Digest of headline news as of 7:00 p.m. Moscow time on May 27:
BUSINESS & FINANCE
*** SOUTH STREAM CONSTRUCTION IN BULGARIA MAY START IN 2014 - ECONOMY MINISTER STOYNEV
Bulgarian Economy Minister Dragomir Stoynev remains hopeful that "common sense in politics and the economy" will eventually prevail in Brussels concerning the South Stream project.
He also reaffirmed Sofia's readiness to launch the gas pipeline's construction on the territory of the country in 2014.
"I believe that common sense in politics and the economy will eventually prevail at the national and European levels. Let's not forget that we bear responsibility to citizens and businesses of the EU which look forward to the reliability of energy supplies," Stoynev told Interfax.
*** NAFTOGAZ READY TO PAY $2 BLN TO GAZPROM BY MAY 29 - OETTINGER
Naftogaz is prepared to pay $2 billion to Russian gas giant Gazprom (MOEX: GAZP) before May 29 if the Ukrainian company agrees upon this payment with the authorities of Russia and Ukraine, European Commissioner for Energy Gunther Oettinger has said.
Naftogaz will be able to pay another $500 million to Gazprom by June 7, Oettinger said after talks between the Russian and Ukrainian energy ministers on Monday.
*** RUSSIA WAITING FOR UKRAINE TO PAY $2 BLN GAS DEBT BY FRIDAY - GAZPROM CEO
Russia is waiting for Ukraine to pay off $2 billion in gas debt by Friday, Alexei Miller, CEO of Russia's Gazprom (MOEX: GAZP), said in an interview with the Russia 24 TV Channel.
Miller said that as a result of three-party talks in Berlin with the EU's involvement in May 26, Ukraine agreed to work on the issue of settling some of its debt to Russia for gas.
"If you look at the agreements reached, then Ukraine agreed to work on the issue, if that's how we can describe it, to coordinate with the Ukraine leadership the issue of paying $2 billion for gas this week, well, at least something," Miller said.
"Russia is waiting for Ukraine to pay $2 billion by Friday," Miller said.
*** STROYTRANSGAZ TO TAKE PART IN BUILDING BULGARIAN SEGMENT OF SOUTH STREAM GAS PIPELINE
A consortium of CJSC Stroytransgaz and Bulgarian Gasproekt Jug AD has won the tender to design, build and commission the segment of the South Stream gas pipeline system in Bulgaria.
CJSC Stroytransgaz, unlike OJSC Stroytransgaz and other companies in the Stroytransgaz group, are not subject to U.S. and Canadian sanctions. The EU did not impose any sanctions on companies in the group. "The Bulgarian partners carefully analyzed all these issues a source at Gazprom (MOEX: GAZP) told Interfax.
*** TGK-2 GAINS CONTROL OVER MACEDONIAN POWER COMPANY
OJSC TGK-2 (MOEX: TGKB) has gained control of 89.2% of Macedonian TE-TO AD Skopje, which owns a combined cycle power plant in Skopje (CCPP Skopje) with capacity of 220 KW, the company said in a press release.
This was TGK-2's way of entering the international market, the company said. TGK-2 gained control over the company following the acquisition of Bitar Holdings Limited, which was registered on April 28. The value of the deal was not disclosed.
*** ROSTELECOM UPS Q1 IFRS REVENUE 1%, NET PROFIT 8%
Rostelecom (MOEX: RTKM) edged sales revenue to International Financial Reporting Standards (IFRS) up 1% year-on-year in Q1 2014 to 80.4 billion rubles, the state-owned telco said in a statement.
Operating income before depreciation and amortization (OIBDA) fell 9.86% to 26.5 billion rubles and the OIBDA margin was 33%, down from 37% a year previously.
Net profit grew 8% year-on-year to 6.9 billion rubles.
*** MTS BOOSTS Q1 GAAP REVENUE 5.1%, OIBDA - 5.3%, ABOVE FORECAST
Mobile TeleSystems (MTS) (MOEX: MTSS) boosted sales revenue to US GAAP 5.1% year-on-year in Q1 2014 to 97.6 billion rubles, the telco said in a statement.
Operating income before depreciation and amortization (OIBDA) gear 5.3% to 41.5 billion rubles and the OIBDA margin increased to 42.5%, from 42.4% a year previously.
Net profit edged up from 12.9 billion rubles to 13 billion rubles and was affected by 3.77 billion rubles in FX translation losses. Free cash flow grew 40% to 34.1 billion rubles.
*** SBERBANK'S GERMAN GREF JOINS YANDEX BOARD OF DIRECTORS
Sberbank (MOEX: SBER) CEO German Gref has been elected to Yandex's board of directors, the internet company said in a statement.
