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21 Jan

Dmitry Bobrovsky,, December 10, 2012 (Belarus)

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KAMAZ and MAZ merge on the edge of failure

The process of merging the Russian KAMAZ and the Belarusian MAZ drags on. Officials of two countries constantly declare that they are close to reaching agreement about a project to create an automobile holding called "Rosbelavto". The day before, the president of Belarus, Alexander Lukashenko, declared that the final agreement on all disputed issues will take a while. It is not out of the question that the association may not happen at all.

On November 9, during a meeting with the governor of Leningrad region of Russia, Alexander Drozdenko, Lukashenko noted that in Belarus privatization and merges  are taken very seriously and accurately. He also expressed some doubts towards the MAZ and KAMAZ merge.

Alexander Lukashenko also wondered why and for whom “this artificial association” is necessary? “I take offense that politics in Belarus plays a huge role. I say: not politics. What will MAZ or KAMAZ receive from this privatization? There is no answer”, – emphasised Lukashenko.

The president of Belarus noted that privatization should be carried out only to increase productivity of an enterprise. Otherwise, according to him, there is no reason to privatize.

It should be remembered that the idea of consolidating KAMAZ and MAZ as one company was suggested to Belarus by Russian Technologies state corporation (“Rostechnologii”). As a result of the transaction, KAMAZ becomes the owner of 100 % of MAZ stocks, and the government of Belarus in exchange receives KAMAZ block of shares. However Minsk declared that it doesn’t intend to sell more than 49 % of MAZ stocks. After that the Kremlin suggested creating a “Rosbelavto” joint venture on the basis of MAZ and KAMAZ.

However it still seems hard to reach agreement. Russia insists on the controlling stake of holding, Belarus planned a merge on a parity basis (50 % for 50 %). KAMAZ insisted on a controlling stake because its assets cost much more on an open market than assets of MAZ. Later Belarus estimated MAZ much higher than its market cost is – at $2,5 billion. Let’s note that for that time KAMAZ was estimated by experts at $2,02 billion. Such a calculation didn’t suit Moscow.

After all, MAZ is a company which doesn’t disclose its financial activity, therefore its real cost is hard to estimate. In order to solve that pretty tough situation, Ernst&Young (international auditor company) specialists were invited. They estimated MAZ at $800 million. After that Ernst&Young carried out one more appraisal that estimated the cost of MAZ assets at $1,095 billion. After that, the process of merging MAZ and KAMAZ slowed down.

Meanwhile, the turnover between Tatarstan and Belarus for nine months of this year amounted to 1.7 billion dollars, said the head of Belarus’ Embassy in Kazan, Ruslan Drozd, during his visit to Almetyevsk.

According to the diplomat, this is a record for the whole history of cooperation of the republics. Belarus purchased Tatarstan products for a total amount of about $ 1.3 billion.

Let’s note that according to the official data from Belarus’ National Statistics Committee, the total volume of mutual trade turnover between Belarus and Russia for the first quarter of this year amounted at $11056,2 million. In comparison with the first quarter of 2011 this indicator has increased by 29.3%. Tatarstan, Bashkortostan, Udmurt Republic, Perm Krai, Saratov and Nizhny Novgorod region are among the Russian regions which have the greatest volumes of foreign trade with Belarus in the Volga Federal district.

So, in the first quarter of this year, turnover between Tatarstan and Belarus has quadrupled. According to this indicator, the Republic of Tatarstan moved from eighth to fourth place among the regions of Russia which actively cooperate with Belarus. For this period there was also an increase in deliveries to Belarus from Tatarstan, which led to an increase in the positive balance for RT to $428.3 million (in comparison, in the 1st quarter of 2011, the positive balance for the Republic of Tatarstan was amounted at $32.6 million).

Meanwhile Tatarstan mainly has trade relations with the countries outside the CIS – 87.8% of its entire foreign trade (in January-September 2011 – 88.1%). Tatarstan’s main foreign trade partners are Italy, Germany, the Netherlands, Poland and Belarus.

Tatarstan exports mainly oil and oil products. The export of oil for nine months of this year decreased by 29.5%, to 10.37 million tons. In money terms oil export has decreased by 26.5%, falling to $7 958 million. Incidentally, a large amount of oil was exported to countries outside the CIS. Oil products exports grew by 2.2 times – up to 7.107 million tons. In monetary terms it has risen 2.1 times up to $4,881 billion.

The Republic of Tatarstan mainly imports plastics and plastic products, the compounds of organic chemistry, ferrous and non-ferrous metals. The import of plastics in natural terms decreased by 5.8% (up to 54 thousand tons). Import of compounds of organic chemistry increased by 4% (up to 23.2 thousand tons). It is remarkable that in money terms the import of organic chemical compounds decreased by 0.6% and amounted to $62.8 million.

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