In relations with Dmitry Pumpyansky and other metallurgists

Yesterday in Taganrog, a five-party agreement on socio-economic cooperation for 2003 was concluded between the administrations of the Rostov region and the city, as well as CJSC Pipe Metallurgical Company, IC Rinako (a company affiliated with the MDM group) and OJSC Tagmet. The agreement regulates relations between the authorities and metallurgists on investment, social and tariff issues. Such documents have not yet been signed in the region.
Yesterday in Taganrog, a five-party agreement on socio-economic cooperation for 2003 was concluded between the administrations of the Rostov region and the city, as well as CJSC Pipe Metallurgical Company, IC Rinako (a company affiliated with the MDM group) and OJSC Tagmet. The agreement regulates relations between the authorities and metallurgists on investment, social and tariff issues. Such documents have not yet been signed in the region.

As Rog Governor Vladimir Chub stated when signing the first five-party agreement in the region (previously there were two-tripartite agreements), this document “resolves a series of tensions” at Tagmet between the authorities and metallurgists. At the same time, the governor noted, the interests of all five parties are taken into account, which assume certain obligations and make certain concessions in relation to each other. Previously, such an agreement was unacceptable due to very strained relations between the late mayor of Taganrog Sergei Shilo and Vladimir Chub, who did not particularly disguise their inclination towards the Alfa Eco M group, on the one hand, and the former management of Tagmet, headed by Sergei Bidash. After a change of ownership at the plant and the tragic death of the mayor of a seaside town, the situation changed radically. Moreover, instead of Sergei Shilo, the former production director of Tagmet, Konstantin Semerikov, sat in the mayor’s chair.

According to the signed agreement, Rinaco undertakes to “take actions to intensify the investment process in the region” and attract “physical, intellectual administrative and other resources” for this purpose. In addition, according to the company's president, Evgeniy Tugolukov, the company must ensure an increase in the enterprise's utilization and the growth of its production. Its primary tasks are labor safety, payment of wages to workers and “maintaining social balance in the workforce.”

Vice President of Rinako Anatoly Meshcheryakov noted that such agreements in the practice of enterprises belonging to the MDM group are usually followed as an example by other large Russian holdings.

TMK (MDM Group owns 33% of the company’s shares) is also going to increase production and sales of pipes, ensure increased competitiveness of its own products, deal with environmental issues, energy saving, and the development of cultural and social ties with the constituent entities of the Southern Federal District. The most important obligations include “preserving and increasing the number of jobs at their enterprises” and preventing the management of pipe workers from “economically unjustified layoffs.” The head of the company, Dmitry Pumpyansky, announced plans to invest $15 million in Tagmet in 2003 to install a line of pipe cutting machines for the production of premium gas and water pipes for the needs of the oil and gas industry that meet international standards. In addition, funds are needed for the ongoing reconstruction of the enterprise and intra-holding cooperation of Tagmeta in order to avoid unnecessary competition in TMK. According to the head of the holding, this year the plant has set a plan to produce this product three times more than in 2002.

As the press service of TMK told Kommersant, “participation in regional social programs and charity events contribute to the image of a company that understands its responsibility to its own employees and residents of the regions where it operates.”

Under the future agreement, Tagmet's management undertakes to ensure timely payment of taxes (in 2003 - 302 million rubles, more than 293 million rubles in the past), production volumes and sales of products at the level of 6 billion rubles. In addition, General Director Anatoly Brovko is going to guarantee the average salary at the enterprise is at least 6,100 rubles.

For their part, the Don authorities are going to “consider the possibility of subsidizing Tagmet’s interest rate on preferred bank loans,” agree with the tax authorities on installment payments for debts to the Ministry of Finance of the Republic of Russia and help with the reimbursement of export VAT to the plant as one of the largest and traditional exporters of the region. And also to assist in coordinating with RAO UES the issue of energy tariffs, which is sore for metallurgists. As a source in the RO administration told Kommersant, the preferential tariff rate for Tagmetu will be set at 89 kopecks per kilowatt. Vladimir Chub noted that “we have nowhere to go, we cannot help but give preferences on tariffs, because we do not even give back what we owe to Tagmet due to cross-subsidies.” In addition, according to the governor, if Tagmet, bypassing Rostov, independently entered FOREM, this would bring much greater losses for the regional budget. The governor is ready to provide the company with support in selling its products, attracting investments, assisting in obtaining a regional order, as well as “political support” for Tagmet.

The Taganrog authorities are also ready to cooperate. They are going to provide metallurgists with a deferment on tax payments, while paying off their own debt to them for energy resources, and also facilitate the “allocation of land plots and the privatization of municipal real estate.” At the same time, the mayor of Taganrog, Konstantin Semerikov, promised to use funds received from Tagmet in the form of taxes (25% of the city budget revenue) “to intensify housing construction, repair roads and improve the sanitary condition” of Taganrog.

SERGEY KISIN

Kommersant (Ekaterinburg) No. 43 dated March 14, 2003, p. 13

The Rostov governor eased the tension