OREANDA-NEWS. August 01, 2008. The government forecasts that the GDP will grow 10-12% in 2009-2010, First Deputy Prime Minister of Belarus Vladimir Semashko told a press conference in Minsk on August 1.

“We have approached the point when further GDP growth is impossible if we do not put in operation additional capacities, manufacture new products,” Vladimir Semashko said. According to him, it is necessary to increase an inflow of capital investment. “Capital investment is not the end in itself. It is the means to maintain high GDP growth: at 10-12% annually. In 2009-2010 we project the same rate of economic growth,” the First Vice-Premier said.

In addition, Belarus has been implementing the innovation development programme which is aimed at creating hundreds of companies which also requires an inflow of investment.

In January- June 2008, capital investments in Belarus were up 23.9% over H1 2007. Foreign investments were up 2.8 times. Over the six months a total of USD233.4 million was put in fixed capital from foreign sources.

OAO Beltransgaz and OAO Gazprom have signed an additional agreement to increase the price for gas transit via Belarus, First Deputy Prime Minister of Belarus Vladimir Semashko said.

He reminded that in Q2 this year, Russia increased gas prices for Belarus from USD 119 to USD 128 per thousand cubic meters. “In this connection we have signed an additional agreement to increase transit prices,” Vladimir Semashko noted.

“In H1 2008, Gazprom paid USD 105 million for gas transit,” the First Vice Prime Minister said. Some part of these funds has been used to compensate an increase in gas prices, he noted. The price for Russian gas of USD 128 will remain in place by the end of 2008, Vladimir Semashko highlighted.

Belarus thinks it necessary to sign an additional Belarus-Russia agreement on gas pricing, First Deputy Prime Minister of Belarus Vladimir Semashko told a press conference.

The amendments to the previous agreements have been necessitated by the deferment of Russia’s transition to the same gas prices that are effective in European countries.

According to Vladimir Semashko, starting from 2009, Belarus might expect a considerable increase in prices for Russian gas. He noted that while signing a 2006 agreement, the Belarusian side was guided by the official projections of the Russian government concerning the changes to the world oil prices. However, the circumstances changed and the projections did not prove to be true. That caused the Russian side to delay the transition to the same gas prices that are effective in European countries.

The Belarusian side also thinks that the drastic change of the situation can justify the introduction of amendments to the terms of the signed agreement. Moreover, the Civil Codes of the both countries allows for such amendments. “Thus we should either hold talks with the Russian side or annul the agreement. The latter solution is unacceptable. At present, we are holding negotiations with our Russian counterparts,” Vladimir Semashko said without giving details.

In Q1 2008, Belarus paid USD 119 per 1,000 cubic meter of the Russian gas, in Q2 2008, the prices were set at USD 128 per 1,000 cubic meter. The First Deputy Prime Minister of Belarus noted that the gas prices for Belarus are not the lowest among the CIS member states: Armenia buys the Russian gas for USD 110 per 1,000 cubic meter.

The Minsk Automobile Plant (MAZ trademark) and OAO Russian Machines are about to sign a cooperation agreement, First Deputy Prime Minister of Belarus Vladimir Semashko said.

According to him, the two companies intend to set up a unified company which will also include one of western investment banks.

Vladimir Semashko noted that MAZ was planning to double production by 2013. Yet the arrival of the investor will help the company to do it 1.5 times faster. Thanks to the investor the company may become a strong player on the international market. “So, we will have a synergy effect,” the official noted.

An industrial corporation will be set up on the basis of Minsk Tractor Works (MTZ), First Vice Premier of Belarus Vladimir Semashko told media in Minsk.

He remarked, a new programme for the company’s innovative development had been worked out. It envisages boosting the tractor output up to 105-110 thousand per annum. The programme focuses heavily on manufacturing powerful tractors.

The main production facility is supposed to stay in Minsk, with three satellite plants to be created in provinces, namely in Bobruisk (the output capacity — 10,000 tractors per annum), Mozyr (5,000-6,000), and Smorgon (6,000-7,000).

All in all, USD 1.2-1.3 billion of investments will be channelled into implementing the programme. It is supposed to end in 2013.

In 2008 MTZ plans to manufacture 70,000 tractors.

The final choice of the company that will help Belarus construct the nuclear power plant will be made between Rosatom and Areva T&D (France/Germany), Vladimir Semashko said.

Rosatom and Areva T&D gave an official reply to the offer of the Belarusian Energy Ministry to participate in the competition for the construction of a nuclear power plant in Belarus. The US-Japanese energy corporation Westinghouse-Toshiba has given no reply. “That narrowed the number of our potential partners to two companies,” Vladimir Semashko said. “By August 10 we have to decide with whom and on which terms to negotiate or to hold a tender.” The First Deputy Prime Minister noted that the reply given by Rosatom is unambiguously positive, and the Russian company is ready to implement this project within the framework of the Belarus-Russia interstate agreement and to provide the tied credit. Rosatom also agrees the established deadline and other terms of the project.

According to Vladimir Semashko, Areva T&D wrote that the company “is ready to consider its participation in this project.” Within the next few days Belarusian Energy Minister Alexander Ozerets will hold talks with the top executives of Areva T&D.

The market value of the Belshina tyre producer is several billion US dollars, First Vice-Premier of Belarus Vladimir Semashko told a press conference in Minsk on August 1.

According to him, “five years ago investors offered USD 52 million for a controlling stake. Today we will not sell it even for USD 1 billion,” First Vice-Premier said.

Big funds have been injected into the company and now it performs well posting a 25-30% growth annually. “The company’s profitability is recording a double-digit growth,” Vladimir Semashko added.

According to him, one of the priority areas of the Belshina upgrade is technical revamp of the heavy-duty tyres production. A total of USD100 million was allocated last year and in 2008.

The Russian companies LUKOIL and Rosneft are developing proposals to participate in petrochemical investment projects in Belarus, First Deputy Prime Minister of Belarus Vladimir Semashko said.

According to him, negotiations are underway with Rosneft and LUKOIL on the projects related to Naftan refinery and Polimir company. LUKOIL will present its feasibility study in August, Rosneft in October 2008. “We have to estimate the profitability and conditions of this cooperation,” the First Deputy Prime Minister of Belarus said.

He underlined that Belarus has three major criteria for choosing investors. First, the potential investor should possess enough finances not only to purchase the shares, but also to invest in the development of an enterprise. Second, it should have a good raw materials base to enable the enterprise to work at full power. Third, the markets where the potential investor will sell its products should be already tapped by it. “If all these criteria –finances, resources and markets - are met, we are ready to welcome the investors and sign contracts with them,” Vladimir Semashko said.