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Renault given ultimatum over funding for Avtovaz by Russian prime minister Vladimir Putin
By Steve Gavriliuc for CEOWORLD Magazine Updated:October 4, 2009
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Russian Prime Minister Vladimir Putin on Friday gave an ultimatum to French carmaker Renault ( EPA:RNO): either participate in funding troubled Russian carmaker Avtovaz (AVAZ.MM) or see its stake reduced.
‘Either they Renault (RNSDY.PK) participate in funding the enterprise or we will have to agree with them on dividing up our stakes,’ Putin told government officials.
Carmaker AvtoVAZ (AVAZ.MM), faced with plunging car sales, is preparing to cut a quarter of its workforce, or 27,600 people, in the largest round of job cuts in a single Russian city.
Russian Prime Minister Vladimir Putin has called for making a comprehensive approach to the issue of social support for the employees of the AvtoVAZ car-making giant and all residents of the nearby town of Togliatti.
“The decision must be comprehensive. It should encompass not only the enterprise, but the city and the entire region,” Putin told his first deputy, Igor Shuvalov.
“Social support measures must not be token ones, but available to the people and easy to get. The position of the enterprise must be clear and transparent, without any room for omissions, shadow zones and rumors,” Putin told the Cabinet’s presidium.
Shuvalov briefed Putin on the measures being taken to transfer the social establishments that have so far belonged to AvtoVAZ to the balance sheets of the municipal and regional budgets.
“We are aware what sort of establishments they are, and to what extent their financing is necessary in 2010,” Shuvalov said. According to his estimates, this spending article will require an estimated 1.8 billion rubles. The parameter is to be specified next week.
“We are to go ahead with furnishing support for Russia’s constituent territories in order to fund this network to the full extent,” he said.
Shuvalov noted the importance of the normal operation of many of those enterprises for every single resident of the region.
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