Gazprom may buy Total's UK petrol stations
Sources in Russia told The Guardian that the energy group's oil arm, Gazprom Neft, was looking at the petrol station assets
The Russians may be coming – to a petrol station near you, if the latest upheaval in the oil industry comes to pass. French energy group Total wants to sell off up to 500 UK forecourts and Gazprom from Moscow is an interested buyer.
The Muscovites have long eyed a major move into Britain but backed off after ideas of taking over British Gas triggered a minor political earthquake in Westminster.
Gazprom declined to comment about its latest plans, but well-placed sources in Russia told the Guardian that its oil arm, Gazprom Neft, was looking at the petrol station assets.
Total, which was recently fined £3.6m for its role in the Buncefield fuel refinery fire in Hertfordshire in 2005, said it was reviewing the future of 480 directly owned forecourts and contracts to supply 300 franchised-out stations.
The French company accounts for 9% of the UK market, selling more than 3bn litres of fuel and lubricants each year, and recently put its Lindsey oil refinery in North Lincolnshire up for sale. But the company, which employs 6,500 staff and is said to support 35,000 others, says it will not quit the country.
Gazprom, which is controlled by the state, provides a quarter of all mainland Europe's gas. The Kremlin has been accused by the west of using energy as a political weapon after it cut off supplies to the Ukraine and Belarus.
Gazprom Neft is keen to expand outside Russia. It recently bought the service stations and other interests of the main oil company in Serbia.
David Clark, a former UK government adviser who has been critical of Gazprom in the past, said he did not see any possible strategic threat from Russia buying British petrol stations but added: "I don't understand why a heavily indebted Gazprom goes round buying downstream assets when it needs to spend large amounts on getting gas out of the ground."
Britain and Russia have enjoyed an uneasy political relationship over the past decade but Russian oligarchs have bought up everything from Chelsea football club and the Independent newspaper to auto firm TVR.
BP, which is one of Russia's biggest foreign investors through the joint venture TNK-BP, has also been through turbulent times. BP and some other oil companies have long claimed that retailing petrol in Britain brings relatively little reward given the intense competition from supermarkets. They point out that the bulk of the pump price goes to the government in tax.
Critics have often argued that the claims are motivated by an attempt to calm angry motorists who resent the very high fuel prices in Britain and the massive global profits produced by the oil majors.
Almost 2,000 petrol stations have closed over the past six years, with big oil companies preferring to spend their money on the "upstream" exploration and production side of the business, where profit margins are higher.
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Nokia replaces Kallasvuo with Microsoft's Elop
Nokia ousts chief executive and brings in Microsoft business head Stephen Elop as mobile phone maker struggles to compete with Apple iPhone and Google Android handsets
Nokia has fired its embattled chief executive, Olli-Pekka Kallasvuo, and turned to a senior Microsoft executive in an attempt to restore its fortunes.
The mobile phone maker announced this morning that Kallasvuo will leave the company on 20 September. He will be replaced by Stephen Elop, who until last night was the head of Microsoft's business division.Shares in Nokia jumped by 5.8% in early trading after the news was announced.
Kallasvuo has been under mounting pressure for months over Nokia's failure to compete better with Apple's iPhone and the slew of new handsets running Google's Android operating system. Nokia's board said it had appointed Elop in an effort to "complete the transformation" of the company.
"The time is right to accelerate the company's renewal; to bring in new executive leadership with different skills and strengths in order to drive company success. The Nokia Board believes that Stephen has the right industry experience and leadership skills to realise the full potential of Nokia," it said this morning.
As president of Microsoft Business Division, Elop was responsible for its Office suite, various applications for enterprise customers, and its unified communications arm. He joined Microsoft at the start of 2008, having previously worked as chief operating officer for Juniper Networks, and headed up Adobe's sales division.
The announcement of Kallasvuo's departure comes just days before Nokia World, the company's annual gathering, which is taking place in London next week.Analysts at CCS Insight said that Elop's appointment was a departure from Nokia's tradition of appointing a Finn as its chief executive.
Nokia has also been criticised for a clumsy acquisitions strategy in which several start-ups were purchased, only to then wither on its books. As the Guardian reported this morning, travel social network site Dopplr appears to have languished since being bought by the Finnish company for $20m (£12.9m) almost a year ago. Dopplr's fate has been mirrored by several other promising new companies, which have effectively disappeared from view after being acquired. Meanwhile, Nokia's Ovi app store has failed to match the success of Apple's app store, or the Android Marketplace.
