Rafinat Yarullin — about the fate of KZSK: ''The plant should find its owner''

The head of Tatneftehiminvest-holding predicts a slowdown in investment activity of companies, trade wars of China and the US and calls to sign special investment contracts (SPICs)

The petrochemical complex ended the year 2018 with an increase in production by 2,9%, but received revenue by a third more — up to 1,3 trillion rubles. On 28 January, at the first meeting of the board of directors of Tatneftehiminvest-holding this year, they summed up the results of the industry and listened to new projects. Read the details in the material of Realnoe Vremya.

Who claims KZSK: ministry of industry, Rostec and Tatarstan

On 28 January, at the regular meeting of the board of directors of Tatneftehiminvest-holding, chaired by Rustam Minnikhanov, the problem of restarting the Kazan Plant of Synthetic Rubber (KZSK), which was stopped last autumn, was raised again. As Realnoe Vremya already reported, three years ago the board of directors of KZSK under the chairmanship of Evgenia Dautova acted as the guarantor on the credit of VEB at 3,7 billion rubles, which was obtained for continuation of the construction of the second plant of KZSK — subsidiary KZSK-Silicon. Being tied to the feet with weights, KZSK after the bankruptcy of the subsidiary company almost went into the financial grave itself. Until today, the agony of KZSK, as the head of Tatneftekhiminvest-holding Rafinat Yarullin told, continues.

''The decision on further destiny of the plant has not been made,'' he reported during the summary report at the meeting of the board of directors. ''The implementation of projects on silicones has been frozen,'' he told, speaking with the speed of a burst of machine-gun fire, preferring not to go into details of the current state of KZSK and its subsidiary KZSK-Silicon.

The authorities of the Russian Federation and the Republic of Tatarstan and Rostec will probably become the founders of the new KZSK and enter its capital with varying degrees of participation. Photo: invest.kzn.ru

What hinders the revival of the plant, which was planned to open this spring? Later, the head of Tatneftehiminvest-holding, Rafinat Yarullin, explained to Realnoe Vremya that the decision to restart the plant is still questionable, since it is at the federal level decided who is ready to take on this asset: ''The plant should find its owner,'' he explained. ''Who will run the plant? It will be given to the ministry of industry [the ministry of industry and trade of the Russian Federation — editor's note), Rostec, or us (Tatarstan — editor's note).''

In other words, KZSK has identified three most likely candidates who are likely not to compete for the purchase of the plant, as it may seem at first glance, but will act as a single investment pool. To put it simply, the government of the Russian Federation and the Republic of Tatarstan and Rostec will probably become the founders of the new KZSK and enter its capital with varying degrees of participation. When the triple alliance of KZSK is going to be formed — Rafinat Yarullin did not specified. So, it remains to wait until VEB determines the sale price of KZSK, taking into account the debt to the other creditors of the enterprise. By the way, KZSK-Silicon, because of which KZSK stopped, should reach the annual production of 40,000 tonnes of silicone in 2016, but its fate also remains uncertain.

Nefis agreed with creditors and kept the business

Another centre of stalled investment projects was Nefis-Cosmetics. As reported by Rafinat Yarullin, here ''the production of washing powders has been frozen''. Let us note that we are not talking about the current production, as you might think, but about the new project of synthetic detergents with a capacity of 240,000 tonnes. It was assumed that the plant would be launched in 2017 with credit support of the then bankrupted Tatfondbank. Despite the active negotiations on the sale of the business of group of companies Nefis in December, today on the sidelines there has appeared the unexpected information that the alleged shareholders were able to negotiate with the banks to settle the debt to Sberbank. However, official confirmation of this has not been obtained yet.

