Russia: Gazprom Board Member Fedorov on Personnel Changes in Company, Status of CEO Miller
CEP20020816000272 Moscow Vremya Novostey in Russian 14 Aug 02
[Interview with Gazprom board member Boris Fedorov, conducted by correspondent Aleksey Grivach: "Boris Fedorov: 'I Am Very Much Concerned About Miller's Fate'"; date and place not given--taken from html version of source provided by ISP.]
[FBIS Translated Text]
Boris Fedorov, who has retained his seat on the Gazprom board of directors, has in recent times not only begun to criticize the management much less, but generally to speak out publicly about the work of the concern. Our Vremya Novostey observer, Aleksey Grivach, asked the independent Gazprom director to share his views on the current problems of activity of major Russian companies.
[Correspondent] You have become less critical in your assessment of the situation at Gazprom. Do you associate the positive changes with Miller's arrival or, rather, with Vyakhirev's departure?
[Fedorov] As an objective person, I make my judgments based on the changes which are occurring. If the pilfered assets are returning, if businesses outside of our profile description are being sold, if we are being told of financial effectiveness and of a strategy of development, and if attempts are being made to restructure indebtedness on more advantageous conditions--is this not positive? Under Vyakhirev, there was a situation whereby nothing was done on any of the aforementioned directions. Today, the situation has qualitatively changed: They are fighting against Stroytransgaz, returning SIBUR, and have sold the NRB. It is another matter that we need to create a stronger team. Not to change the people in the top management after a few months of work, as was the case with Siyenko in Gazeksport (Oleg Siyenko, who replaced Rem Vyakhirev's son Yuriy in the post of the company's general director, worked there for less than 5 months--editor). We cannot make such mistakes. It is too important of a direction.
[Correspondent] Were there any surprises for you at the Gazprom shareholder's meeting?
[Fedorov] The complement of the board of directors was retained. I am referring to state representatives and independents. There were no surprises. Those who monitored the events could see perfectly well that Fedorov was absolutely not nervous, because he knew how many votes he had. As for the management, as expected, the representatives of the old team disappeared from the board of directors. There were certain doubts about whether Vyakhirev would actually leave for good. But ultimately, these seats were occupied by Miller and his people.
[Correspondent] Did you expect that specifically those people would be elected from the management (on the new board of directors, the management is represented by Chairman of the Board Aleksey Miller, Deputy Chairman of the Board Aleksandr Ananenkov and head of the board apparatus, Mikhail Sereda)?
[Fedorov] Anenkov is in fact the first deputy chairman of the board. What can be surprising about his selection? According to the code of corporate management of Gazprom, the management may be represented on the board of directors by only two people, but the company's management had enough votes for three seats. Several months ago, I asked how this question would be resolved, and the reaction to it was rather nervous: Supposedly, everything would be within the scope of the law. As a result, Mr. Sereda, who is not formally a member of the board, became the third representative of management.
[Correspondent] How do you appraise the fact that such ambitious members of the government as Minister of Energy Igor Yusufov and head of the FEK [Federal Energy Commission] Georgiy Kutovoy were not elected to the board of directors?
[Fedorov] Evidently, this is a question of succession. Honestly speaking, I did not expect any drastic changes.
[Correspondent] Dmitriy Medvedev, first deputy head of the Kremlin administration, once again heads up the Gazprom board of directors. At the same time, he is often criticized for the fact that liberalization of the market in the company's shares, which was undertaken by the work group under his leadership, never came to pass...
[Fedorov] I believe that Medvedev's commission fulfilled its mission. I am not entirely happy with its recommendations from the standpoint of content, but that is another matter. The problem is that specific decisions on the basis of these recommendations have not yet been adopted. But this is already a question for the government, and, of course, for the management. The recommendations were presented, but no one in government focused attention on this topic, because it does not bear direct relation to the reform. At the same time, according to the idea, this should worry Gazprom itself most of all. After all, we are talking about increasing capitalization and investment attractiveness. But in connection with the latest changes in the management, it is unclear what position it holds. Vitaliy Saveyev (former deputy chairman of the board of Gazprom in charge of finances--editor) understood that this was necessary, but we cannot say that about the new financier. I get the impression that the company's management is not sufficiently defending and promoting this idea. Perhaps it would make sense for the president to instruct Medvedev to conclude the process of liberalization, to grant him the appropriate powers and authorities.
