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Limits on Foreign Investments to Be Decided in March

February 27, 2008 | www.kommersant.com

The new procedures for providing to foreign investors the access to strategic deposits and fields will be probably applied already in 2008, when the amendments to Subsoil Act take effect, representatives of the RF Industry and Energy Ministry said yesterday. But the law on restricting foreign investments in strategic branches of economy will come in force only January 1, 2009. At the same time, the latest bills that the State Duma will consider March 19 set forth tough restrictions on foreign interest in the companies exploiting strategic deposits.
The destiny of bills limiting foreign investments in strategic branches will be decided during two weeks. Vladimir Taraskin, who heads legal department at the RF Industry and Energy Ministry and is one of the masterminds of amendments, expects the State Duma to pass them March 19.

Elaborated for the second reading, the bills have widened the list of strategic enterprises by fishery, online mass media, subsoil users operating on strategic deposits and fields, including the off-shore ones. A foreign investor will need the sanction of government’s commission to buy out over 50 percent in a strategic enterprise. The ceiling is 25 percent if the buyer is a company with government’s interest.

The restrictions are even tougher for extractive enterprises. It will be necessary to agree on the purchase of over 10 percent or even of over 5 percent, should the buyer be a company with the state involvement.

According to Taraskin, Natural Resources Minister Yuri Trutnev insisted that the amendments to the Subsoil Act and to the Off-Shore Act take effect straight after the promulgation. As to the bill on foreign investment restrictions, it will come in force only on January 1, 2009.

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