The Jakarta Post, Jakarta: Osama Bin Laden's al-Qa'ida financed the major terror attacks in Indonesia over the past four years, a senior National Police detective said Tuesday.

Senior Commissioner Petrus Reinhard Golose said the global terror group sent money to its operatives in the world's largest Muslim country to carry out a series of attacks, including the 2002 and 2005 Bali bombings, the 2003 JW Marriott Hotel bombing and the 2004 Australia Embassy blast.

The bombings, which were all blamed on the regional Jamaah Islamiyah terrorist network, killed a total of 244 people from more than 20 nations.

Petrus, formerly a senior member of Detachment-88 and the current head of the police cyber-crime unit, was speaking at a two-day international conference on terrorism that ended on Tuesday (28 Feb).

He said the money had been delivered through couriers sent by an al-Qa'ida leader.

"They sent it through their channels from Khalid Sheikh Mohammed via Thailand and Malaysia before finally reaching here (Indonesia)," Petrus told the media after the conference.

He declined to specify from which country the funds originated and who received them in Indonesia.

Mohammed, an alleged mastermind of the 11 September 2001 attacks on the United States, was arrested in Pakistan in 2003 and handed over to US authorities. He is believed to be al-Qa'ida's third in command.

Petrus said funds of up to US$30,000 were first delivered for the 2002 Bali blasts, and that al-Qa'ida also sent tens of thousands of dollars to finance the JW Marriott bombing and the Australian Embassy attack.

Leftover funds from the JW Marriott bombing, reportedly controlled by terror mastermind Azahari bin Husin, along with a third delivery of an unspecified amount of money from al-Qa'ida was used to finance the second Bali attack, Petrus said.

"The funds for the second Bali explosions were also collected from donations and fa'i operations," he added. Fa'i is an Arabic word referring to the robbing of enemies of Islam to secure funds for defending the faith.

Petrus added that remaining funds from the second Bali bombings were sent to the southern Philippines, where Jamaah Islamiyah trained its followers.

National Police Chief General Sutanto told a hearing with lawmakers early last month that in February 2002, Malaysian terror fugitive Noordin M. Top received $86,000 from al-Qa'ida.

Noordin also received $130,000 in May 2003 from Palestinians to carry out attacks in Indonesia, Sutanto added without elaborating.

Petrus, who was a key police officer involved in the anti-terror raid that killed Azahari near Malang in East Java last year, said that the Noordin-led group Tandzim Qoedatul Jihad had changed its structure amid the intensive hunt for its followers.

"People say that if we catch Noordin, terrorism in Indonesia would be finished. No, it's still dangerous because terrorists have changed the framework of their organization," he added.

Petrus said that based on a letter signed by Noordin, which was found in a raid on his suspected hideout in Semarang, Central Java, his next operations were still targeting foreigners, especially Australians, Americans and their allies, with cafes, hotels and discotheques prime sites for attack.

Apart from Noordin, he said the police were also searching for Abu Dujana, who is believed to be the new Jamaah Islamiyah leader and has been accused of helping to hide terrorist suspects who allegedly planned attacks on US interests in Singapore.

(Description of Source: Jakarta The Jakarta Post in English -- newspaper tailored for the foreign audience)

PNG & BOUGAINVILLE

PNG: PNG Police Seek Pay Rise to Fight Corruption within Force Wellington Radio New Zealand International WWW-Text in English 28 Feb 06

OSB Transcribed text

Unattributed report: "PNG police seek pay rise to fight corruption within force"

The Papua New Guinea Police association says it is appealing to the government to increase the salaries for police officers. Police investigations have found 66 officers involved in corruption, and a senior officer has been arrested over allegations of accepting bribes from an Asian crime syndicate. The president of the PNG police association, Robert Ali, says the lack of incentives for officers is likely to be a factor as to why some officers get involved in corrupt activities.

"We are appealing to the PNG government to look at the police salaries and probably give us a fair go on the salary. This is one way of setting the benchmark so that will help cut down on the accepting of bribes and you know using police premises for their personal agenda and that sort of thing." Robert Ali says the association is also appealing for a review on how people are recruited into the force.

NGO Review Finds Most Logging in PNG Illegal Wellington Radio New Zealand International WWW-Text in English 2245 GMT 28 Feb 06

OSB Transcribed Text

Unattributed report: "Review finds most logging in PNG illegal"

A new report on the commercial logging industry in Papua New Guinea shows that most of the logging is illegal. The Forest Trends report, "Logging, Legality, and Livelihoods in PNG" summarizes five independent reviews of the timber industry conducted between 2000 and 2005. PNG logging is dominated by mainly Malaysian-based companies. Forest Trend president Michael Jenkins says one solution is to ensure logging is better policed.

"What the report reveals is that there needs to be a much stronger role and will of the government to be able to better monitor logging in the country - that would be the step that needs to be taken."

The review was initiated by the PNG government to determine whether forest management was providing long-term benefits to the country.

PNG Has Highest Rates of Sexually Transmitted Infections in the Region Port Moresby Post Courier (Internet Version-WWW) in English 01 Mar 06

OSB Transcribed Text

Unattributed report: "PNG has highest sexual infections"

Papua New Guinea has the highest sexually transmitted infections (STI) cases in the Asia Pacific region and therefore the chances of its people getting infected with HIV are high. National AIDS Council senior medical adviser Dr John Millan said this when giving an overview on the surveillance conducted on the HIV/AIDS epidemic in the country. He said the September 2005 report on HIV/AIDS in the country, which was yet to be released by the council, had shown the reported cases of HIV/AIDS had gone beyond 13,000 and was continuing to rise. At the same time, the number of women getting infected is increasing with housewives among them. The surveillance had also found that all provinces have HIV/AIDS as well as the districts and villages.

Other staggering statistics, he said, include 20 per cent of people going to voluntary counselling and testing sites for testing have STI, including gonorrhoea and syphilis. "HIV is spread around the country," he said, adding that the common transmission factor in this country were multiple sex partnering which was high in PNG; high STI infection rate; and low condom use. However, in response to queries on why the statistics on HIV/AIDS were continuing to rise, Dr Millan said the cases being picked up had occurred some 15 to 20 years ago. "The cases we are picking up occurred 15 to 20 years ago when all of us were relaxing, thinking that the disease belonged to some other countries," he said. Dr Millan said it would take some years before the good work being done now would show any results.

Meanwhile, his colleague Dr Joachim Pantumari said behaviour change was difficult to achieve, mainly because there were people with HIV who did not come out in public to reveal their status and were going around and spreading the virus. Currently, 300 to 500 people with HIV/AIDS are on the antiretroviral treatment program with another 600 people still on the waiting list.

Bible Group Joins Fight Against HIV/AIDS Port Moresby Post Courier (Internet Version-WWW) in English 01 Mar 06

OSB Transcribed Text

Unattributed report: "Institute helps in AIDS fight"

An international inter-denominational organisation involved in Bible translation and literacy work in the country has been engaged in the fight against HIV/AIDS. Summer Institute of Linguistics, which is translating the Bible into vernacular languages of the country and is also teaching people to read and write in their own languages, has been engaged to translate the information, education and communication materials developed by the National AIDS Council. NAC's health promotions adviser Ili Monovo said this at a workshop in Port Moresby yesterday when responding to a question on why the HIV/AIDS cases were continuing to escalate despite a comprehensive awareness program.

National Health Secretary Calls for Joint Fight against HIV/AIDS Port Moresby The National (Internet Version-WWW) in English 01 Mar 06

OSB Transcribed Text

Report by Phillinda Silkeno: "AIDS' fight needs joint effort"

The fight against HIV/AIDS in PNG will be lost if people and groups working to combat the disease do not pull together, national health secretary Dr Nicholas Mann told a high-level gathering of HIV/AIDS experts in Port Moresby yesterday. Speaking on the implementation of a new national strategy for the monitoring and evaluation of all AIDS-related activities, Dr Mann said the fight against AIDS demanded coordinated approach and proper planning. "We will not win the fight working alone ... I've seen other countries go backwards with the achievements of 20 years lost in a matter of two years. "We must pull together to stop such a calamity happening in PNG," said Mr Mann.

