borrowing requirements.

Vedomosti and Gazeta quoted Gazprom sources as saying the company had agreed to limit the dividend payment to 16 billion rubles.

Gazprom, whose board is due to meet on Dec. 25 to discuss the issue, declined to comment.

The Cabinet call to limit the dividend might help to reduce Gazprom's financial shortfall.

Gazprom expects to spend 1.39 trillion rubles on operating costs and investment in 2004. It forecast revenues of 1.2 trillion rubles, leaving the firm 233 billion rubles short.

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EBRD Loan for Uralsib

MOSCOW (Reuters) -- The European Bank for Reconstruction and Development said Wednesday it had made a $25 million loan to regional bank Uralsib to help it boost financing to small and medium-sized businesses.

The development of small and medium-sized businesses is seen as a key to diversifying the oil-dependent economy, which is also heavily dominated by post-Soviet financial-industrial groups controlling vast swathes of the economy.

The agreement covers a $15 million four-year facility that provides funds for Uralsib to redistribute to small and medium enterprises as loans ranging from $200,000 to $1 million, the EBRD said.

A separate $10 million, five-year deal under the EBRD's Russian Small Business Fund program, will finance smaller businesses with loans up to $200,000.

"The EBRD believes that this funding will stimulate competition in the growing market of bank loans to small businesses and help the development of the private sector of the economy," the statement said.

The EBRD said it has handed out 160,000 loans totaling $1.3 billion under the RSBF since 1994.

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VTB Stake Sale

MOSCOW (Reuters) -- The European Bank for Reconstruction and Development will take a stake in state-owned Vneshtorgbank in the first half of 2004, Prime-Tass quoted Prime Minister Mikhail Kasyanov as saying Wednesday.

The sale of a stake in Vneshtorgbank to the EBRD is seen as the first step before a sale of a stake to private investors. This deal was previously expected to be completed by the end of 2003.

The EBRD had said it was ready to spend up to $300 million for a 10 to 20 percent stake in Vneshtorgbank. The government wants to reduce its role in a banking industry still heavily dominated by state-run institutions.

Sources in the government had said that it wants to raise $300 million for a 10 percent stake after J.P. Morgan and Ernst & Young valued its business at slightly more than $3 billion.

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LUKoil Plans PVC

MOSCOW (Bloomberg) -- A unit of LUKoil will invest 100 million euros ($123 million) to build a polyvinyl chloride unit in Ukraine because Borsodchem, Eastern Europe's largest PVC maker, will stop buying chloride vinyl from LUKoil's Ukrainian venture in 2004, Vedomosti said, citing a LUKoil official.

LUKoil-Neftekhim, one of LUKoil's petrochemical units, plans to complete the new plant in 2007. The facility will be based at Lukor, a Ukrainian chemical venture, in which LUKoil-Neftekhim holds a 52.1 percent stake, the paper said, citing Alexei Smirnov, chief executive of LUKoil-Neftekhim.

The PVC plant will produce 150,000 tons of the plastic per year and may expand that to 300,000 tons per year, the paper said.

Ukraine's state-owned petrochemical company, Oriana, owns about 48 percent of Lukor.

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$355M Enka Contracts

ISTANBUL, Turkey (Bloomberg) -- Enka Insaat ve Sanayi AS, Turkey's largest construction and power company, said Wednesday it won $355 million of building contracts in Russia, four African countries and Kazakhstan.

The orders include the construction of a cigarette factory for Altria Group Inc.'s Philip Morris unit in St. Petersburg, and a role in building U.S. embassies in Cameroon, Sierra Leone, Guinea and Mali, Enka said in a statement to the Istanbul Stock Exchange. It did not say when the contracts were signed.

With the addition of the latest projects, Enka has a backlog of $1.2 billion in orders, Oyak Research said in a note to investors. Enka has projects in Central Asia, Russia and Eastern Europe.

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GE Expects $1Bln

NEW YORK (Bloomberg) -- General Electric announced that it is expecting revenue in Russia to double from this year, to $1 billion in 2005.