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17.04.2017  
  Realnoe Vremya,  
 

Rustam Minnikhanov: 'Results of Entire Republic Would Look Different Without Systematic Work of TAIF'


 
 

Total investment in the construction of the Heavy Residue Conversion Complex at TAIF-NK made up almost RUB 100 billion, as it was reported today at the annual meeting of shareholders of TAIF Groups holding company attended by the President Rustam Minnikhanov. The topic why the oil refining industry found itself in a difficult situation was discussed at the traditional meeting with journalists held after the summing-up. Find out more details in the report of Realnoe Vremya.

Over RUB 12 Billion Loss Because of Economic Crisis

The performance of the company and the Group was summed up at the annual meeting of TAIF's shareholders. When presenting a key report on the Group's performance, Albert Shigabutdinov, General Director, TAIF PSC said that the world crisis, which commenced as early as in 2013, continues affecting the national economy even today. 'First of all, this resulted in a substantial decrease of consumers' purchasing power not only in Russia but also in the leading countries worldwide, which led to the fall of prices of manufactured products, including those we produce. The decline of the global prices virtually impacted 60% of oil products and polymers produced by TAIF Group. Export prices for certain types of products, such as rubber and diesel fuel, dropped by 12% and 21% respectively, if compared with 2015. As a result, TAIF Groups losses caused by lower prices during the reporting year exceeded RUB 12 billion, the major part of which fell on the profit decrease, ' Albert Shigabutdinov noted.

As it turned out, however, TAIF-NK faced especially challenging situation. Excise duties on the oil products manufactured by TAIF-NK were significantly enhanced last year. The excise duty on diesel fuel was increased from RUB 3,450 to RUB 5,300 by the end of 2016, i.e. by over 53%. The excise duty on a 5-class motor gasoline grew to RUB 10,130 per ton in 2016, which is by 83% above the figure of 2015,' TAIF's General Director revealed disappointing data and noticed that, nevertheless, the company managed to achieve production growth mainly due to increase in manufacturing of more efficient products with higher added value and reduction of inefficient production facilities, respectively.

Despite the influence of the mentioned adverse factors during the reporting year, TAIF holding was able to earn the consolidated proceeds from the sale of products in the amount of RUB 625.8 billion, which is by RUB 9.1 billion more than in 2015. The consolidated revenue of the group amounted to RUB 538.7 billion, which is by RUB 14.5 billion or 2.8% higher year-on-year. We recall that Realnoe Vremya has already published a detailed review of TAIF Groups economic, financial and production performance.

Hidden Defect from Korean Manufacturer Delayed HRCC Start-Up

The holding implements several major projects simultaneously. At the shareholders' meeting, a specific focus was placed on an ambitious Heavy Residue Conversion Complex of TAIF-NK.

'This year, we entered the home stretch of the implementation of the most important large-scale projects over the past 10 years, which will have a serious positive impact on the efficient development of the economy of Tatarstan and Russia. And the start-up of a unique Heavy Residue Conversion Complex at TAIF-NK in 2017 will impact the entire global oil refining business. So far, total investments in the implementation of TAIF-NK's project have amounted ca. RUB 100 billion. We planned to proceed with the commissioning activities even in the 4th quarter of 2016, but unfortunately our plans were ruined by a Korean company, the supplier of a unique equipment, which required a special approach in manufacturing. Air coolers bundles manufactured for the high-pressure section contained a hidden defect, which made us emergently seek and order the bundles from Hamon, France, out of turn. It cost us a great deal of efforts to reduce the equipment and materials manufacturing time by half in order to replace those got out of order during the tests because of the defect by the manufacturer. As a result, start-up activities were shifted to the spring of 2017, Albert Shigabutdinov said.

How Rustam Minnikhanov Worried for Heart of Ilsur Metshin

After listening about the results of the reporting period, Rustam Minnikhanov highlighted that no matter how difficult, the overall performance of the group was positive and plans were very ambitious. 'What is TAIF today? It is 21% of the industrial production volume of Tatarstan, about 27% of the gross regional product, 17% of income tax proceeds to the consolidated budget, and RUB 78 billion of investments in the fixed capital. Many regions do not even see such investments,' Rustam Minnikhanov said.

Having listed all current projects of TAIF Group, including social projects, the President noted that the restoration of the Lebyazhye (Swan) Lake, which had been uncared, was under way at the moment. 'In the near future, it probably will become the most favorite recreational place for the city dwellers,' Rustam Minnikhanov expressed an assumption and after a pause switched to support of sports. Looking at Ilsur Metshin, the Mayor of Kazan, the President of Rubin football club sitting nearby, Minnikhanov ironically said we still had less goals on the soccer field. 'Every work requires some effort. Ilsur Raisovich is also concerned. I am even more concerned for him. I'm afraid his heart could stop because of the team's losses. Such is life; one has to accept losses, too. And here we must realize that Rubin's brand is the brand of the republic. And poor results are unacceptable here. We must make every effort,' the President of Tatarstan came back to serious speech.

'In general, we are grateful for the work being carried out by the entire group. The results of the entire republic would look different if there was no such systematic work by TAIF Group. Today, Tatarstan makes a contribution to both the industrial production volume and the growth of the gross regional product. The republic allocates RUB 690 billion of taxes and charges to the budgets of all levels! We are ranking first in our region and fifth in the country,' Rustam Minnikhanov stated.

The Board of Directors of the parent company consisting of 10 persons was approved at the end of the meeting; Timur Shigabutdinov, Adviser to the General Director, TAIF PSC joined it. Rustem Sulteev, the First Deputy General Director, Production and Commerce, TAIF PSC was re-elected as the Chairman.

'Oil refining industry is in a very challenging situation'

During the press conference following the shareholders' meeting with participation of Rustam Minnikhanov, the President, Albert Shigabutdinov, General Director, TAIF PSC and Rustem Sulteev, the Chairman of the Board, TAIF PSC, the conversation went to development prospects.

'It's very important that a company's management thoroughly analyzes particular circumstances,' Rustam Minnikhanov began his speech. 'Taking into account existing difficulties in the market, and the tax legislation, they find opportunities to optimize production and develop product portfolio. Development prospects are very ambitious. TAIF-NKs project is enormous. Launch of the Heavy Residue Conversion Complex will greatly change the product slate and improve the company economic position. Today, it is very important for us to launch this complex as soon as possible. In general, the oil refining industry is in a very difficult situation now. There is quite an unfair treatment since the oil refining companies have signed an agreement with the government aimed at increasing of processing volume and depth. It was not taken into account, however, when tax changes were introduced and the refiners found themselves in a difficult situation. But despite this, the Group manages to find solutions, and I would like to thank the management of the Group. The strategy they chose, of course, makes them look for new niches and new markets, but if they have not performed this work, there wouldnt have been today's investments.'

Realnoe Vremya asked about a tender for the ethylene complex project of Nizhnekamskneftekhim. 'The tender is still going on; Toyo, SB&I, Lummus, and Linde are competing. In the first half of the year, the tender will be finalized and the contract will be signed,' Albert Shigabutdinov revealed.

Further, the journalists pointed out that Nizhnekamskneftekhim refused the payment of dividends for the first time within 10 years. 'Yes, but it is one side, and the other side is the increase in the companys capitalization due to non-payment of the dividends; it is also beneficial for shareholders. Now, the issue of the ethylene complex financing is under review. Calculations are being made; we receive different proposals. Once every kopeck is calculated for all the four stages, then we can say when and to what extent the dividends will be paid out,' Albert Shigabutdinov, General Director concluded.

 
 
 

 

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