He said monitoring and evaluating (M&E) all the various activities being carried out in PNG to prevent and treat AIDS was a critical part of the national strategic plan. The formal M&E framework discussed yesterday formed part of the plan and was consistent with the United Nations' 'three - ones' principles on nations having one agreed HIV/AIDS action framework; one national coordinating authority; and one agreed country-level M&E system. The lack of coordinated reporting of activities in PNG to date had created problems. With the introduction of the M&E framework, organisations engaged in AIDS-related activities would be required to report on a quarterly basis to the provincial AIDS committee and the National AIDS Council Secretariat (NACS). Dr Mann said the Government was committed to the national strategic plan and the new M&E reporting process. He urged people to address AIDS with "compassion". "The fight against this disease is about more than just money, it also calls for good advice delivered with consideration and taking into account the human element; we need to ensure that the approach we take touches the human heart and human emotions," he said. AIDS is a "multi-sectoral" issue that affected people's minds and spirits as well as their bodies.

Police Officers Accused of Corruption seek Injunction against Arrest Port Moresby Post Courier (Internet Version-WWW) in English 01 Mar 06

OSB Transcribed Text

Unattributed report: "Cops' legal wrangle set for courts"

A legal wrangle between two senior police officers will be heard in court in Port Moresby next month. The Waigani District Court issued an injunction on Thursday, preventing police from acting on three warrants of arrest made out against fraud and anti-corruption squad head Chief Superintendent Awan Sete. The warrants had been obtained earlier in the week by police. Supt Sete has been listed among a group of officers in transfers around the country. He has been directed to take up the crimes post currently held by Assistant Commissioner Raphael Huafolo, while Mr Huafolo was directed to take up the command of the Highlands regional office. The court last week approved a request by Supt Sete to restrain police from enforcing the arrest warrants and to list the matter for hearing on 15 March.

Three reports over the past week in the media have quoted Mr Huafolo as saying a senior police officer was wanted for alleged corruption offences. In the third report yesterday, he named Supt Sete as the officer and said police lawyers were trying to have the restraint order set aside, so the arrest could be made. Supt Sete said the current allegations surfaced early last year, at which time he was suspended for six months and investigated, some disciplinary action was taken against him and he was reinstated later. Supt Sete said he had not gone into hiding and was baffled by the news reports. "The reports were basically one-sided, not having my side of the story," he said. He had served the constabulary and the country with distinction for more than 30 years and had more to contribute to serving the state, the government and the people of PNG. He did not believe the media was the appropriate venue for him to air his views or grievances but he had been attacked personally in the media and was determined to "set the record straight". He said all information from "reliable" or "anonymous" sources had to be taken with "a grain of salt" and journalists had a duty to ensure they were not being used to further somebody's personal agenda.

Senior Police Officer Charged with Misuse of Funds Port Moresby The National (Internet Version-WWW) in English 01 Mar 06

OSB Transcribed Text

Unattributed report: "Senior cop charged with funds misuse"

A senior police officer in Popondetta has been charged with misappropriation of funds belonging to police based in Popondetta, Northern Province. Oro provincial police commander Senior Insp Buafe Hugo, 41, of Yuai village in the Chimbu province was charged with misusing K300 given to him by the Oro Bay Local Level Government Council. The money was given as an overtime payment for 12 police officers for conducting a police operation in the Oro Bay wharf. The policemen had searched for escapees, drug traffickers, gun smugglers and also assisted the Oro Bay LLG councillors collect levies/fees from the betel nut buyers at the wharf. The money was given purposely to Mr Hugo to pay the officers at the rate of K25 per person. Mr Hugo however, used the money to buy alcohol and food stuff for his own consumption, police in the province said. He has been released on bail and will appear in Popondetta District Court today.

Bougainville: Former Bougainville resistance leader Hilary Masiria dies OSB Report text in English 28 Feb 06

Compiled from 28 Feb 06 edition of Wellington Radio New Zealand International WWW-Text in English

The president of the Bougainville autonomous government in Papua New Guinea, Joseph Kabui, says the death of Hilary Masiria is an unexpected loss to the leadership of Bougainvilleans. The former chairman of the Bougainville Resistance Force and former police minister in the interim provincial government was electrocuted at his home on Saturday, reportedly while fixing his television. Mr Kabui says Mr Masiria's contribution to Bougainville's peace process is immeasurable.

The Autonomous Bougainville Government in Papua New Guinea is to contribute more than US$8,000 towards the funeral arrangements of Hilary Masiria. (passage omitted previously reported details) The Bougainville President Joseph Kabui says Mr Masiria's contribution to Bougainville's peace process was immeasurable. Mr Kabui says it is because of this that his government is doing all it can to aid the Masiria family.

"There's a committee that has been set up, a working committee that will be putting together a programme for the whole funeral arrangements, for example, what time to have a requiem mass for late Hilary, burial also of late Hilary, all these sorts of things the committee will work on it." Mr Kabui says the funeral is expected to be held on Friday.

Peace Activist Warns Fijians of Money-Making Scams on Bougainville Suva Fiji Times (Internet Version-WWW) in English 01 Mar 06

OSB Transcribed Text

Unattributed report: "Don't ruin our peace: Activist"

A Bougainville peace activist has urged Fiji nationals not to be fooled by moneymaking scams because they are disrupting the peace on Bougainville.

Peace Minister from the former Bougainville Interim Provincial Government James Tanis said recruitment agencies taking Fiji nationals to Bougainville were part of a scam by money launderer, failed businessman and separatist leader, Noah Musingku, and should be avoided at any cost.

"Fijians who are going over with Noah Musingku, claiming to have a contract as security advisors. We don't know what their background is here," Mr Tanis said. "The main problem is that we have foreign elements now with a person who is wanted by the law, is a known money launderer, who is opposing the peace process and he has armed elements." Mr Musingku was previously involved with U-Vistract, a failed pyramid scheme that reportedly left many Bougainville investors, including politicians and church leaders, empty-handed. He is wanted for fraud in Papua New Guinea and the Solomon Islands.

Mr Tanis said the presence of Fiji nationals on Bougainville was a boost to the morale of "Musingku's people" and endangered the good relations Fiji had developed with Bougainville over the years.

"Fijians were some of the first missionaries (on Bougainville), there was a Fiji contingent during the World War II and one of them won a Victoria Cross, there is a war cemetery there and the Fijian Government contributed to the peace process by sending Fijian military as peacekeepers," he said

The 1 March online Indonesian language media carried conflicting opinions by commentators with regard to the performance of National Police Chief General Sutanto and an item on international police co-operation. The seldom seen TPT (Team of Muslim clerics formed on 21 November 2005 to assist in the fight against terrorism by pursuing a religious approach) was also reported, specifically with regard to its relationship with the police.

The following report has been extracted from five articles:

Benny K Harman, who is a member of Commission-III in the DPR (People's Representative Council), has come out and criticised General Sutanto's performance as National Police Chief. He said that the institutional reform process had stopped and just like the disappointing form of his predecessors, he had adopted the policy of jobs for the boys. Benny said that this could be clearly seen with some of the officers he had placed in senior positions. "Look at the new East Nusa Tenggara Police Chief. He has not struck one blow against corruption and I think the same applies in other regions," he said. He continued that the parameters applied by Sutanto when selecting his police area commanders were decidedly unclear. He cited the North Sumatra Police Chief as an example, who had apparently rose up the ranks very rapidly on his way to the job. "It doesn't mean that he is not of high quality, but we want to see some transparent selection criteria. Why was he promoted so rapidly?" asked Benny. Based on this perceived lack of transparency, Benny called for an 'Assessment Committee' and a 'National Police Commission' to be formed to evaluate the performance and suitability of senior police officers for top jobs.

This article advocated that the reason behind the slow road to reform within the police force was the increasing number of non-reformists at senior level in national police headquarters. The item suggested that General Sutanto should immediately take a clearer and firmer line against an apparent rise in the numbers opposing him within the police force. According to an anonymous Suara Karya police source, this was very important now, because the police chief was surrounded by some 'two-faced officers'. The source said that this group of officers was becoming more powerful than the group supporting the police chief. Sutanto's group, who could be called reformists, was down to 30 percent of senior and middle ranking officers. About 40 percent of senior officers were maintaining the 'status quo' but would be quick to jump to the 'bunglon' (chameleon) group, which made up the remaining 30 percent. "Maybe the police chief or police leadership are not aware of this. But these groups definitely exist and it can be felt. He must therefore act quickly to put his house in order," said the source.