In July, analysts at Gartner warned that Nokia needed to find a "European Steve Jobs" to replace Kallasvuo, with "the experience to run a company the size of Nokia, the charisma to pacify investors, the knowledge to recognise bad products and strategies, and the courage to kill them".
Today, Gartner was reserving judgment about Elop's appointment."Microsoft has many of the same problems as Nokia in terms of innovation, especially in the smartphone business. Steve Elop is an American – which the investors will like – but I'm not sure he brings any specific skills that will fix Nokia's challenges," said Gartner vice president and analyst Nick Jones.
Tony Cripps, principal analyst at Ovum, said the choice of Elop showed that Nokia hopes to improve its performance around software, the internet and developer ecosystems.
"Elop's history with Microsoft and Macromedia/Adobe – in particular – should prepare him well for this challenge, although it will also be incumbent on him to keep growing Nokia's core handset business, a market he is as yet largely unfamiliar with," said Cripps.
"Balancing this requirement with the need to move Nokia forward in new areas may prove a difficult challenge to manage effectively."
Kallasvuo will walk away with a payoff worth €4.6m (£3.8m), to cover 18 months' salary and a bonus. He will also receive an estimated €820,000 to compensate him for shares which were due to vest next month
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Infrastructure project financing
KARACHI: The State Bank of Pakistan (SBP) has advised the banks and development finance institutions (DFIs) to assess development, construction and operation stages for risk mitigation before loan disbursement under Infrastructure Project Financing (IPF).The central bank recently revised the IPF guidelines in consultation with various stakeholders to facilitate banks and DFIs. The central bank said that infrastructure projects usually go through development, construction, start-up, and operation stages. “Banks/DFIs should, therefore, assess these stages separately for risk mitigation,” it added.
It said in the revised guidelines for IPF that in view of higher risk in development phase, the funding needs should be met primarily through capital from the main sponsors only. “However, if the lenders decide to provide funding during this phase of the project, they should critically evaluate the possibility of various risks, including those arising from unclear government policies, if any, and their possible impact on the viability of the project,” the central bank added.
The lender may also provide funding during the development phase by having a charge on sponsors’ assets, which would be released at the time of financial close, it said. In the construction and start-up phase, the SBP said that the major risk is that construction would not be completed on time, or may have large cost overruns. “The lending banks/DFIs are advised to adequately safeguard their interests and stress upon the project companies to provide risk assessment and allocation matrix and also to hedge identified and potential risks by opting for fixed price, certain date construction contracts, including turnkey contracts, and built-in provisions for liquidated damages if the contractor fails to perform, along with obtaining insurance cover for certain areas of the project,” the central bank said.
It also said that the banks and DFIs as lenders cannot control the construction process. “Therefore, banks and DFIs should properly assess and negotiate the risks during completion phase of the project.”
To protect against the risk of physical and financial non-completion of the infrastructure project, banks/DFIs are also advised to closely observe issues such as Project Funds Agreement, Financial Completion Agreement, insurance for risk mitigation.
Regarding Project Fund Agreement, the State Bank said that the most common threat to physical completion of the project is cost overruns that affect the project through additional financing. “The issue may even lead to abandonment of the project,” the SBP said.
Therefore, to ensure that unexpected costs do not jeopardise the project’s completion, creditors and minority investors should insist on a commitment for standby financing as part of the initial financial package, the SBP added.
The central bank also advised that to ensure fulfillment of obligations it should be backed-up by a letter of credit, bond or guarantee from a creditworthy third party. “However, for mitigating force majeure that cannot be contractually allocated, banks/DFIs are advised to call for purchase of insurance, wherever possible, by the sponsors, so as to mitigate both direct and indirect types of force majeure,” the SBP said.
Operation Phase: In this phase, the risk is generally lower, and the sponsors may opt for retiring the senior bank debts through arranging cheaper sources of funds in the market. As most of the projects are to stay in business for long-term periods, significant changes may occur that may have adverse impact on the viability of the project. These changes may include availability and cost of inputs, market demand for the projectís products etc. Therefore, banks/DFIs may stress upon the sponsors to undertake long-term purchase contracts for important inputs and long term off-take contracts (where applicable) so that the impact of price volatility and adverse market demand is minimized. The project company may also ask its suppliers for performance guarantees on technical components and other necessary inputs.
Moreover, the Project Company may be encouraged to enter into Operation and Maintenance Agreement (wherever appropriate) for initial few years of operation.
