Excerpt from lengthy report that suggests renationalization of the oil industry as a last resort:

Russian newspaper analyses oil sector problems

Source: BBC Monitoring Former Soviet Union - Economic Publication date: Feb 06, 2000

"Reasonably favourable 1999 output figures in Russia's fuel and energy complex mask serious underlying problems, especially in the oil industry, according to the 'Nezavisimaya Gazeta'newspaper. The sector is failing to carry out exploration work at a sufficient rate or to make adequate investment in production at a time when yields from predominantly ageing wells are falling. In these circumstance, according to the article,the state must be more active in providing investment incentives and in intervening to prevent crises at oil companies, even if it means selectively considering the renationalization option.The following is the text of the article by Ziya Bazhayev,published on 2nd February under the headline "State regulation in the fuel and energy complex - reproduction of mineral and raw-material resources and investments are the principal problems of the fuel and energy complex"..

"What must be done to induce companies to invest money in production development?

First, the state must rely on - and provide incentives to - the domestic and, perhaps, foreign industrialists who have got into the oil business in earnest and for the long term.

Second, it is imperative to create a business climate in which not just the leading giants but also ordinary workers can successfully operate in the real sector.

Third, it is imperative that the state have at its disposal the appropriate mechanisms to take emergency measures in order to localize and prevent pre-crisis and crisis situations.

Finally,in instances in which an oil company shows results that are consistently below the average, this should prompt the question to be raised of replacing inefficient managers and/or owners.

Resources are public property.

The possibility of renationalizing the property of an inefficient resource user(with fair compensation) must not only be acknowledged but also applied when necessary.

For example, we have seen privatization alternating with renationalization in the recent history ofBritain, and this is normal. It is abnormal, in my view, when all the costs of privatization and the subsequent partitioning of property among private owners are accepted in the public consciousness as a given, while nationalization (for purely ideological rather than economic reasons) is presented as something absolutely unacceptable. "

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Link:

http://beta.newsreal.com/cgi-bin/NewsService?osform_template=pages/newsrealStory&ID=newsreal&storypath=News/Story_2000_02_06.NRdb@2@15@3@28&path=News/Category.NRdb@2@7

-- Carl Jenkins (Somewherepress@aol.com), February 07, 2000

Answers

What must be done to induce companies to invest money in production development?

The answer is: None, all profits are being siphoned off by the oligarchy (new Russians for the uninitiated). The only way for new production development is foreign investment and they make it too difficult for foreigners to invest.

-- Guy Daley (guydaley@bwn.net), February 07, 2000.