On the other side of the coin, former MPR speaker Amien Rais has waxed lyrical about General Sutanto and will support him if he runs for the presidency in 2009. "General Sutanto would make an excellent president because he has it all," said Rais in Jakarta yesterday. Sutanto's record, after only a short time as police chief, has impressed Amien Rais and he mentioned three specific breakthroughs. Firstly was the killing of Azahari and progress being made towards capturing Noordin Top. "We were able to enjoy safe Christmas and New Year celebrations because there were no terrorist attacks," he said. Amien continued that giant steps were also being taken towards the eradication of gambling and smashing of narcotics networks.

At the official opening of the TNCC (Trans-national Cyber Crime Office) at National Police Headquarters in Jakarta yesterday, General Sutanto urged all nations to ratify the Law on Eradication of Terrorism (presumably talking about the International Conventions on Terrorism). "We are lobbying all nations to ratify the conventions and laws on terrorism," he said. He said that it was always difficult for the Indonesian police to capture terrorists when they were overseas. "Besides that, we find it difficult to investigate who is providing the money used to fund terrorist attacks in Indonesia," he added. With the assistance of other police forces, including the Australian Federal Police, the TNCC would be conducting such investigations with the benefit of new computer programs already in place at 31 police area commands and several police district commands.

The TPT, which was formed by the Religious Affairs Department and MUI (Indonesian Council of Ulema), will not become a police tool to be used to put pressure on Muslims who might be considered radical. MUI Chairman Amidhan said, "Yes, the TPT has been formed to help in the fight against terrorism, but it will not force Muslims into a corner. Our team will in fact act as a sort of 'bumper'. The police are not authorised to interfere with or rummage around in mosques or pesantren (Islamic boarding schools). That is our territory". Amidhan continued that the TPT would reject and obstruct the arrest of mosque leaders and the searching of pesantren as had been happening over the past few years, unless there was indubitable proof. He did acknowledge that the TPT had been formed as part of the campaign to teach the true meaning of jihad to Indonesian Muslims in accordance with the teachings in the Koran.

Mastheads of some Iraqi papers

Iraqi newspapers dated 28 February highlight the following issues:I. IRAQI ELECTIONS:

Al-Zaman runs on the front page a 1,000-word report entitled "Al-Sadr: Al-Mahdi Army Must Coordinate with Government; Iraqi Al-Tawafuq Front Backs Calming Efforts; Kurdish Initiative To Accelerate Partnership Government."Al-Zaman publishes on the front page a 400-word report citing international experts commenting on the report issued by International Crises Group in Brussels yesterday, 27 February, on the situation in Iraq and emphasizing the importance of forming a strong and integrated national unity government.Al-Zaman publishes on page 8 a 400-word report citing Deputy Foreign Minister Hamid al-Bayyati confirming that the next government will represent all Iraqi components.Al-Adalah carries on page 1 a 600-word report on the negotiations between Iraqi political leaders to form the government and "bury sectarian differences."Al-Mu'tamar carries on the front page a 60-word report citing Unified Iraqi Coalition member Jawad al-Maliki saying that the coalition has started establishing contacts with Iraqi Al-Tawafuq Front and Kurdistan Coalition to form the next government.Al-Mu'tamar carries on page 2 a 450-word report citing Culture Minister Nuri al-Rawi calling on Iraqi politicians to take urgent measures to enable Iraq to restore its position among Arab and Islamic countries and rehabilitate its collapsed economy.Al-Ittijah al-Akhar on 25 February devotes all of page 8 and part of page 9 to a report on the election of Ibrahim al-Ja'fari as prime minister and the negative attitude of political forces towards this.Al-Ittijah al-Akhar on 25 February carries on page 14 a 500-word report saying that Kurdistan Parliament has elected Kurdistan Democratic Party member Nayjarfan Barzani as prime minister and Patriotic Union of Kurdistan member Umar Fattah as deputy prime minister.Al-Ittijah al-Akhar on 25 February carries on page 14 a 600-word report citing sources close to chairman of Iraqi Al-Tawafuq Front saying that political forces desire to form a big parliamentary bloc comprising 145 members in the next parliament.Al-Ittijah al-Akhar on 25 February carries on page 19 a 700-word article by Aziz al-Haj strongly criticizing Iraqi political forces for their political disputes and letting Iraqis suffer from terrorism and sectarian sedition.Al-Mada publishes on page 2 a 110-word report that Kirkuk governor demanded the central government to implement article 136 of the constitution.Al-Dustur publishes on page 2 a 100-word report that Iraqi Al-Tawafuq Front has returned to negotiations to form the new government after it threatened to boycott the political process following the events in Samarra.II. POLITICAL DEVELOPMENTS AND COMMENTS:

Al-Bayan runs on the front page a 150-word report citing Al-Ja'fari's Spokesman Abd-al-Razzaq al-Kazimi criticizing Al-Mu'tamar and Iraq Voice Website for attributing an article criticizing the US policy in Iraq to Ibrahim al-Ja'fari.Al-Bayan publishes on page 3 a 70-word report on Al-Ja'fari's meeting with the Australian deputy prime minister.Al-Zaman publishes on the front page a 200-word report citing Arab diplomatic sources in Cairo confirming that Ambassador Ahmad Bin Hili will visit Baghdad next week to inaugurate the Arab League office in Iraq.Al-Zaman publishes on page 2 a 140-word report on Ashraf Qazi's meeting with Al-Fallujah Administrator Dari al-Zawba'i and other officials to discuss the problems facing the city.Al-Zaman publishes on page 8 a 220-word report on the statement issued by Conciliation and Liberation Bloc yesterday, 27 February, criticizing Al-Ja'fari's outgoing government.Al-Zaman publishes on page 8 a 300-word report on Baghdad Advisory Council dissolving the Al-Husayniyah Municipality Council for corruption.Al-Zaman carries on page 4 a 350-word report on Al-Azhar Shaykh Tantawi's visit to the Iraqi Emb assy in Cairo yesterday, 27 February.Al-Adalah carries on page 2 a 1,000-word report on a statement by Abd-al-Aziz al-Hakim calling on Iraqi religious scholars to encourage people to unite and renounce sectarianism. The report also refers to a meeting by Al-Hakim with Zalmay Khalilzad to discuss the political situation and the formation of the government.Al-Sabah al-Jadid runs on page 2 a 500-word text of the agreement signed by Al-Sadr trend and Iraqi Al-Tawafuq Front.Al-Sabah al-Jadid publishes on page 2 a 400-word report on a recent press conference by Muqtada al-Sadr discussing the current political and security situation in Iraq and the results of his visits to a number of neighboring countries.Al-Mu'tamar carries on the front page a 100-word report on a statement by Iraqi Association for Pro-Journalists Rights calling on the government to form a committee to follow up violations against journalists.Tariq al-Sha'b carries on the front page a 200-word report citing chairman of Basra Governorate Council saying that his council is still boycotting British forces, during a press conference yesterday, 27 February.Tariq al-Sha'b carries on page 2 a 100-word report saying that representatives of Iraqi Communist Party in Berlin met with the in-charge of external relations at German Left Party.Al-Ittijah al-Akhar on 25 February carries on page 2 a 900-word report on a statement by Reconciliation and Liberation Bloc led by Mish'an al-Juburi strongly criticizing Al-Ja'fari's government for failing to combat corruption and improve security and public services.Al-Ittijah al-Akhar on 25 February carries on page 4 a 450-word article by editor of political affairs commenting on Zalmay Khalilzad's declarations on sectarian situation and the Iranian role in Iraq. (OSC plans to process this item)Al-Ittijah al-Akhar on 25 February carries on page 9 a 1,000-word report on Condoleezza Rice's press conference in Cairo.Al-Ittijah al-Akhar on 25 February carries on page 10 a 1,000-word commentary on Zalmay Khalilzad's declarations that Washington will not accept sectarianism and militants in the next government. The report comments on Interior Ministry's "death teams" and their "crimes" against Sunnis.Al-Ittijah al-Akhar on 25 February carries on page 16 a 500-word exclusive report citing Iraqi Al-Tawafuq Front member Shaykh Khalaf al-Alyan saying that the agreement between Al-Anbar tribal shaykhs and US forces and the Iraqi government are deceptive because these shaykhs have nothing to do with Al-Anbar tribes.Al-Mashriq publishes on the front page a 30-word report that Iraq has submitted a proposal to contain the crisis in Iraq to Arab League.Al-Mashriq publishes on the front page a 230-word report that Turkish Interior Ministry has agreed to permit Iraqis holding Kurdistan passports to enter the country.Al-Mashriq publishes on page 5 a 1,000-word report that Iraq and Syria are working to solve the issue of Iraqi frozen assts.

