In line for government support. Alexey Mordashov asked the government for help due to sanctions

Businessmen under sanctions are beginning to flood the government with requests for help. In addition to Viktor Vekselberg and Oleg Deripaska, Alexey Mordashov turned to the state for help, The Bell found out.

Alexey Mordashov’s Power Machines, which came under US sanctions in January, began having liquidity problems, two federal officials told The Bell. Foreign banks refuse to process payments to the company in dollars, and the company's costs have increased due to the need to transfer transactions into other currencies, they say. In April, Mordashov addressed Prime Minister Dmitry Medvedev with a letter asking for support for the company. He listed some of the requests at a meeting of the government commission on import substitution, which took place at the Power Machines site in April, and conveyed others by letter.

Details

Among the priority measures proposed by Mordashov, according to The Bell’s interlocutors:

preferential financing of Power Machines projects through the Russian Export Center - up to 85% of the project amount.
recommendations from the Central Bank to banks to also provide preferential loans to sanctioned companies.
In addition, Mordashov asks to prohibit state corporations and state-owned companies (in particular, Rosatom, RusHydro, Gazprom, InterRAO and Rostec) from requiring Power Machines to provide state guarantees.

At a meeting of the government commission on import substitution, Mordashov also asked the government:

provide Power Machines with support in accessing domestic and foreign markets - in particular, provide the company with state guarantees when its customers require it.
with government support, create Russia’s own gas turbine technology. Rostec has already invited the company to join the project to create its own high-power gas turbine together with Rusnano and Inter RAO.
Mordashov also spoke about the need to create personnel development centers together with the state.

Power Machines came under sanctions after a scandal involving the supply of gas turbines to Crimea, which were produced by the company’s joint venture with Siemens (Siemens has a 65% stake in this joint venture). In a 2017 report issued after the sanctions were imposed, the company indicated that, according to preliminary estimates of its management, the effect of sanctions on the group’s financial results was “not significant.” In 2017, with revenue of $1.2 billion, the net loss of Power Machines amounted to $167.4 million.

The press service of Power Machines, in response to a request from The Bell, only confirmed that support measures and difficulties that the company faced due to sanctions were discussed at a meeting with Medvedev in April.

Context

In addition to Mordashov, Viktor Vekselberg turned to the government for large-scale state support , as Kommersant reported today. According to the publication, he was the first of the billionaires to develop and propose a detailed plan for state support for his companies. The list of their proposed measures is striking in its breadth - from state guarantees for loans worth up to $5.5 billion to a ban on the import of Evian and Perrier, which compete with the Baikal Holding company, which is part of Renova.

En+ and Oleg Deripaska’s UC Rusal have also already sent proposals to the Ministry of Energy to support sanctioned companies, said Deputy Minister Vyacheslav Kravchenko. “Rusal expressed a large number of different wishes. There are many of them, we are working with them,” he told the TASS agency, without disclosing details.
Earlier, Finance Minister Anton Siluanov said that the sanctioned companies requested a “considerable amount” of about 100 billion . According to him, the state is not going to directly recapitalize the companies, but Promsvyazbank can provide them with the necessary liquidity. “Assistance can be provided in the form of advance financing. Suppose the same recycling fee for sanctioned companies could be advanced, and [companies could] use this money as the “turnover” they need,” he explained.
All companies are also asking to ensure demand for their products within the country, a federal official told The Bell: decisions in each case will be made individually, “we will look and work with partners in the EAEU.” “Turbines, cars and buses are needed in neighboring countries,” he says. “We can work out the mechanisms for settlements under these contracts in rubles.”

What's in it for me?

The last time large Russian companies applied en masse for government guarantees and other types of support was during the 2008-2009 crisis. And the government generously provided it - at the expense of oil and gas accumulations of past years. But now the state has other plans - after the inauguration, Vladimir Putin was going to announce an increase in spending on healthcare, education and infrastructure by 10 trillion rubles . Whether the state will be able to afford such expenses in a situation with strict sanctions against business is a big question.

Irina Malkova, Alexandra Prokopenko, for The Bell