It was assumed that the plant would be launched in 2017 with credit support the then bankrupted Tatfondbank. Photo: Maksim Platonov

Fortune favours oilmen

However, the main topic of the agenda of the meeting of the board of directors was the report on the results of the petrochemical complex of Tatarstan in 2018. The index of production growth was modest 2,9%, Rafinat Yarullin said. But even this slowing rate of production was enough for record revenue to continue to ''roll'' in money. According to Rafinat Yarullin, revenue amounted to 1,3 trillion rubles, which is 32% higher than in 2017. Fortune favoured the oilmen, who more than others earned money thanks to the recovery in global oil prices. The return on sales of tire manufacturers has increased by 3%, of the Karpov Chemical plant — by 12%, and of Ammonia — by 12% due to higher prices for nitrogen fertilizers. ''The profitability of sales increased for Tatneft, Kazanorgsintez, Nizhnekamsktekhuglerod, but Nefis Cosmetics experienced a decline in profit,'' said Yarullin. The treasury received generous bonuses in the form of large tax payments of 416 billion rubles. However, the budget of Tatarstan received only 77 billion rubles…

One of the key players of Tatneftekhiminvest-holding — Tatneft — continues slowly but steadily to catch up with the lost pace of oil production caused by OPEC restrictions. Oilmen increased the production by 2% — up to 29,2 million tonnes. But even more they increased processing. Ahead of its competitors, Tatneft plans to launch the second complex ELOU-AVT-6 at TANECO oil refining complex this year. According to Rafinat Yarullin, as a result, the volume of oil refining at TANECO will double and reach 14 million tonnes a year. Last year, TANECO increased the production of diesel fuel and gasoline by 43% and 29%, respectively.

Tatneft is building a gas-chemical wing

In addition, the gas-chemical wing of Tatneft, which has been mentioned more than once in the last decade, is taking concrete shape. After the completion of the modernization of the oil refining complex, Tatneft intends to process 390,000 tonnes of gas chemical raw materials, Yarullin said. The oilers will start to produce own polypropylene, entering into competition with other manufacturers of petrochemicals. Tatneft plans to obtain 247,000 tonnes of polypropylene, and in total to produce 317,000 tonnes of gas chemical products at the first stage.

Tatneft plans to obtain 247,000 tonnes of polypropylene, and 317,000 tonnes of gas chemical products at the first stage in total. Photo: Maksim Platonov

Tatarstan players of the petrochemical complex increasingly go beyond the borders of Tatarstan. The container manufacturer Iplast has a plant in Vladimir Oblast, one is expected in Azov (Rostov Oblast), it is planned to build a plant in the Arab Emirates. Danaflex is building a plant in the Czech Republic and plans to expand capacity in Finland, Tekhstroy is developing plants in Sverdlovsk Oblast (Talitsa), Ingushetia (Karabulak), Egida is going to build a polyurethane foam plant in Karaganda and planning to build the production plant in Lipetsk. At the same time, Russian companies are part of the republic. Phosagro, part of SIBUR group, is deeper penetrating into the Volga region, opening logistics warehouses in the republic, KuibyshevAzot is participating in a joint venture with the Tatarstan company to develop sales of fertilizers.

Who is going to speak SPIC

Looking to the future, Rafinat Yarullin predicts a decline in investment activity, trade wars for markets between the US and China and economic stagnation. ''At any time, Russian companies can limit access to carbon fibers, for example for MS-21,'' he reasoned. ''Especially if it allows foreign companies to win the fight for the market.'' In these conditions, he believes, it is necessary to rely on federal support, but not to stop investment projects. He gave an example of how SIBUR actively uses all the tools from the RFPP, the Welfare Fund and signs the SPIC. ''In Russia, there are few mechanisms to support petrochemical industries. Yes, Tatarstan has PSEDAs, economic zones, but major projects long haven't attracted state funding. The last time significant funds were attracted in 2006 for 16 billion rubles, when the government allocated 16,5 billion rubles from the Investment Fund for the construction of TANECO infrastructure...'' he put an ellipsis.

He was followed by Deputy Director of the Institute of Problems of Chemical Physics Elmira Badamshina, who presented the technology of the alternative way to obtain a precursor of carbon fibers. General Director of Samson Controls OJSC Azret Krymshamkhalov presented the company's capabilities to localize the production of control valves. The site selection is currently underway.

By Luiza Ignatyeva

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