Al-Mada publishes on the front page a 1,000-word report on the consensus reached upon by heads of main political blocs in Iraq after the tension following the events in Samarra.Al-Mada publishes on the front page an 80-word report on the apology submitted by US Embassy in Baghdad to Karbala Governorate.Al-Mada publishes on page 2 a 120-word report that Iraqi Foreign Minister Hoshyar Zebari received an official Turkish delegation headed by the Turkish ambassador to Iraq to discuss latest developments in the Iraqi field. The Iraqi foreign minister also met with the British ambassador in Iraq.Al-Mada publishes on page 2 a 400-word report that Iraqi Council for Peace and Solidarity condemned the attack against the two holy shrines in Samarra.Al-Dustur publishes on page 5 a 300-word report that Libya will participate in rebuilding the two holy shrines in Iraq which were damaged.Al-Dustur publishes on page 5 a 300-word report on the re-opening of the railwa y link between Turkey and Iraq.III. REACTION TO SAMARRA BOMBINGS:

Al-Bayan carries on the front page a 400-word report on Al-Ja'fari's meeting with Al-Sadr trend delegation yesterday, 27 February, to discuss the Samarra bombings yesterday, 22 February.Al-Bayan runs on the front page a 300-word report on the statement issued by Al-Da'wah Party on 26 February, condemning the eviction of Shiite families from Abu-Ghurayb and Al-Tarmiyah districts and urging Sunni leaders and clerics to stop it.Al-Bayan publishes on the front page a 300-word report citing Housing and Construction Minister Jasim Muhammad Ja'far outlining the steps for the reconstruction of the Holy Shrines of Imams Ali al-Hadi and Hasan al-Askari.Al-Bayan carries on the front page a 100-word report citing Interior Ministry's Commandos Commander General Rashid Fulayih confirming the arrest of a number of people suspected of being involved in the Samarra bombings.Al-Bayan carries on page 2 a 200-word report on the three-day celebration organized by Al-Da'wah Party in Al-Sadr City in the wake of the Samarra bombings.Al-Bayan runs on page 3 a 300-word exclusive report on the demonstration organized by the Iraqi community in Austria on 25 February, to condemn the bombing of the shrines.Al-Bayan carries on page 3 a 600-word column by Salim Rasul discussing why takfiris (the individuals who declare other Muslims to be infidels) targeted the shrines in Samarra. The writer urges Sunni political and religious leaders to clearly condemn takfiris and forbid the targeting of Iraqi Army and police in order to avoid sectarian sedition in the country.Al-Zaman carries on the front page a 400-word report entitled "Al-Sadr Trend, Al-Khalisi Trend, Association of Muslim Scholars Begin Joint Campaign To Rehabilitate Damaged Mosques."Al-Zaman runs on the front page a 240-word report citing Salah al-Din Governor Hamad Humud confirming that hundreds of Sunni and Shiite people performed a joint prayer in a mosque in Tikrit yesterday, 27 February.Al-Zaman publishes on the front page a 100-word report on the statement issued by Foreign Ministry yesterday, 27 February, confirming that the Italian government has offered to rehabilitate the two shrines.Al-Zaman carries on page 2 a 100-word report on the statements issued by Shiite Waqf yesterday, 27 February, condemning attacks on Shiite holy sites in Basra, Diyala and Kirkuk.Al-Zaman runs on page 4 reports on the angry reaction of Iraqi political parties and communities in Holland and other countries to the Samarra bombings.Al-Zaman carries on page 4 a 500-word report that life is back to normal in Samarra.Al-Zaman carries on page 5 a 600-word column by Dr Sa'd al-Ubaydi entitled "Hidden Chapters in Sectarian Civil wars."Al-Adalah publishes on page 3 a 500-word report citing SCIRI senior leader Sadr-al-Din al-Qubbanchi commenting on the reasons behind the bombing of Imam Al-Askari Shrine and ways to avoid sectarian strife.Tariq al-Sha'b carries on the front page a 1,100-word report on the consequences of Samarra bombings and political forces' measures and attempts to prevent a civil war in Iraq. The report cites a statement by Association of Muslim Scholars and Al-Sadr trend denouncing Samarra bombings and any acts targeting Sunni and Shiite mosques.Tariq al-Sha'b carries on the front page a 200-word report citing Ashraf Qazi saying that United Nations will construct a special fund to reconstruct the holy shrine in Samarra and calling on Iraqis to be united to face sectarian sedition.Tariq al-Sha'b carries on page 9 a 900-word article by Rida al-Zahir commenting on the consequences of Samarra bombings and criticizing the government for being unable to improve the security situation.Al-Ittijah al-Akhar on 25 February carries on page 2 a 500-word report on a statement by Association of Muslim Scholars blaming some Shiite authorities for ordering demonstrations following the S amarra bombings.Al-Ittijah al-Akhar on 25 February carries on page 3 a 220-word exclusive report citing Mish'an al-Juburi strongly denouncing Samarra bombings and calling for self-control to avoid sectarian sedition.Al-Ittijah al-Akhar on 25 February carries on page 3 an 800-word article expressing Al-Ittijah al-Akhar's opinion about the Samarra bombings. The article praises Shiite and Sunni religious clerics for urging people to be calm and exercise self-control to prevent sectarian sedition.Al-Ittijah al-Akhar on 25 February carries on page 4 a 200-word report on a statement by Reconciliation and Liberation Bloc strongly denouncing Samarra bombings and calling for the punishment of criminals.Al-Ittijah al-Akhar on 25 February carries on page 5 a 550-word article by Fakhr al-Din Fayyad commenting on the Iranian role in crimes and tragedies in Iraq. The writer says that the Samarra bombings serve Iran only.Al-Ittijah al-Akhar on 25 February devotes all of page 6 and page 7 to a report on Samarra bombings and their effect on Iraqi, Arab, and international arenas.IV. SECURITY AND MILITARY DEVELOPMENTS:

Al-Bayan carries on the front page a 100-word report on the statement issued by Interior Ministry confirming the arrest of 75 suspects during raids in Baghdad, Diyala and Ninawah Governorates.Al-Bayan publishes on page 2 a 150-word report on Immigration and Displaced Persons Minister Suhaylah Abid Ja'far's meeting with the ministry's FBS commander on 26 February, to discuss ways to improve their performance and living standards.Al-Bayan publishes on page 2 a 300-word report citing General Marid Abd-al-Husayn, director of Interior Ministry's Iraq Tribal Affairs Directorate, outlining the result of Iraqi tribal chiefs' recent conference.Al-Zaman carries on page 4 a 120-word report citing a police source in Mosul confirming the assassination of Dr Yusif Rida in the city on 26 February.Al-Mu'tamar carries on the front page a 100-word report that Interior Ministry has lifted the three-day curfew in Baghdad and three governorates.Al-Mu'tamar carries on the front page a 600-word report citing a well-informed source at Defense Ministry who requested anonymity giving details about the assassination of Colonel Husayn Shayya', commander of a regiment in Al-Mahmudiyah.Al-Mu'tamar carries on page 3 a 75-woprd report citing a source at Al-Muthanna Police saying that three explosives were defused in the governorate.Tariq al-Sha'b carries on the front page a 60-word report citing Joint Council to reconsider prisoners' cases saying that it has released 69 prisoners from US prisons.Tariq al-Sha'b carries on the front page a 300-word report citing an officer from Basra Police saying that three missile were launched in Basra. The report cites Baghdad Police saying that four persons were killed and six others were injured in a booby-trapped car explosion in Al-Hillah.Tariq al-Sha'b carries on page 2 a 100-word report on a statement by Iraqi Communist Party in Al-Shatrah denouncing attacks on political headquarters.Tariq al-Sha'b carries on page 2 a 150-word report citing an official source at Army Training Center in Kirkuk saying that a new class of soldiers has graduated in the governorate.Al-Ittijah al-Akhar on 25 February carries on page 3 a 500-word report citing a source at Iraqi Al-Tawafuq Front accusing Shiite takfiris for breaking Sunni houses in Al-Nahrawan and killing some citizens. The report cites a letter by the front to Jalal Talabani that it has decided to suspend its participation in the next government protesting the attacks on Sunni mosques.Al-Ittijah al-Akhar on 25 February carries on page 5 a 140-word report on a statement by Association of Muslim Scholars criticizing US forces for not taking measures to investigate Interior Ministry's "death teams" and calling for neutral international committees to investigate this issue.Al-Ittijah al-Akhar on 25 February ca rries on page 5 a 200-word report on a statement by Interior Ministry denying US declarations that "death teams" exist at the ministry.Al-Mashriq publishes on the front page a 1,000-word report citing Sayyid Muqtada al-Sadr confirming that he returned to Iraq to control Al-Mahdi Army and coordinate with the Iraqi government and security forces following the latest events in Samarra.Al-Mashriq publishes on the front page a 30-word report that four Iraqis were killed and 14 others were injured when three mortar bombs detonated near gas and oil stations in north Baghdad.Al-Mashriq publishes on the front page a 300-word report citing an official at Defense Ministry announcing on Monday that armed forces have been deployed in various places in Baghdad to protect people from any possible attack.Al-Mashriq publishes on the front page a 30-word report that Iraqi and Jordanian forces released the kidnapped Jordanian driver in Iraq.Al-Mashriq publishes on the front page a 300-word report citing the minister of housing and reconstruction announcing that the reconstruction of Imam al-Hadi shrine will take five years.Al-Mashriq publishes on page 4 a 270-word report that 250 bodies arrived at Ministry of Health in the last four days. Most of the bodies were bullet riddled.Al-Mashriq publishes on page 4 a 100-word report on punishment for some policemen in Babil, who were involved in human rights violations.Al-Mada publishes on the front page a 450-word report citing Sayyid Muqtada al-Sadr denying reports that Al-Mahdi Army was behind dozens of attacks against Sunni mosques in Baghdad.Al-Mada publishes on page 2 a 500-word report on the new security plan announced by the Iraqi government to combat terrorism and armed groups which are trying to destabilize the country.Al-Mada publishes on page 2 a 20-word report on the death of a US soldier in Baghdad.Al-Mada publishes on page 2 a 400-word report on various acts of violence that claimed the lives of dozens of civilians at various places in Baghdad.V. HEALTH AND HUMAN RIGHTS ISSUES:

