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Tuesday, 19 February, 2002, 16:21 GMT
Russian guru upbeat on economy
Boris Fedorov
Boris Fedorov is a renowned sceptic
By BBC News Online's Alexander Koliandre

There is no wonder that Russia's officials and bankers are upbeat on prospects for the country's economy.

Russia is in many ways experiencing its best post-communist years.

Economic growth is being fuelled by high oil and gas prices, political stability, a devalued currency, and structural reforms adopted in the last two years.

Even Boris Fedorov, Russia's former finance and tax minister, who is also a non-executive director of Gazprom and a renowned sceptic, said things, while far from perfect, are getting better.

Benchmark company

The fortunes of Gazprom, the world's largest gas production company, are to some extent an acid test for those of the country's economy itself.

Gazprom HQ in Moscow
Gazprom: Export king
More than one fifth of Russia's export revenues come from gas.

The government controls 38% of Gazprom, but until recently was unable to force the company to pay taxes.

Small investors were all-but neglected and mismanagement of the company was shocking even by Russian standards.

'Milking the company'

Under the old management, millions of dollars went missing and the governance was widely seen as lax.

"The company was out of reach of the law, which is not the case now", Mr Fedorov told BBC News Online.

Last May the government succeeded in appointing Alexey Miller as chief executive.

He has headed efforts by a new team to clean up Gazprom's murky books and banish remnants of the old management, that were "milking the company", Mr Fedorov says.

Rem Vyakhirev, the former Gazprom's boss
Rem Vyakhirev, former Gazprom boss

"The situation in Gazprom has been improved by 10%, but we need 1,000% improvement," Mr Fedorov said.

He urged the company to get rid of non-gas businesses accumulated in the past.

Gazprom owns various media companies, including NTV, a private TV company founded by one of Russia's mighty moguls in the mid-1990s.

Mr Fedorov proposed that Gazprom should sell-off its media assets and avoid the involvement in politics which characterised its past.

Accounting disputes

He was happier with the latest audit by PricewaterhouseCoopers on Gazprom - an energy company that some observers have branded as "Russia's Enron".

Certainly some foreign investors have accused PwC of hiding Gazprom's financial wrongdoings in attempt to keep the contract.

But Mr Fedorov said that the critics were trying to get a place on the board of directors, gaining votes by attacking the management.

Indeed, Russia is not longer an "insider's market", he said, comparing today's country to that of the days when the government would sell off profitable state enterprises for a fraction of their value, in return for financial support in presidential elections.

Alexey Miller
Alexey Miller: New Gazprom chief executive

"Nothing like the loans for shares case is possible now", Mr Fedorov said.

He credited the improvement in economic conditions largely to Russia's president, Vladimir Putin.

"For the first time we can see that there is a president, who is healthy and able," Mr Federov said.

"He is Russia's main asset, apart from oil and gas."

Reform call

But it seems as that even Mr Putin is proving unable to fight the figures.

According to recent data, Russia's growth slowed in the past month.

Mr Fedorov urged the government to be more active in stopping ineffective subsidies, in selling-off state assets, and letting more independent directors to the boards of major companies.

Amid all the reservations, Mr Fedorov sounded optimistic.

He saw no reason for Russia to suffer again the crisis it did in 1998.

"I am more optimistic now, than then when I was a minister," he said. "Probably because I was better informed then."

See also:

14 Feb 02 | Business
Russia's retail growth
12 Oct 01 | Business
Gazprom to shed media interests
06 Sep 01 | Business
Kremlin lifts Gazprom secrecy veil
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