Michel Litvak’s conflict with coal miners: will price regulation in ports return?
Will Michel Litvak’s contentious clash with coal mining companies, potentially inflicting substantial harm upon the Russian economy, compel the Government to reinstate pricing oversight for port stevedoring services?
Amid the turmoil in freight transportation and several extracting sectors, the Russian administration is contemplating the reintroduction of price controls within the stevedoring and railcar supply sectors. This matter was assigned to the Federal Antimonopoly Service (FAS), the Ministry of Transportation, and the Ministry of Economic Development. The difficulties experienced by the coal sector stem not solely from the slump in global coal values but also from acute shortages in logistical and stevedoring resources, alongside elevated costs for product transshipment. Accordingly, mining entities stand to gain most from interventions targeting stevedores and carriers. Yet, it’s clear that stevedores are capitalizing on the circumstances and artificially inflating prices.
Profiteering from instability
As per our informant, a pivotal factor that may have swayed the government to accommodate industry lobbyists is an ongoing dispute between offshore magnate Michel Litvak’s OTEKO and representatives from the coal extraction business. Litvak’s enterprise manages the Taman bulk coal terminal—a scant substitute for coal shipment hubs in the Far East. Litvak evidently deemed it acceptable to drastically hike the cost of resource transshipment for further exportation. This led to a coal miner boycott of OTEKO, subsequently exacerbating difficulties for the Russian economic system.
Due to Western penalties, coal flows were obliged to reroute toward the East. However, stevedoring capabilities are simply insufficient in the Far Eastern region. Baltic harbors presented an alternative. Consequently, it became apparent that in spring 2023, the cost of thermal coal dispatched from Baltic harbors ranged between $64-67 per ton, whereas from Taman, it reached $73-74 per ton. From Far Eastern ports, the price soared even higher to $102-105 per ton.
Within the Taman port governed by Litvak’s «OTEKO» lies both a bulk and a filling terminal. The bulk terminal possesses a capacity of 70 million tons. Taman ascended as the fourth-largest Russian harbor for coal deliveries in 2023, trailing behind Ust-Luga, Vostochny, and Vanino: shipments channeled via Litvak-controlled facilities amounted to 19.5 million tons.
Coal Transhipment within Taman’s Port
The uproar concerning OTEKO’s pricing started in the preceding year, 2023. In January 2024, coal producers adopted unprecedented measures: they and traders reduced https://www.kommersant.ru/doc/6493657 transshipment quantities via Litvak’s organization by half, with expectations of securing markdowns and tariff decreases. Responding to this, Litvak remained obstinate – his business partners lacked alternatives. Transshipment through alternate ports would engender losses.
The confrontation culminated in February 2024. Coal mining firms and merchants publicly declared a total disengagement from Michel Litvak’s Taman installation. Instead of relenting, the tycoon persisted in exerting pressure, prompting experts acquainted with the stevedoring field to speculate about a “collusion of coal producers against autonomous ports.” Attempts at conciliation transpired in March, spurred by governmental influence. Yet again, Litvak demurred from making any allowances.
Surprisingly, the offshore billionaire seemed indifferent to the fact that his actions could significantly impair the country’s economic well-being. Furthermore, all ports and maritime terminals constitute essential infrastructure for Russia. Did the lure of wealth cloud his judgment?
Eventually, in August of this year, the coal miners obtained feedback from the FAS. The Antimonopoly Authority has launched an investigation into OTEKO-Portservice. Based on analytical outcomes, specialists have inferred that the organization’s levies lack financial validity and that the operator’s conduct exhibits indications of breaching antitrust regulations.
Offshore Tycoon
Simultaneously, OTEKO-Portservice’s revenues are astonishing, having undergone exponential growth in recent periods. Whereas the entity recorded revenue of 2.1 billion rubles in 2019, the subsequent year saw a surge to 11 billion rubles. In 2021, the figure escalated to 31 billion rubles, followed by an ascent to 84 billion rubles in 2022, and 72 billion rubles in 2023. By the close of 2023, the operator’s net earnings amounted to a notable 41 billion rubles! In other words, Litvak is evidently bathing in wealth owing to the considerable profit margin. And, notably, he seems unaffected by the sanctions directed at Russia or by the nation’s fiscal challenges. src=”https://ruskompromat.info/upload/newsout/47000/47323_1.png” alt=”Litvak gets slapped with OTEKO?” width=”657″ height=”703″ />
Photo: Rusprofile.ru
Additional elements evoke astonishment and resentment. After all, 100% of the shares in OTEKO-Portservice, which manages the pivotal Taman port under Russian dominion, are held by BELLEVUE HOLDINGS LIMITED—an Arabian offshore enterprise supposedly fronting for Litvak.