Gref is joining the company's board of directors as a non-executive director. Yandex's shareholders made this decision at their annual shareholders meeting, which took place on Tuesday. Gref's term extends from May 21, 2014 to the date of the annual shareholders meeting in 2017.
*** RUSSIAN BANK GETS FIRST EUROBOND MANDATE IN MONTHS
VTB Capital will act as joint global coordinator for a Eurobond offering by Logan Property Holdings Company Limited, a major Chinese developer, a banking sector source told Interfax.
This is the first time a Russian investment bank has been mandated to arrange a public-debt offering since March, when political events effectively sideline Russian borrowers from the Eurobond markets indefinitely.
*** VTB SEES Q1 EARNINGS TO IFRS PLUMMET 97.5% TO 400 MLN RUBLES
VTB (MOEX: VTBR) closed Q1 2014 with net profit of 400 million rubles to International Financial Reporting Standards (IFRS), down 97.5% from 15.7 billion rubles in the same period of last year, Russia's second biggest bank said in a statement.
This is way below the 13.1 billion rubles net profit that analysts predicted in a consensus forecast for Interfax.
The bank posted 8.2 billion rubles in losses on forex transactions in Q1 2014, driven by the Ukrainian hryvnia's devaluation and increased swap costs during the quarter.
*** MOSCOW EXCHANGE BOOSTS Q1 IFRS EARNINGS 24%
OJSC Moscow Exchange (MOEX: MOEX) had net profit to International Financial Reporting Standards (IFRS) of 3.l17 billion rubles in Q1 2014, the exchange's CFO, Yevgeny Fetisov, told reporters.
This was 24% higher than in the same period of last year and 11% higher than in the fourth quarter of last year.
Earnings before taxes, depreciation and amortization (EBITDA) grew 14.6% year-on-year to 4.43 billion rubles and the EBITDA margin was 68%, down from 70% a year previously.
*** GEORGIA BEGINS EXPORTING ELECTRICITY TO RUSSIA
Georgia has begun exporting electricity to Russia for the first time since the beginning of the year, Georgian State Electrosystem (GSE) PR Director Nino Dzheiranashvili told Interfax on Tuesday.
"Electricity shipments to Russia are being carried out via the 500 kW power transmission line at 5 million kWh per day," she said.
POLITICS & SOCIETY
*** ITALIAN PM, RUSSIAN PRESIDENT OFFER CONDOLENCES FOR DEATH OF ITALIAN CITIZEN, RUSSIAN CITIZEN IN UKRAINE
Russian President Vladimir Putin has talked on the telephone with Italian Prime Minister Matteo Renzi, the Kremlin press office said in a statement.
"The two countries' leaders have exchanged opinions on the situation in Ukraine in the context of the results of the presidential elections held on May 25, 2014," the document said.
Mutual condolences have been offered due to the tragic death of Italian reporter Andrea Rochelli and Russian citizen Andrei Mironov, who accompanied him, the press office said.
"Putin has emphasized the necessity of immediately stopping the tactical punitive operation in southeastern regions and introducing peaceful dialogue between Kyiv and representatives of the regions," the statement said.
*** LAVROV: RUSSIAN VISIT OF POROSHENKO IS NOT ON THE TABLE
A Russian visit of Ukrainian President Elect Petro Poroshenko is not on the table, Russian Foreign Minister Sergei Lavrov said.
"A Russian trip of Poroshenko is not being considered or discussed by diplomatic or any other channels," Lavrov told a press conference on Tuesday while answering an Interfax question.
Interfax asked whether the situation in southeastern Ukraine might hinder Russia-Ukraine normalization. "As to the recent events, let me remind you that Petro Poroshenko made a promise to unite the country in his election campaign. He said yesterday his first trip would be made to Donbas but they have a real war there so far," the foreign minister noted.
*** LAVROV: RUSSIA-TURKEY HIGH-LEVEL COOPERATION COUNCIL TO MEET IN H2 2014
The Russia-Turkey High-Level Cooperation Council will converge in the second half of this year, Russian Foreign Minister Sergei Lavrov said before the Russian-Turkish Strategic Planning Commission began its fourth meeting. The commission is chaired by two foreign ministers.
"We are tasked to thoroughly prepare the next meeting of the High-Level Cooperation Council in the second half of this year," the Russian minister said.
*** COLD WAR PRINCIPLES SHOULD NOT BE APPLIED TO UKRAINE - TURKEY
Application of Cold War patterns may lead to further tensions in Ukraine and bring to naught all reconciliation efforts, the Turkish foreign minister said.
"We are telling all of our partners that they should not be guided by the Cold War principles, or else confrontation will escalate in the region and all our reconciliation efforts will be brought to naught," Ahmet Davutoglu said at a joint press conference with Russian Foreign Minister Sergei Lavrov in Moscow on Tuesday.
