As Russia moves further from 2017, dubbed the Year of Ecology, for some regions environmental prospects look bleaker that to others. And Oligarchs has a lot to do with it.
One of the biggest Russian metallurgical corporation, Norilsk Nickel, is facing various risks as shareholders argue over dividends. Namely, oligarchs Vladimir Potanin and Oleg Deripaska, both owning considerable shares, are going to play buy-or-lose with each other — a game initiated by Deripaska to buyout Norilsk Nickel and eliminate his competitor from the Board.
The conflict emerged when Deripaska, holder of roughly 27,82% share, demanded to rise proprietor dividends from $1,5m annually to $2,5m which Potanin, being the main shareholder with 31,02%, couldn’t sustain due to heavy investment program, including various ecological programs in the region. Instead of complying with the main decision maker, Deripaska evoked a 2012 agreement, initializing a process dubbed the Russian Roulette. Rules are – first party offers to buy the whole share of the other at the cost 20% above market value and the other party can either succumb, return offer, or rise stakes. The game is not over until one surrenders, either by getting an offer too sweet, or failing to uphold a deal by not having enough funds.
However, these billionaire games are affecting thousands of people directly, and many more indirectly – Norilsk Nickel is the biggest metallurgical corporation around with direct impact in most manufacturing industries. Even more importantly, recently Norilsk Nickel in the attempt to drastically cut its emission proposed largest ecological investments in Russian history and having its current management in jeopardy may be a major environmental threat to the Siberian parts of Russia, especially Krasnoyarsky Kray.
In the latest years, Russia was moving from the rule of oligarchy to the more authoritarian rule of the federal government. Financial elites like Deripaska and Potanin, both Forbes list billionaires, were allowed to continue profiting from their gains, acquired during wild privatization after the Union’s collapse, as long as they payed taxes and played along to the Putin’s administration. Status quo, however, may be threatened, as oligarchs put a national security level asset in jeopardy. “Kremlin is watching this managerial conflict. However, we cannot interfere in a shareholder feud over private property” – was the official statement of the government.
Black Sky over Krasnoyarsk, image taken from social networks.
The real position may not be this see-through, however. Deripaska has attracted a lot of unwanted attention lately with escort story, and is currently being linked to affairs as deep as US election meddling. He is clearly disfavored by both Kremlin and his fellow financial elites, not even talking about Russian people. Deripaska is clearly up to something with this bet, likely looking for a way out of Russian business, as he have recently obtained a citizenship at Cyprus. Analysts suggest that in any case, he will likely escape Russia with as much funds as he can and will lead a life of a reclusive millionaire, following a familiar path of other disfavored oligarchs like Abramovich and Rybolovlev. If he plays his cards right, he might even stay a billionaire, but all experts agree that it is not likely that Deripaska will be allowed to run Norilsk Nickel.
Billionaires are likely to stay afloat, yet the situation is likely more damaging to the local environment. Feud puts the city of Norilsk and the whole region – Krasnoyarsky Kray in danger of slowing down ecological improvements it has seen in the recent years. While oligarchs are busy debating, scheming, gathering support and attracting investments for incoming bet war, the city of Krashoyarsk have seen a third ‘Black Sky’ warning in a year. This warning is issued when dangerous emissions reach such a high concentration that they do not easily dissipate and stay over the populated area in a form of a thick smog. Norilsk Nickel is currently planning to invest over 1 trillion rubles on modernization, including more than 250 billion rubles for ecological projects. This initiative will likely be scrapped, as corporation’s current management will need the funds for the bet war, leaving citizens of Krasnoyarsky Kray suffering from severe environmental consequences of metallurgical fabrication processes.
“It is hard to talk about improvements in healthcare when some people still live in a permanent smog, some suffer from black snow, and some lack access to clean water” – Putin noted in his recent address to the government, linking ecology and healthcare together, “All enterprises that cause high environmental risk should transition to modern ecological standards by 2021. Delays are unacceptable.”
Currently, even being in this undefined state, Krasnoyarsky Kray is moving its environmental agenda forward. Minister of Ecology and Nature Resources of Russia, Sergey Donskoy was personally overseeing a modernization of one of the region’s Power Plants. Earlier, Governor have attracted 587 billion rubles of investments for sustained development and ecological modernization of Krasnoyarsky Kray.
Norilsk Nickel is not slowing down its ecological programs either – the Gray Project, aiming to reduce emission from the whole Norilsk processing complex by whooping 75% by 2023, is a go. However, as the situation unfolds, high chances are that number of ecological projects will be reduced as the result of the billionaire feud, and people will continue suffering from emissions.