Yuckos

6 July 2004 By Fiona Maharg-Bravo

The Russian government keeps sending conflicting signals about what it plans to do with the country s largest oil company. That may suit the Kremlin s purposes to some extent, but it is wreaking havoc on the Russian market.

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Russia's deputy finance minister Sergei Shatalove said Yukos may be given extra time to pay its $3.4bn tax bill if it asks for it. Unless the deadline is extended, the Russian oil company has until midnight on Wednesday to pay the bill. Given it has only about $1bn in cash, this risks throwing the company into bankruptcy.

Meanwhile, the company has offered to settle the tax bill with its 35% stake in oil company Sibneft, worth about $4.7bn at current market prices. The bailiffs have so far rejected the offer.

Bruce Misamore, chief financial officer, accused president Vladimir Putin of scuppering secret talks between the government and the company on how to settle the bill. He told the Financial Times: The situation is extremely uncertain. There is just one person in this entire country who is responsible: Mr. Putin. He started the problem and only he can solve it.

Meanwhile, S&P said the uncertianty regarding the Yukos case highlighted the political risks in Russia, one of the key factors preventing the country from achieving an investment grade rating.

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