| Gazprom sharply increases expenses and understates revenues The budget process in the main state company - Gazprom - yesterday passed the first milestone. The management board of the concern generally approved the financial plan, investment programs, cost reduction and financial investments for 2004. Although tangible progress has been achieved in a number of important areas, in general Gazprom continues to implement a policy of inflating expenditures and excessive modesty in the area of revenue generation. Total costs are planned to increase by 220 billion rubles, while the concern's managers intend to replenish the revenue side by only 124 billion rubles. compared to the current year's financial plan. In a week, the investment program will be the subject of meticulous consideration at a government meeting, and on November 25, all these documents will be presented to the board of directors. We can already confidently predict that they will be sent for revision.
In the main scenario conditions, the developers of Gazprom’s budget proceeded from the dollar exchange rate of 31.3 rubles. per dollar, gas prices in non-CIS countries are 108.5 dollars per thousand cubic meters and 10 percent inflation. A company representative says that the main financial document was deliberately formed according to the most conservative scenario in order to protect itself from sharp market fluctuations. As a result, revenues from gas sales should amount to 868.6 billion rubles, with export earnings from Europe expected to amount to only 477.8 billion rubles. Since the average gas price is unlikely to fall below $120 per thousand cubic meters, it can be argued that management has already secured excess revenue of 52-53 billion rubles.
Unlike “long-distance” exports, revenues from gas supplies to neighboring countries are growing. At the same time, Gazprom’s earnings in Ukraine and Moldova will fall by $270 million, but this is more than offset by increased income in the Baltics (an increase of $80 million) and especially Belarus (by $521 million). These figures are explained by the upcoming transition to market pricing in connection with the revision of the intergovernmental agreement. Gazprom's income from the provision of transport services should also increase sharply - from 26.9 billion rubles. this year to 41.4 billion rubles. Firstly, this happened due to the transfer of operator rights in the gas transportation system of Uzbekistan to Gazprom, and secondly, due to an increase in tariffs for transporting gas from independent producers. The concern plans to sell non-core and ineffective assets for 3 billion rubles, which is half the current year's plan.
Experts consider the receipt of money for Ukraine’s “old” debt, which is included in the concern’s budget, to be extremely positive news. As is known, Gazprom was going to cede the right to claim the debt to a “third party” at a discount. As a result, in the financial plan, the item “income from the sale of Ukrainian receivables” appeared in the amount of 31.3 billion rubles, or $1 billion. Accordingly, the “discount” amounted to 30% of the amount of the restructured debt of Kyiv. According to the Vremya Novostei newspaper, the buyer is Vnesheconombank, which is participating in the scheme in accordance with an intergovernmental agreement.
The greatest disappointments for investors lie in the expenditure side of Gazprom's budget. By 50 billion rubles. The tax burden on the monopolist increased (up to 233 billion rubles) due to changes in legislation. Gazprom's spending on its subsidiaries has increased dramatically - purchasing gas from them, as well as paying for services for its transportation and storage, will cost a quarter (or $3 billion) more in 2004 than this year. The company explains the growth by inflation and increased fiscal burden. The salaries of the concern's employees almost doubled (by $400 million), and the mysterious “other” expense item became more significant by $270 million. One of the consoling moments is the reduction of the company's liabilities by 20 billion rubles. (up to 172 billion rubles) compared to the current year, as well as a significant increase in dividend payments dear to investors’ hearts. Next year, it is planned to send almost $1 billion to Gazprom shareholders (in 2002, $330 million was allocated for dividends). The investment program has so far been left at the same level: 212.3 billion rubles. for capital investments and 20 billion for long-term financial investments.
Gazprom's borrowing program provides for the receipt of 31.1 billion rubles. long-term and 29.5 short-term loans, another 89.3 billion rubles. planned to be received from the placement of bonds. On November 25, at the board of directors, management will ask to be allowed to borrow another 67 billion rubles. in financial markets for the purpose of early repayment of part of the debt. This is being done as part of the upcoming strategy for optimizing Gazprom’s debt portfolio. This year, about $700 million was paid under this scheme, which ultimately was not included in the borrowing program.
Gazprom's total budget deficit next year is expected to be 43.2 billion rubles. (7.5 billion rubles were recorded in this year’s budget). Such a deficit budget obviously does not correspond to the prosperous environment that prevails in external fuel markets and the rising gas prices within the country. Apparently, no special efforts are being made to reduce costs in the monopoly, because the cost reduction program of 30 billion rubles. more like PR. Alexey GRIVACHS |
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