Al-Manar al-Yawm devotes all of page 7 to a report on bird flu.Al-Bayan publishes on the front page a 100-word report citing Iraqi Red Crescent confirming the distribution of aid to Shiite refugee families, who were evicted from Abu-Ghurayb, Al-Tarmiyah and other nearby Sunni districts, in Al-Shu'lah district in Baghdad.Al-Bayan carries on page 2 a 500-word report citing Ali al-Ka'bi, director of UAE Red Crescent Bureau in Baghdad, confirming the distribution of blankets and food aid to poor families.Al-Bayan carries on page 2 a 120-word report citing Deputy Health Minister Dr Sabah al-Wakil confirming that according to the ministry's recent survey, 61 doctors have been killed and 130 injured, since the downfall of the former regime in 2003.Al-Bayan carries on page 2 a 220-word report citing Environment Ministry urging Al-Durah Refinery to stop polluting Tigris.Al-Bayan carries on page 2 a 120-word report on the inauguration of a new kidney washing unit in Children's Central Hospital in Baghdad.Al-Zaman carries on page 2 a 130-word report citing Health Minister Dr Abd-al-Muttalib Ali Muhammad Salih confirming that the ministry is planning to take measures to minimize the misuse of medicines.Al-Zaman runs on page 3 a 400-word report citing Environment Ministry confirming environment violations in Salah al-Din Governorate.Al-Zaman carries on page 3 a 220-word report citing Salah al-Din Health Director Dr Hasan Zayn al-Abidin confirming that so far, no avian flu cases have been reported in the governorate.Al-Zaman publishes on page 8 a 500-word report citing Ninawah Health Monitoring Director Dr Muzaffar Salim Nuri confirming that the governorate is free from avian flu.Al-Zaman publishes on page 8 a 220-word report citing Ma'n Bashur, secretary general of Arab National Conference urging Arab regimes to respect human right s.Al-Adalah carries on page 4 a 200-word report citing Al-Najaf Health Directorate Information Officer Salim Ni'mah saying that Al-Najaf Governorate is free from avian flu.Al-Adalah runs on page 4 a 100-word report citing a source at Al-Hillah Police saying that three tuberculosis cases have been discovered among detainees.Al-Mu'tamar carries on page 2 a 500-word report citing director of Veterinary Hospital in Al-Diwaniyah and a member of Al-Diwaniyah Governorate Council denying rumors that bird flu exists in the governorate. The report cites director general of Al-Muthanna Health Department saying that his department has taken preventive measures.Al-Mu'tamar carries on page 2 a 100-word report citing director general of Al-Sulaymaniyah Health Department saying that a medical center to treat thalassemia will be inaugurated in the governorate next week.Al-Mu'tamar carries on page 2 a 160-word report citing chairman of Scientific Association to Rehabilitate Marshlands in Iraq saying that a conference on the environment situation in Iraq will be held in Arbil on 21 March.Al-Mu'tamar devotes all of page 13 to a report citing health employees and citizens about the problems faced by the health sector in Iraq.Al-Mashriq publishes on the front page a 30-word report citing Iraqi government announcing that it released 96 Iraqi detainees in the last few days.Al-Mashriq publishes on page 4 a 200-word report citing Baghdad Mayor Sabir al-Isawi warning of the consequences of throwing hospital waste on pavements and streets.Al-Mashriq publishes on page 4 a 150-word report that Ministry of Deportees and Immigrants has submitted a suggestion for the establishment of a fund to offer loans to families of deportees and immigrants to the cabinet for endorsement.Al-Mashriq publishes on page 4 a 350-word report that Health Ministry has allocated 10 state-of-the-art ambulances for Maysan to be used for monitoring bird flu and other diseases.Al-Mada publishes on page 3 a 100-word report on the emigration of Iraqi academics.Al-Mada publishes on page 5 a 1,400-word report that Marjan hospital is only receiving 10 percent of its actual medical needs.VI. ECONOMIC NEWS AND PUBLIC SERVICES:

Al-Bayan publishes on page 2 a 130-word report citing an official source at Education Ministry denying that the ministry is planning to hire new teachers.Al-Bayan runs on page 2 a 100-word report citing an official source at Finance Ministry confirming that the ministry has instructed all state institutions to pay reinstated employees their liabilities.Al-Bayan publishes on page 2 a 240-word report citing an official source at Higher Education and Scientific Research Ministry announcing the postponement of the second semester from 26 February to 5 March.Al-Bayan runs on page 2 a 200-word report citing an official source at Public Works and Municipalities Ministry confirming that Italy has allocated 10 million euros for the rehabilitation of Al-Jibayyish and other marshland districts in southern Iraq.Al-Zaman carries on page 2 a 140-word report citing Trade Ministry confirming the distribution of 2006's food ration vouchers soon.Al-Zaman publishes on page 2 a 900-word report citing citizens holding telephone maintenance workers responsible for the disconnection of their telephones. The report cites Communication Ministry Spokesman Samir Ali al-Hasun confirming the prosecution of corrupt officials.Al-Zaman carries on page 2 a 500-word report on the statement issued by cabinet yesterday, 27 February, confirming the completion of a number of service projects in Baghdad and other governorates.Al-Zaman runs on page 2 a 120-word report on the statement issued by Education Ministry yesterday, 27 February, denying the payment of new allowances to teachers.Al-Zaman publishes on page 2 a 150-word report on the statement issued by Transport Ministry yesterday, 27 February, confirming that the ministry has prepared a new design for railway projects in Baghdad and other governorates.Al-Zaman carries on page 2 a 250-word report on the statement issued by Higher Education and Scientific Research Ministry yesterday, 27 February, confirming cooperation between Basra University and the Czech government.Al-Zaman carries on page 3 a 400-word report citing Jabbar Ghafil, member of Al-Diwaniyah Farmers Union, attributing the deterioration in agricultural production to electricity outages, lack of fuel, and high taxes.Al-Zaman runs on page 3 a 150-word report citing an official source at Finance Ministry confirming that the ministry, in cooperation with Arab Organization for Administration Development, is organizing a workshop for the ministry's officials in Cairo.Al-Zaman carries on page 3 a 200-word report citing an official source at Industry Ministry announcing that the ministry requires $2 million for lifting scrap from Baghdad and other governorates.Al-Zaman carries on page 3 a 400-word report on the statement issued by Communication Ministry yesterday, 27 February, outlining its achievements and development plans.Al-Zaman publishes on page 3 a 600-word report on the seminar by Dr Salah al-Din Hamid al-Hadithi, director of Finance Ministry, on the ministry's financial policy and government's subsidy programs.Al-Zaman carries on page 8 a 1,000-word report citing citizens complaining about the lack of fuel and its high prices in the black market.Al-Adalah carries on page 2 a 200-word report citing Industry and Mineral Ministry Usamah Abd-al-Aziz al-Najafi calling on the Iraqi private sector to participate in the investment agreement with the Iranian side to improve Iraqi industries.Al-Adalah publishes on page 3 a 100-word report citing Iraqi Businessmen Society Counselor Abdallah al-Lami commenting on the foundation of Iraqi-Irish Trade Society.Al-Adalah runs on page 3 a 500-word report on a meeting by Acting Oil Minister Hashim al-Hashimi and Baghdad Governorate Council members to discuss ways to solve the fuel crisis in Baghdad.Al-Adalah carries on page 4 a 1,200-word report citing Al-Nasiriyah Deputy Governor Ta'mim Mahdi commenting on the efforts to improve public services in the governorate.Al-Sabah al-Jadid publishes on page 5 a 1,000-word report citing Water Transportation Company Manager Ali Nasir Muhammad al-Idani commenting on the efforts to improve the company's fleet.Al-Sabah al-Jadid carries on page 5 a 200-word report citing Karbala Municipality Director Jawad Kazim Abd discussing the projects implemented by the directorate to pave roads in the governorate.Al-Sabah al-Jadid runs on page 10 a 1,200-word report on the comments of a number of Iraqis on the housing crisis.Al-Sabah al-Jadid publishes on page 10 a 1,000-word report on the use of tents by Iraqis to solve the housing crisis.Al-Mu'tamar carries on page 2 a 450-word report citing citizens and drivers commenting on traffic jams in Baghdad.Al-Mu'tamar carries on page 2 a 220-word report citing an official source at North Gas Company saying that the company has started increasing cooking gas production in order to contain the gas crisis in Kurdistan Region.Al-Mu'tamar carries on page 2 a 100-word report citing an official source at Dhi Qar University saying that the university will construct a complex of dormitories soon.Al-Mu'tamar carries on page 2 a 160-word report citing chairman of Central Commission for Statistics saying that the commission held its annual conference to discuss methods to develop performance.Al-Mu'tamar carries on page 2 a 100-word report citing a source at Labor and Social Insurance saying that salaries of pensioned workers will be distributed tomorrow, 1 March.Al-Mu'tamar carries on page 2 a 75-word report citing acting Oil Minister Hashim al-Hashimi denying reports that the ministry has annulled all contracts and agreements with local and foreign companies.Tariq al-Sha'b carries on page 2 a 100-word report citing Kurdistan Region's Transport and Communication Ministry Undersecretary Rashad Umar saying that a project to connect railways in northern cities will be implemented soon.Tariq al-Sha'b carries on page 2 an 80-word report saying that prime minister of Kurdistan Region inaugurated an investment project to construct a tourist city in Arbil at a cost of $350 million.Al-Mashriq publishes on page 4 a 300-word report citing the minister of trade confirming that his ministry is committed to provide the complete ration share to over 29 million Iraqi citizens, as part of the ministry's current plan.Al-Mashriq publishes on page 4 a 750-word report citing the minister of housing and reconstruction confirming that the ministry's budget for this year is insufficient.Al-Mashriq publishes on page 4 a 200-word report that Babil Governorate has gained approval from Oil Ministry to increase its share of cooking gas and fuel, starting from last Tuesday.Al-Mashriq publishes on page 4 a 230-word report that Ministry of Agriculture has signed a contract with a Russian company to provide Iraq with agricultural planes to combat pests.Al-Mashriq publishes on page 4 a 750-word report citing the head of Al-Najaf Local Council asserting the necessity of returning financial allocations usually submitted by Ministry of Municipalities and Public Funds.Al-Mashriq publishes on page 4 a 110-word report citing Ministry of Water Resources demanding donor countries to design and implement irrigation projects in Iraq.Al-Mashriq publishes on page 4 a 340-word report on agreements between Iraq and Turkey for transporting passengers and goods.Al-Mashriq publishes on page 4 a 130-word report citing the minister of housing and reconstruction confirming that the ministry is implementing 300 primary schools.Al-Mashriq publishes on page 4 a 300-word report that Ministry of Housing and Reconstruction has started building a housing complex in Babil costing 37 billion dinars.

Al-Mashriq publishes on page 4 a 120-word report citing Telecommunication Ministry announcing that 1200 telephone lines are re-operational after Arabsat Satellite was started after repair.Al-Mashriq publishes on page 5 a 340-word report citing Baghdad mayor confirming that Baghdad needs more than one million cubic meters of drinking water.

Al-Mashriq publishes on page 5 a 650-word report citing the UN representative in Iraq promising to implement new projects in Al-Ramadi.Al-Mashriq publishes on page 5 a 100-word report that trade between Iraq and Jordan decreased in the first half of 2005, in comparison with 2001 and 2002.Al-Mashriq publishes on page 5 a 100-word report that Royal Jordanian will resume its flights to Baghdad.Al-Mashriq publishes on page 5 a 350-word report that the cooking gas crisis in Kirkuk has ended.Al-Mada publishes on page 3 a 300-word report that Iraq has signed an agreement to establish an international council of experts for dams with MWH, the biggest US company in the field of dam construction.Al-Mada publishes on page 3 a 600-word report that Ministry of Higher Education and Scientific Research is planning to establish new universities.Al-Mada publishes on page 3 a 400-word report that Ministry of Industry and Minerals has called on businessmen and investors to participate in implementing the ministry's investment projects.Al-Mada publishes on page 4 a 700-word report on the acts of sabotage that have caused poor postal and telephone services.Al-Mada publishes on page 4 a 500-word report on a wide-scale symposium to discuss unemployment and administrative corruption in Al-Diwaniyah.Al-Mada publishes on page 4 a 500-word report on the possibility of establishing an Arab free zone.Al-Dustur publishes on page 5 a 120-word report that 117 billion dinars have been allocated to rebuild Kirkuk.VII. PRESS COMM ENTS:

