Emergency income and expenses

The Gazprom board unscheduled revised the budget

Before the May holidays, the Gazprom board decided to change the company's financial plan for 2006. Most likely, the board of directors will be asked to approve an increase in capital investments by $1.1 billion in absentia. Previous versions of the concern's budget and investment program were approved by the directors just two months ago.

In the new edition, Gazprom’s investment program should increase by 27.1 to 337.2 billion rubles. ($12.3 billion). Moreover, the monopolist is going to reduce long-term financial investments by 2.4 billion rubles compared to initial plans, and increase capital investments by 29.5 billion rubles, to 307.9 billion. According to Vremya Novostei, a solid increase in capital investments in primarily related to the acceleration of work on laying the onshore section of the North European Gas Pipeline and the development of the Yuzhno-Russkoye field, the raw material base of the NEGP.

“The need to make clarifications to the budget arose in connection with changes in both macroeconomic indicators - the dollar exchange rate, and market changes - rising hydrocarbon prices, as well as a number of production and financial forecasts” of the company itself, Gazprom said in a press release. Previously, the management of the monopolist made similar requests to increase capital investments only based on the results of work in the first half of the year. As a source in the company explained to Vremya Novostei, the current rush is due to the tightening of internal procedures and reporting on the expenditure of funds (including tenders). “We simply would not have time to implement all our investment plans,” he said. The previous system allowed Gazprom to take a more “creative” approach to budget parameters and record increased expenses “retroactively.”

The desire to increase the investment program required Gazprom financiers to work to “increase” the revenue side of the budget. The extremely favorable situation in export markets made it possible to show significant additional revenue - 271.7 billion rubles, about 10 billion dollars. On the other hand, demonstrating such a significant surplus is also not in the rules of Gazprom management. As a result, about 100 billion rubles. will go to the budget in the form of an export duty (30%) and income tax, about another 10 billion rubles. shareholders of the company should receive in excess of the initial plan (after updating the net profit of OJSC Gazprom according to RAS, the estimated amount of dividends increased to 35.1 billion rubles). In addition, an additional 64.5 billion rubles. will have to be spent on purchasing Central Asian gas that has increased both in price and in volume. As is known, this year Gazprom agreed to purchase 30 billion cubic meters of Turkmen gas at $65 per thousand cubic meters (previously it was planned to purchase 7 billion at $44). And after this, prices increased for 8 billion cubic meters of Uzbek gas (from 37 to 65 dollars).

Vremya Novostey's source at Gazprom also reported that it was decided to improve the structure and volume of the company's debt. In particular, early repayment of obligations in the amount of about $1 billion is provided. Negotiations are currently underway about this with creditor banks. According to Gazprom's reporting according to international standards, at the end of the third quarter of 2005, the company's obligations on long-term loans amounted to 345 billion rubles.

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Gazprombank quadrupled its profit. Gazprombank published financial results for the first quarter of 2006. Compared to the figures for the fourth quarter of last year, the bank’s profit increased almost fourfold, to 6.7 billion rubles, assets - by 15%, to 500.8 billion rubles, equity - by 3%, to 45 .3 billion rubles, the volume of loan debt - by 21%, to 348.6 billion rubles. The sharp increase in profits is associated with the bank's operations on the stock market. “The growth in stock prices and debt obligations of Russian issuers contributed to an increase in Gazprombank’s profits from investments in securities. Its net income from operations with securities for the first quarter was 3.9 billion rubles,” Alexander Voznesensky, vice-president of Gazprombank, told Vremya Novostey. In addition, the increase in profit was influenced by an increase in interest income from loans provided to customers. “Gazprombank’s high credit rating, as well as low interest rates in the US and Europe, have created favorable conditions for raising funds abroad at low interest rates,” says Mr. Voznesensky.

Alexey GRIVACHS