[Correspondent] How do you appraise Savelyev's departure?
[Fedorov] The man worked for less than a year at his post. He had barely delved into his work--and here was another change. This appears strange, to say the least. The directors received no explanation for this. After all, he was not fired for some errors or omissions, but, as is usually the case with us, he wrote a resignation "of his own volition." Vitaliy Savelyev had developed a good financial program. In my opinion, the dismissal was associated with the fact that Gazprom as yet has no team spirit and lacks the necessary level of cohesion.
[Correspondent] And what were your impressions of the new head of the financial department, Boris Yurlov?
[Fedorov] I am not personally acquainted with him. Furthermore, I know very little about him. In broad economic circles, he is known much less than his predecessor. Aside from that, as yet we have not been presented anything to replace Savelyev's program. And the absence of clarity for investors always leads to concern. These questions will undoubtedly be present on the future agenda of the board of directors.
[Correspondent] How stable is Gazprom's financial position today?
[Fedorov] I have repeatedly stated that the level of gas prices within the country does not correspond to the tasks facing Gazprom. The largest reserves of gas in the world are, of course, a good thing. But, in order to extract them, billions of dollars are needed. And as long as Gazprom sells a significant part of the fuel which it extracts at a loss to itself, [these billions] will not be forthcoming. Undoubtedly, the company will fulfill its investment program for this year. But is this what leads us to the future? It is aimed at stabilizing production. Yet there is no discussion of any serious increase in volumes in the nearest time. Excuse me, but I cannot consider an increase from 512 billion cubic meters of gas per year to 520 to be an increase as such. Gazprom has no money for increasing production. Whatever the company borrows on the markets goes primarily for re-financing the huge debt. The worst thing about the domestic tariffs is their uncertainty. Gazprom must be given a plan for increasing tariffs for a term of 5 years. For example, during this time prices would grow by 15 percent in the real expression annually, after inflation. Then it would be possible to at least somehow make plans.
[Correspondent] Aleksey Miller is constantly surrounded by rumors of resignation, and these rumors are heated up by his illnesses and vacations. Is this normal, or will the "aggressive environment" sooner or later have an effect on his positions?
[Fedorov] I am very much concerned about the fate of Miller himself, because there are too many unpleasant rumors surrounding his name. As they say, may God grant him good health, because, if the leading personage of such a company is always sick, this has a negative effect on his ability to manage. I believe that Miller has had a positive effect on the situation at Gazprom. But he needs to be a tougher leader.
[Correspondent] After your personal contact with the head of Gazprom, did you get the impression that he has the qualities to be tougher?
[Fedorov] If his health permits, then undoubtedly he does. By his character, by that which he implemented this year, this is within his powers.
[Correspondent] What, in your opinion, are the prospects of SIBUR? Why was Gazprom able to return the seemingly lost assets with relative ease, but when the "time of peace" came and it was necessary to build a normal business, the process ground to a halt?
[Fedorov] To raid, to take away, to sue--that is one sphere of activity. Another sphere is, having returned the assets, to try to make an attractive business out of them. The main task for the present day, in my opinion, is to hammer together a working holding company out of SIBUR. Because it will not do to invest $350 million and a great deal of reputation, and then to leave it all.
[Correspondent] Does Gazprom have sufficient financial and organizational capacities to make a Russian BASF out of SIBUR, or will it gradually be sold off piece by piece to oil producers?
[Fedorov] In regard to the sale--the question is for how much and when. We must act carefully. Let us take that same NTV. Although I harbor no sympathies for Mr. Jordan, I get the feeling that some semblance of a holding company is being created there. A business strategy is being built. However, I believe that, in any case, the media assets should be sold before the elections, while the price on them is highest, and not the other way around. When they say "after," this is already a political factor. In the case of SIBUR, there is uncertainty. However, the best variant would be to create a holding company which would at least operate, so as to be able to sell it for decent money. Not to the Russian oligarchs, who will not buy anything at an expensive price, but to that very same BASF. But this takes time, skilled managers, and investments. In my opinion, Gazprom should have enough resources for this.
[Description of Source: Moscow Vremya Novostey in Russian -- daily paper created in 2000 by disgruntled correspondents from Vremya MN; reportedly has links to the Presidential Administration.]