Al-Bayan carries on page 5 a 1,200-word article by Hawra al-Sa'idi discussing the impact of the Samarra bombings on the ongoing political process.Al-Bayan publishes on page 5 a 900-word article by Muhammad Muhammad al-Alfi entitled "Civil Society Organizations' Role in Fighting Electronic Criminal Acts."Al-Bayan runs on page 5 a 400-word column by Zaynab al-Khafaji entitled "Change from US Point of View," commenting on US Undersecretary of State Karen Hughes's recent speech on reforms in Arab countries at United States-Muslim World Forum in Qatar.Al-Zaman publishes on page 3 a 600-word column by Ahmad al-Amin praising Al-Azhar shaykhs for their stance towards the recent sectarian sedition in Iraq.Al-Zaman runs on page 4 a 1,200-word article by Khudayyir Fulayih al-Zaydi criticizing the Samarra bombings.Al-Zaman carries on page 5 a 700-word report on Iraqis' angry reaction to the assassination of Al-Arabiyah satellite television channel reporter Atwar Bahjat.Al-Zaman publishes on page 6 a 700-word column by Ali Diya al-Din saying that the Samarra bombings were among the major and decisive battles of takfiris. (OSC plans to process this item)Al-Zaman carries on page 8 a 500-word column by Abd-al-Jabbar al-Samarra'i entitled "Black Wednesday."Al-Zaman publishes on page 15 a 3,000-word article by Jawad Kazim al-Dayyini on Iran's nuclear program.Al-Zaman publishes on page 15 a 1,200-word article by Dr Akram al-Mashhadani entitled "Politicization Will Not Restore Stability; Security Conditions in Iraq."Al-Zaman publishes on page 15 a 1,300-word article by Mas'ud Aku urging neighboring countries not to oppress Kurdish communities.Al-Zaman publishes on page 19 a 600-word column by Ali al-Sudai condemning the assassination of Iraqi journalist Atwar Bahjat.Al-Zaman publishes on page 19 a 500-word column by Fatih Abd-al-Salam holding naive Iraqi politicians responsible for the recent sectarian sedition in Iraq.Al-Adalah carries on page 3 a 400-word article by Dr Ali Khulayf commenting on the "success" of Iraqi people in "defeating" terrorists' schemes of kindling sectarian strife.Al-Adalah runs on page 6 an 800-word article by Widad Fakhir discussing how Iraqis should react to the recent bombing of Imam Al-Askari Shrine.Al-Adalah publishes on page 6 a 400-word article by Ali al-Gharash commenting on the attempts to abort the political process in Iraq.Al-Adalah carries on page 6 a 1,000-word article by Falih al-Hamrani saying that Iraq is at a crossroads because the attempts to kindle sectarian strife "have reached their peak."Al-Adalah runs on page 6 an 800-word article by Dr Murad al-Sawadiqi saying that the bombing of Imam Al-Askari Shrine gave Iraqi people a lesson in unity and the necessity of mobilizing good potential and perseverance to carry on with the building process.Al-Adalah publishes on page 7 a 1,000-word article by Ahmad Mahdi al-Yasiri calling on the Iraqi government to stop media channels that distort facts about Iraq and encourage terrorism.Al-Adalah carries on page 12 a 600-word article by Alia al-Ansari saying that the bombing of Imam Al-Askari Shrine will unite Iraqi people.Al-Sabah al-Jadid runs on page 1 a 400-word editorial by Chief Editor Isma'il Zayir calling on Iraqi politicians to avoid sectarianism to save Iraqi from "falling into an abyss." The writer also calls for a standing constitutional council to solve the current political and security crisis in Iraq.Al-Sabah al-Jadid publishes on page 4 a 600-word article by Hasab-Allah Yahya commenting on the need for active work by honest and loyal Iraqis, who should not "just pray and wait to be killed."Tariq al-Sha'b carries on page 3 a 200-word article by Abbas Rahmatallah calling on the next government to fulfill its promises and stop Iraqi sufferings.Tariq al-Sha'b carries on page 9 a 1,200-word article by Jabbar Abd-al-Khaliq al-Khazraji commenting on Lawyers Law and Pensioned Lawyers Law.Tariq al-Sha'b carries on page 9 a 600-word article by Hashim Ni'mah Khashan commenting on the law to reinstate employees who were dismissed for political reasons.Tariq al-Sha'b carries on page 9 an 800-word article by Michael Liyan commenting on the concept of terrorism which is different from resistance against occupation.Al-Ittijah al-Akhar on 25 February carries on page 10 a 500-word article by the political editor strongly criticizing Paul Bremer and Radi al-Radi, chairman of Integrity Commission, for their roles in destroying Iraq.Al-Ittijah al-Akhar on 25 February carries on page 13 a 450-word article by events editors strongly criticizing Integrity Commission for accusing people without evidence.Al-Ittijah al-Akhar on 25 February carries on page 18 a 1,000-word article by Faysal al-Qasim strongly criticizing Islamic regimes for always raising the slogan of fragmentation. The writer praises Islamic people who staged demonstrations protesting the publication of cartoons insulting the prophet.Al-Ittijah al-Akhar on 25 February carries on page 18 a 400-word article by Sa'd Muhayu commenting on the US-Iranian escalation and its impact on the region.Al-Ittijah al-Akhar on 25 February carries on page 19 a 400-word article by Hani Naqshabandi commenting on Arab media criticizing British violations in Iraq and expressing sympathy with western countries for receiving thousands of Arab refugees who escaped from violations in their countries.Al-Ittijah al-Akhar on 25 February devotes all of page 28 to an article by Shakir al-Nabulsi commenting on the Iranian president.Al-Ittijah al-Akhar devotes all of page 35 to an article by Fakhir al-Sultan commenting on "Vilayat al-Faqih" concept in Iran.Al-Mashriq publishes on page 6 a 900-word column commenting on the assassination of Al-Arabiyah Satellite Channel Chairman Atwar Bahjat.Al-Mashriq publishes on page 6 a 1,000-word article on the "blind hatred" towards Prophet Muhammad and his family.Al-Mada publishes on page 2 a 750-word article commenting on the latest crisis in Iraq.Al-Dustur publishes on the front page a 500-word article about the sectarian sedition that was about to erupt in Iraq.Al-Dustur publishes on page 5 a 900-word column warning of sedition.VII. SADDAM HUSAYN'S TRIAL:

Al-Zaman runs on the front page a 500-word report entitled "Former President Ends Hunger Strike, Trial Continues Today; German Intelligence Handed Over Saddam's Defense Plan P rior to Iraq's Invasion."Al-Zaman carries on page 4 a 600-word report citing Al-Ummah Party Chairman Sa'd Salih Jabr commenting on Saddam's trial.Tariq al-Sha'b carries on the front page a 120-word report citing chairman of the prosecution at Supreme Criminal Court to try Saddam and his followers saying that some of the defendants will attend the 13th session today, 28 February.Al-Ittijah al-Akhar on 25 February carries on page 11 an 850-word report citing Khalil al-Dulaymi, Saddam Husayn's defendant, saying that he has information convicting Iran of using poisonous gas in Halbajah. He comments on Saddam Husayn's situation in prison.Al-Ittijah al-Akhar on 25 February carries on page 16 a 450-word report citing a Moroccan farmer saying that he will file a lawsuit against Fadil Salfij al-Azzawi, a witness at Saddam Husayn's trial, for beating him when he was working in a farm in the late 1990s.

Al-Mashriq publishes on the front page a 300-word report that Saddam's trial will resume today.Al-Mada publishes on the front page a 500-word report on the thirteenth session of Saddam's trial which will be held today. The report said that important memos between Saddam and his intelligence department about the Al-Dujayl issue will be submitted to the court.

Click here for a list of Iraqi papers under OSC coverage

Sofia in Bulgarian -- high-circulation independent daily; regularly carrying political analyses; critical of both government and opposition; owned by Germany's Westdeutsche Allgemeine Zeitung (WAZ)

1. Interview with SND Chief Secretary Vladimir Donchev, who views current political matters, including proposal for setting up ministry to oversee utilization of EU funds, expresses concern over rise in organized crime in wake of murder of alleged top gangster. (pp 12, 13; 1,500 words)

Sofia in Bulgarian -- high-circulation sensationalist daily; critical of government policies; owned by Germany's Westdeutsche Allgemeine Zeitung (WAZ)

1. Nearly 200 employees of Foreign Ministry will be laid off next month. (p 4; 300 words; processing)

Sofia in Bulgarian -- popular, independent nationalist daily, generally critical of government policies that are pro-United States and pro-NATO

1. Report cites former detainee in Abu Ghurayb, describing "abuse" of prisoners, commenting on Abu Ghurayb images broadcast by Australia's SBS TV. (pp 1, 14; 1,200 words; processing)

2. Commentary by Stoyko Tonev says that current ethnic model does not serve interests of ordinary ethnic Turks. (p 12; 700 words)

Sofia in Bulgarian -- moderate centrist daily, occasionally left-leaning

1. Commentary by Yoana Gundovska argues that disagreements among SND, BSP, DPS are not so serious as to threaten stability of governing coalition. (p 11; 900 words; processing)

Sofia in Bulgarian -- nationalistic anti-NATO and anti-EU daily closely affiliated with the Attack Party, and displays anti-Western and anti-US tendencies, has a hostile attitude to ethnic minorities, and cautions readers about "threats" from Bulgarian Turks and Gypsies

1. Report quotes Adem Kenan, leader of unregistered Turkish Democratic Party, as saying that ethnic Turks rely on support from Turkey for their demands for minority status. (p 3; 550 words; processing)

Sofia in Bulgarian -- low-circulation daily, generally supportive of the rightist parties and US policies; critical of the government; linked to weekly; partly owned by Germany's Verlagsgruppe Handelsblatt

1. Commentary by Petya Vladimirova criticizes Interior Ministry's handling of investigation into murder of alleged top gangster Ivan "the Doctor" Todorov, accuses police of failing to crack down on organized crime. (pp 12, 13; 1,000 words; processing)

: 28 Feb-6 Mar

Sofia in Bulgarian -- high-circulation independent daily; regularly carrying political analyses; critical of both government and opposition; owned by Germany's Westdeutsche Allgemeine Zeitung (WAZ)

1. Interview with SND Chief Secretary Vladimir Donchev, who views current political matters, including proposal for setting up ministry to oversee utilization of EU funds, expresses concern over rise in organized crime in wake of murder of alleged top gangster. (pp 12, 13; 1,500 words)