*** RUSSIA, EU HOPE STABILITY WILL BE RESTORED IN UKRAINE AFTER ELECTIONS
Moscow and Brussels hope that the Ukrainian presidential elections will facilitate normalization.
On May 27 Deputy Foreign Minister Grigory Karasin met with chief of the European Union's mission in Moscow Vygaudas Usackas to discuss "various aspects of the current political crisis in Ukraine in the context of the May 25 presidential elections," the Russian Foreign Ministry said in a statement on Tuesday.
"The parties expressed the mutual hope that the May 25 presidential elections will mark the beginning of a new and more constructive period in the political life of the Ukrainian state," the statement says.
*** NATO QUITS FIGHTING DRUGS IN AFGHANISTAN - FSKN CHIEF
Central Asian countries are under pressure of drugs coming from Afghanistan as NATO has practically quit the anti-drug fight in that country, Federal Drug Control Service Director Viktor Ivanov said.
"Countries of the region are experiencing a very strong pressure from drug production in Afghanistan," Ivanov said after exhibition performances of CSTO drug control officers.
"We have to rely on ourselves, the regional states - Central Asia and Russia - in combating Afghan drugs," the FSKN chief added.
"Alas, the North Atlantic Alliance has stopped active anti-drug operations in Afghanistan, so this is a problem of our region, a problem of our states and we will be solving it with every method available," Ivanov underscored.
*** PATRIARCH KIRILL WISHES POROSHENKO RECONCILIATION OF UKRAINIAN PEOPLE
Patriarch Kirill of Moscow and all Russia said he congratulated Petro Poroshenko with being elected Ukrainian president.
"Together with many people I hope that powers and authority, which come into your hands today, will serve for the benefit of Ukraine's east, west, north and south. I hope that bloodshed will stop forever, that no one will be oppressed or humiliated and that the life, worldview and cultural choice of each group of the country's population will be implemented," the patriarchal press office quoted Patriarch Kirill as saying in his telegram to Poroshenko on Tuesday.
*** RUSSIAN, ISRAELI LEADERS TO HAVE DIRECT ENCRYPTED COMMUNICATION LINE
The Federal Protective Service of Russia and the office of the Israeli prime minister will negotiate a direct encrypted communication line between the Russian president and the Israeli premier.
Russian Prime Minister Dmitry Medvedev signed a directive to this effect.
*** 12 PARTIES WILL BE ABLE TO RUN IN 2016 DUMA ELECTIONS WITHOUT COLLECTING SIGNATURES - CEC
The parties already represented in the Russian parliament plus another eight political parties, including Yabloko, Right Cause and RPR-PARNAS, will not have to collect signatures in their support if they decide to run in the State Duma elections of 2016, Russian Central Election Commission (CEC) Deputy Chairman Leonid Ivlev has said.
"We see a list of 12 political parties which, as of today, will be able to take part in the elections of the seventh State Duma without having to collect signatures. But this list remains open," he said.
*** DONETSK MAYOR: 40 KILLED IN DONETSK FIGHTING ON MAY 26
The fighting in Donetsk on May 26 between a Ukrainian law-enforcement contingent and the militia left 40 people dead, among them two civilians, Donetsk Mayor Alexander Lukyanchenko said.
Lukyanchenko did not say to which conflicting party the fatalities belonged, according to the online newspaper Ostrov.
"Thirty-one victims injured in the fighting are in hospitals, among them four civilians," he said.
*** UKRAINE-RUSSIA TALKS WITHOUT MEDIATORS CURRENTLY IMPOSSIBLE - YATSENYUK
Ukrainian Prime Minister Arseniy Yatsenyuk claims that holding bilateral negotiations between his country and Russia is impossible at this stage.
"The government's position concerning talks with the Russian Federation remains unchanged as well: in present-day conditions, bilateral negotiations are not considered possible without the presence of the U.S. and the European Union," he said at a Ukrainian cabinet meeting on Tuesday.
INCOME AND UNEMPLOYMENT TRENDS CREATING PRE-CONDITIONS FOR POSSIBLE STRENGTHENING OF PRO-INFLATIONARY PRESSURE - CENTRAL BANK
Russians' powerful civic activity, consolidation at election important amid domestic and external challenges - Putin
Moscow ready to work with new U.S. president's advisor Bolton - Russian Foreign Ministry
GROWTH IN MORTGAGE, CONSUMER LENDING NOT CREATING RISKS OF INFLATION EXCEEDING 4% FOR TIME BEING - CENTRAL BANK
NEW FORMULATION OF CENTRAL BANK SIGNAL: WILL CONTINUE TO REDUCE KEY RATE AND WILL COMPLETE TRANSITION TO NEUTRAL MONETARY POLICY IN 2018