Page 146 - RusRPTFeb23

for the production of granulated calcium nitrate with a capacity of 100,000 tonnes per year at the production site in Veliky Novgorod.
And petrochemical giant Sibur launched the production of PET granules in the Republic of Bashkortostan using secondary raw materials with a capacity of 144,000 tonnes per year, as well as a polyalkylene glycol production line at the Nizhnekamskneftekhim enterprise with a capacity of 15,000 tonnes per year.
Russia’s timber industry has asked the government to freeze forest lease rates after 2023. At a meeting with representatives of the government of Arkhangelsk Region on January 11, the region's Duma and heads of the largest local businesses in the forest industry, as well as representatives from the Vologda and Kostroma regions, the participants decided to appeal to Deputy Prime Minister Victoria Abramchenko with a request to introduce a moratorium on forest lease rates after 2023. As a reminder, late last year the government decided to increase forest lease rates by 6% this year (earlier, there had been talk of an only 3.9% increase in 2023), 4.7% in 2024 and 4.0% in 2025. The corresponding decree was issued on December 23.
In Sber’s model, it projected a 3.9% hike to forest lease rates in 2023, as had been discussed previously, so the change to a 6% increase will cost Segezha Group about R76mn, or 0.3% of its 2023 adjusted EBITDA (after lease payments). The requested freeze of lease rates in 2024 and 2025 could save around R144mn and R150mn in the respective years, or around 0.5% of adjusted EBITDA in both years, according to our estimates. It is also worth mentioning that on December 16 at a meeting headed by Economy Minister Maxim Reshetnikov, it was decided that the government would support industry players' proposal to base lease payments for forest plots on actual logging volumes (rather than having fixed payments) starting this year. We estimated that a shift to payments based on logging volumes would allow Segezha Group to save up to R0.8bn in 2023 (3.7% of its adjusted EBITDA this year). However, since lease rates for this year were raised by more than had been discussed (by 6.0% rather than 3.9%) and not switched to a volume basis, we now doubt that this shift will actually occur. In addition to that, we note that we see the likelihood of the industry's proposed initiatives actually being implemented as low given the 's recent depreciation versus the dollar (which should materially support sector earnings - according to Segezha's estimates, each one-ruble increase in the $/RUB rate adds at least R500mn to its EBITDA) and how little room there is for further adjustments to the federal budget this year.
146 RUSSIA Country Report February 2023 www.intellinews.com