City authorities in St. Petersburg are distancing themselves from Gazprom City, which will now be paid for by Gazprom, not the city budget.
Photo: Mikhail Razuvaev
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Gazprom to Share Its New HQ
// Governor of St. Petersburg took back half a skyscraper
Governor of St. Petersburg Valentina Matvienko and Gazprom chairman Alexey Miller have announced changes in the Gazprom City construction project. Now it will be called Okhta Center. City authorities will be co-owners, with a 49-percent share in it and provide that portion of the financing for it. These changes are a reaction to elections to the city legislative assembly, in which the defenders of Gazprom City took a considerable drubbing.
The Gazprom City project, with a 300-meter skyscraper the gas monopoly's St. Petersburg headquarters as its center, arose after the company bought Sibneft, renamed it Gazprom Neft and relocated it from Omsk to St. Petersburg, bringing a surge in local tax payments with it. Under the agreement reached between the city and Gazprom Neft Invest (a subsidiary of Gazprom Neft) at the beginning of last year, the project was to be financed from taxes paid by the future occupant, in return for which Matvienko agreed to pay Gazprom Neft Invest an annual subsidy from the city budget between 2006 and 2016, to amount to 60 billion rubles, which would have fully paid for the center's construction.
The center is to contain 280,000 sq. m. of office space, 62,000 sq. m. of which Gazprom Neft and its subsidiaries are to occupy, with the remainder to be used at its discretion. The agreement was considered beneficial both to the company and the city: the city would receive more tax revenue and the company would receive free world-class office space. Politics got in the way of those plans, however, as the opposition took up the cause of the city's historical skyline.
United Russia, which supported Gazprom's plans, lost 4 of its 27 places in the city legislative assemble, taking 37.37 percent of the votes in the recent elections. Just Russia, which favored moving the project, seriously gained in the elections. On Friday , Matvienko and Miller met at the Gazprom Neft office in St. Petersburg, after which it was announced that the city would become 49-percent owner of OOO Gazprom Neft Invest and that the city would invest only 29.4 billion rubles – half the previously promised subsidy – with the rest of the cost of the project to be covered by Gazprom Neft. Since the skyscraper was estimated to cost about $1 billion, it can be said that each party will pay for what it wants. The project originally included office and living space, but now it will also contain sports, concert and shopping facilities and instead of the “Gazprom City office and business center,” Matvienko and Miller spoke of the “Okhta Center social and business district.”
St. Petersburg Deputy Governor Mikhail Oseevsky explained to Kommersant that the new Budget Code will prohibit subsidies to private companies. The looming prohibition was known about in advance, however, and the Prosecutor General's Office had already determined that the city had the right to make its deal with Gazprom. No mention was made by Matvienko or Miller of moving the project or building a lower building.
Anna Pushkarskaya, St. Petersburg; Dmitry Butrin
All the Article in Russian as of Mar. 19, 2007
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