A blueprint with the privileges is yet to be signed by Prime Minister Mikhail Fradkov after two ministries agree on a compromise draft.
Photo: Ilya Pitalev
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Privileges on the Halt for Priority Timber Projects
The government has failed to provide privileges for major businesses in forest exploitation to match a hike in timber export duties on July 1. A blueprint with the privileges that would alleviate the situation is still to be signed by Prime Minister Mikhail Fradkov after two ministries agree on a compromise draft.
On July 1, Russia introduced a new order for organizing auctions on forest plots rent and increased export duties on roundwood from 6.5 to 20 percent. The government was to pass a bill with privileges for major investment projects on the same day.
According to a new draft of the Forestry Code, privileges for priority projects in timber processing are to become the only subsidy in the toughened timber exploitation investment regime. Privileges to the projects are quite small, covering only ventures worth more than 300 million rubles, according to Vsevolod Gavrilov, deputy chief of the Property Relations Department at the Russian Economic Development and Trade Ministry. A project from the Economic Development Ministry strove to allocate forest plots to these ventures without auctions and cut rent by half. The Industry and Energy Ministry wishes to provide broader subsidies, lifting the whole rent payment for projects worth more than 5 billion rubles.
The argument between the ministries has left exporters without any privileges. In the meantime, the hike in timber export duties may deal a hard blow on the whole industry after forest rent soared in January.
Major timber businesses are pressing for broader privileges. “The bill ought to contain considerable benefits, otherwise the timber industry won’t see the expected changes,” Dmitry Chuiko, a spokesperson for the Ilim Pulp concern, told Kommersant.
Vsevolod Gavrilov says the government may also draft another bill to support the industry with co-financing projects. But if the decision on the privileges is not made before this fall, major companies will not receive any rebates before 2008.
www.kommersant.com
All the Article in Russian as of July 02, 2007
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