Russians Take Over Armenian Chemical Plant
The Nairit factory has been sold to a foreign investor for a second time.
By Tigran Avetisian in Yerevan and IWPR in London (CRS No. 235, 27-May-04)
Armenia’s giant chemical factory, Nairit, the object of ownership
battles over the last few years, has acquired a new and little-known
Russian owner, in a sale welcomed by both government and workers.
The takeover of one of Armenia’s prize assets follows the acrimonious
departure last year of Ransat, the British-based company that tried
to turn around the factory, but ended up quarrelling with the Armenian
government.
A provisional deal was struck on April 16 by Armenia’s central bank,
which was in de facto control of the company, to sell Nairit to the
Volgaburmash company, based in the Russian city of Samara.
The final details of the deal are still pending as currently an
audit is being carried out to determine the worth of the factory. Its
results will be announced in August.
Nairit produces chloroprene rubber. In Soviet times it had a monopoly
and was the only factory in the USSR making the product. It is still
one of only five factories around the world turning out the synthetic
rubber and has customers in 20 countries. Anil Kumar, general director
of former owner Ransat, told IWPR last year that if the plant operated
well, it would be worth 50 million US dollars.”
Ransat pulled out last May after a row over who was responsible for
the factory’s energy debts. Kumar said he had “spent ten million
dollars before a single ton of rubber was produced” and blamed the
Armenian government for not supporting his plans to turn around the
company. (See “Armenian Chemical Deal Ends in Tears, CRS 177, May 1
2003 )
Kumar said Ransat had promised to invest 25 million US dollars in the
factory over a five-year period and progressively settle its debts,
estimated variously at between 30 and 35 million dollars.
After Ransat pulled out of Armenia, the factory’s shares passed
to Haykapbank and, as the bank did not have enough assets and was
therefore taken under administration by the central bank, effectively
placing it under Armenian government control.
The Armenian government then handed management of Nairit to the Russian
bank Runabank, one of whose major shareholders is the Volgaburmash
holding company. Volgaburmash is owned by Samara businessman Andrei
Ishchuk who is also a member of Russia’s upper house of parliament,
the Federation Council.
The holding company has several factories in Ukraine and Russia that
produce drilling equipment and several factories producing heating
equipment, 11 construction companies and two banks. The Russian news
agency Interfax reported that Volgaburmash had an annual turnover of
200 million dollars.
However as Volgaburmash has not previously dealt in chemicals,
questions are being asked about how and why it acquired Nairit.
“The Yerevan chemical factory is not a prestige project for
Volgaburmash,” Gleb Stolyarov, Samara correspondent of the Russian
business newspaper Vedomosti told IWPR.
Volgaburmash declined to answer IWPR’s questions, but Stolyarov pointed
out that the company’s vice-president Yury Trakhtenberg had told a
press conference that, “the personal connections of the president of
the holding, Andrei Ishchuk, played a role.”
The acquisition of Nairit follows a pattern where major plants
in Armenia have been acquired by Russian companies, while western
companies have experienced significant difficulties in the Armenian
market. The Razdan hydroelectric power station and the Metsamor
nuclear power station are managed by Russian companies.
The Armenian government is enthusiastic about Nairit’s new owner. Karen
Chshmaritian, minister of trade and economic development said that,
“Four or five years ago, no one believed that Nairit would ever be
privatised – first of all, because of its size, and secondly because
of all the problems that had accumulated. But today that has become
a reality.”
Political analyst Aghasi Enokian commented that a big business like
Nairit could not succeed in Armenia without support from top levels
of governmen.
Whatever the politics of the deal are, there is general agreement
that Nairit is now undergoing a revival.
Mikhail Zavetyayev, who represents Volgaburmash, said that 3.5 million
dollars had already been invested in the factory over the past ten
months and that it was already bringing in a profit.
Ruben Saghatelian, the new executive director of the factory, told
IWPR that Nairit was now working at full capacity and that “we have
no more problems with putting out the product”.
Chshmaritian said that thanks to its new owner Nairit had not acquired
any new debts over the past ten months, that the almost 2,000 workers
on the payroll were receiving their wages regularly and that 350,000
dollars worth of back wages had been paid out. Factory director
Saghatelian said that they had worked out a schedule for paying
off debts.
The workers are also pleased with the new management. “We are happy
that finally we’ve started to receive our salaries on time,” Hrachik
Tadevosian, chairman of the trade union representing the factory’s
workers, told IWPR.
But he added, “We are still owed a lot of money. Not only from the
Ransat period but from much earlier.”
“I have no interest at all who owns Nairit or where our rubber
gets sold,” said Sarkis, a 43-year-old worker at the factory.”I am
content now, thank God. “If only they could pay us the money we’re
owed from before.”
Tigran Jrbashian, an economic analyst, said that the situation
at Nairit was now “very promising”. But he said that a lot of the
previous problems plaguing the factory remained. “The problem of
transporting the product still remains very serious and that directly
puts up costs.”
Tigran Avetisian is a journalist for Aravot newspaper in Yerevan.