Former governor of Kostroma Region Viktor Shershunov
Photo: Игорь Груздев
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Finns Clash with New Kostroma Gov.
The Finnish forest industries company Ruukki Group has withdrawn from a project in Kostroma Region and plans to take the region's new governor to court. In June 2007, the company announced a project worth more than €1 billion for the construction of a sawmill with a capacity of 500,000 cu. m. and cellulose plant with a capacity of 800,000 per year.
The agreement on the project was reached between Ruukki and the Russian region under the governorship of Viktor Shershunov. Part of the agreement was the project's inclusion in the list of regional priority projects, which would serve as the basis for an application for national priority status. That status would have given the project significant benefits, such as a reduction in the rent for forest lands, under the new edition of the Forest Code.
Shershunov was replaced as Kostroma Region governor by Igor Slyunyaev in the autumn of 2007. In January, the regional investment council found the agreement with Ruukki “unacceptable.” Specifically, the new governor objected to the extension of Tax benefits to Ruukki to 2017, a move that would cost the region €400 million. Also, the 4.5 million cu. m. of pinewood the project would consume represents 70 percent of the region's total resource base.
A month's negotiations between the Finns and the new administration were fruitless and the administration announced last week that the Finnish project had been excluded from the list of priority projects. Ruukki conducted an IPO to attract €340 million for the Russian project, construction on which has not been started.
www.kommersant.com
All the Article in Russian as of Mar. 04, 2008
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