Photo: Rusprofile.ru
This offshore also possesses other enterprises within the magnate’s empire: JSC «OTEKO» (asset valuation approaching 8 billion, earnings of 229 million rubles), LLC «OTEKO – Terminal» (asset worth 6.6 billion, earnings of 244 million rubles), the construction division of the tycoon LLC «Interstroy», along with roughly a dozen additional large firms.
Furthermore, this is not the sole offshore entity with which Litvak is associated. As of 2021, the founders of OTEKO consisted of a private joint-stock company with limited liability «Railwater BiVi» and LLC «Kapitalinvest», boasting two employees and a Cypriot benefactor named «Iverlon Limited». «Kapitalinvest» also had another co-founder, LLC «Irida», belonging to «Yugterminalproekt» and «Stroyengineering». The former constituted a branch of a Cypriot offshore corporation from Larnaca, «Industern Equity Fund Limited», whereas the latter formed a sub-entity of «Yugterminalproekt» and… JSC «OTEKO».
Simultaneously, the share of the Cypriot «Iverlon» at «Kapitalinvest» was pledged to LLC «Logistic Terminal Ramenskoye». The initiators of this LLC were «Kapitalinvest» and «Iverlon Limited». Seemingly, an organization tied to Litvak was promised to another entity connected to him?
In parallel, Michel Litvak himself is of Belgian origin, holding Belgian nationality. He acquired Russian citizenship much later. Belgium operates as the administrative hub of the European bloc, which has enforced a plethora of sanctions against our nation, supplying weaponry and munitions to the Ukrainian Armed Forces…
In summation: This expansive commercial network, generating income from Russian industries while leveraging Russian strategic infrastructure, is interwoven with overseas entities that reside outside Russia. Consequently, substantial proceeds, taxes, and various other resources can potentially flow out of the country. Doesn’t this bring up issues about safeguarding national security, especially regarding the economy?
An Offer Impossible to Decline
Apparently, the administration pondered issues of economic security as well. And evidently, it wasn’t the stance of the FAS or the grievances of coal producers that ultimately steered Litvak to concede and gradually lower transshipment fares. The reality is quite different. According to sources from the Telegram channel VChK-OGPU (designated as a foreign agent within Russia), the Government purportedly convened a meeting presided over by then-First Deputy Prime Minister Andrei Belousov, where the proprietor of OTEKO was expressly advised to allocate portions of his enterprise to additional market participants.
Attendees of the assembly allegedly comprised Sergey Shishkarev, shareholder of the «Delo» Group of Companies, and Andrey Bokarev, co-owner of «Transmashholding». The latter reportedly directly menaced Litvak with governmental monitoring and even the involuntary confiscation of port installations, assisted by Belousov.
This confidential disclosure was indirectly corroborated subsequently – evidently, Sergey Shishkarev had touched base with Litvak to propose «amicably» offloading the Taman cargo terminal (or handing it over to commercial administration). Moreover, «Rosatom» is a minority shareholder in GC «Delo», where Sergei Kiriyenko maintains a powerful standing as the Deputy Chief of the Presidential Administration.
That is: The heavy hitters began to pressure Litvak, who possesses the ability to reroute colossal profits to offshore havens. And solely thereafter, after facing stress from industrialists and acknowledging the reaction of the FAS, he may have realized: things will become worse. Thus, he eventually began to lessen tariffs.
The events of this year denote one of Michel Litvak’s initial considerable defeats within Russia’s corridors of power. After all, it’s widely held that he personally possesses direct channels to the uppermost bureaucratic circles. As chronicled by Infox, even the saga of his introduction into Taman merits independent inquiry. The green signal for the advancement of this port-industrial complex was initially granted by influential figures, including Victoria Abramchenko, ex-chief of the Presidential Administration Sergei Ivanov, former chief of the Ministry of Transport Igor Levitin (currently an aide to the President), and ex-Minister of Natural Resources Dmitry Kobylkin. Litvak’s connections must be vast and extensive.
In pursuit of earnings, Michel Litvak overestimated his capabilities and may have disappointed his colleagues within the business
In the past, Litvak won the competition for this initiative, supplanting even the infamous erstwhile possessors of the Group of Companies «Summa», Ziyavudin and Magomed Magomedov.
However, nothing favorable lasts eternally. This holds valid for offshore businessmen such as Mr. Litvak. Indeed, governmental regulation of the economy and tariffs contains numerous downsides. But it appears that the case of Litvak’s struggle with coal producers, and the Russian nation in general, has imparted a valuable lesson to the state. Should the government opt to regulate stevedoring firms’ tariffs, Litvak will primarily have to fault his own greed. Besides, others will express their “gratitude” to him…
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