Sofia in Bulgarian -- high-circulation sensationalist daily; critical of government policies; owned by Germany's Westdeutsche Allgemeine Zeitung (WAZ)

1. Nearly 200 employees of Foreign Ministry will be laid off next month. (p 4; 300 words; processing)

Sofia in Bulgarian -- popular, independent nationalist daily, generally critical of government policies that are pro-United States and pro-NATO

1. Report cites former detainee in Abu Ghurayb, describing "abuse" of prisoners, commenting on Abu Ghurayb images broadcast by Australia's SBS TV. (pp 1, 14; 1,200 words; processing)

2. Commentary by Stoyko Tonev says that current ethnic model does not serve interests of ordinary ethnic Turks. (p 12; 700 words)

Sofia in Bulgarian -- moderate centrist daily, occasionally left-leaning

1. Commentary by Yoana Gundovska argues that disagreements among SND, BSP, DPS are not so serious as to threaten stability of governing coalition. (p 11; 900 words; processing)

Sofia in Bulgarian -- nationalistic anti-NATO and anti-EU daily closely affiliated with the Attack Party, and displays anti-Western and anti-US tendencies, has a hostile attitude to ethnic minorities, and cautions readers about "threats" from Bulgarian Turks and Gypsies

1. Report quotes Adem Kenan, leader of unregistered Turkish Democratic Party, as saying that ethnic Turks rely on support from Turkey for their demands for minority status. (p 3; 550 words; processing)

Sofia in Bulgarian -- low-circulation daily, generally supportive of the rightist parties and US policies; critical of the government; linked to weekly; partly owned by Germany's Verlagsgruppe Handelsblatt

1. Commentary by Petya Vladimirova criticizes Interior Ministry's handling of investigation into murder of alleged top gangster Ivan "the Doctor" Todorov, accuses police of failing to crack down on organized crime. (pp 12, 13; 1,000 words)

: 28 Feb-6 Mar

FIJI

Calls for Government to Reduce National Debt Levels Wellington Radio New Zealand International WWW-Text in English 27 Feb 06

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Unattributed report: "Calls for Government to Reduce National Debt Levels"

A Fiji economist says the government needs to spend more money on infrastructure and reduce the level of debt that's used for consumption. The head of the School of Economics at the University of the South Pacific, Dr Biman Prasad, says the country's national debt is projected this year to amount to US$1.5b, or 53 percent of the gross domestic product. He says this is unsustainable because too much is borrowed by the government for consumption expenditure, including, for example, public servants' salaries. Dr Prasad says too little is destined for capital expenditure or infrastructure, which includes spending on roads, water and electricity.

"Our infrastructure is generally of poor quality, telecommunication charges are very high, and it's very costly to fly to Fiji on business, for example. Our port charges are extremely high, legal issues; so all these things are policies that government ought to look at." Dr Prasad says money needs to be spent to improve basic infrastructure to attract investment. The Fiji government says it is looking at ways to reduce operating costs and increase capital expenditure.

Chief's Council to Discuss 'ownership' of Qoliqoli (traditional fishing grounds) Suva Fijivillage WWW-Text in English 28 Feb 06

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Unattributed report: "Chiefs to Discuss Qoliqoli Issue"

As the three day Bose Ni Turaga comprising of 215 vanua chiefs begins in Suva today, the Fiji Resource Owners Association has made it clear that it will push for all Qoliqoli to be returned to landowners as soon as possible. Association President and Bose Ni Turaga organiser, Ratu Osea Gavidi said the government should just pass the Qoliqoli bill and return all the fishing grounds to its traditional owners. He said there is no need for consultations.

"It is pretty black and white. It is clear. We own the Qoliqoli and the survey has been done, the maps are complete, the titles are there and it is for government to transfer back to us the very people. There is nothing else to consult with. There maybe other stakeholders but the question is ownership, not the lease of it. So when we consult the users as far as other stakeholders, as far as ownership, it is quite clear. Government is the custodian for 125 years and supposed to return it to us. It is simple as that. And the promise has been made by government before the end of this term that it will be passed back to us."

Ratu Osea has also stressed that the association will take legal action against the government if it does not fulfil its promise. "Those are the promises. Every year promises have been made by government to return the Qoliqoli and we still believe that government will do that. But now time is running out. This term of the current sitting of parliament will end soon, either in May or August. So we will wait till the end of this current term. If they have not passed it back then we will decide on the options to take. But there are legal means to deal with. We do not have to fight over it. But if they are not interested in passing it back then maybe we seek a legal redress to get our Qoliqoli back. We are becoming desperate. Resource owners all over Fiji are getting desperate now. We claim to have ownership but the control is not with us. We have been alienated." The Bose Ni Turaga meets from 9am today at the Suva Civic Centre

Selection Process for the Next President and Vice President Explained Suva Fiji Times Text in English 28 Feb 06

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Unattributed report: "Sadole outlines nomination process"

The Great Council of Chiefs members who nominate the names of the President and Vice President will have to explain why they have nominated them, says GCC secretary Asesela Sadole. He said the 55 members of the council would then vote for the names taken up during the meeting after hearing explanations from those who have nominated the names and the member that seconded it.

"These members would be asked to explain themselves and their choice before moving on to another nomination with the same explanation before the members are asked to vote," he said. Last month, the secretariat of the GCC confirmed that incumbent Ratu Josefa Iloilo was available for re-appointment. Mr Sadole said there was nothing illegal if Ratu Iloilo was appointed for another term.

"The members are allowed to re-appoint him for another term since he has just served one term of five years but his name would have to be nominated by the council and someone has to second it and that also goes for the appointment of the Vice President," he said. The GCC meeting to appoint the President and Vice President will be held at the Tradewinds Hotel on Wednesday next week. Mr Sadole said the appointments to Government House were the priority of next week's meeting.

Home Affairs Minister Tells Army: Presidential Selection 'None of Your Business' Suva Daily Post Text in English 28 Feb 06

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Unattributed report: "'It's none of your business, Vosanibola tells army presidential appointments not its job"

Home Affairs Minister Josefa Vosanibola told army chief Commodore Frank Bainimarama yesterday that the appointment of the President is "none of his business". Mr Vosanibola said the military has no business in the appointment of the President or the Vice President as the Constitution clearly states that it is the task of the Great Council of Chiefs. In strong words, the minister has asked the military not to "interfere" in a process that does not involve them. "The Constitution, the supreme law of this country, which the military is always be talking about, clearly states that it is the task of the GCC to make these appointments," he said.

"They have no business to interfere and they must respect the Constitution." And while the military admits that the right to appoint the President and Vice President indeed rests with the GCC, there is also a checklist on which the August body works that requires the appointee not to have a criminal record. Military spokesman Lieutenant-Colonel Orisi Rabukawaqa said all the military was trying to ensure was that the President's office "should be free from any opportunity to denigrate".

"The President's office is the symbol of unity of the state," Lt-Col Rabukawaqa said. "There has been some speculation by the media on Ratu Naiqama's (Lalabalavu) nomination but at this stage they are just speculation," he said. Lt-Col Rabukawaqa maintained that all the military wanted was that anyone involved in criminal activities during the 2000 coup crisis must not be allowed to succeed to the high post. However, Mr Vosanibola has warned the military that no one is "above the law". He made the comment in relation to the military's assertion that they will impose the "doctrine of necessity" if anyone who was involved in the May 2000 coup was appointed to the two highest posts of the land. And while he refused to comment directly on the issue of the military imposing the doctrine of necessity, Mr Vosanibola only said that he has spoken to the Police Commissioner Andrew Hughes on the matter earlier. The military has stated that the issue of nominations was merely speculation therefore the doctrine of necessity will only be imposed if necessary.

Four Party Grand Coalition to Meet Soon Suva Fijivillage WWW-Text in English 28 Feb 06

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Unattributed report: "Grand Coalition to Meet Soon"

As the members of the Grand Coalition of Fijian parties get ready to launch the coalition next month, a variety of issues are expected to be discussed when they hold a meeting next Saturday. Chairman Tomasi Vakatora said parties may need to contribute money to draw the crowds. Meanwhile SVT General Secretary Ema Druavesi said they hope to have a good response from the public because as it falls on a working day. The launch of the Grand Coalition which now consists of only four parties after the dissolution of CAMV, will take place on the 10th of next month.

Army Disappointed Over 'Unproductive' Meetings with the Prime Minister OSB Report in English 28 Feb 06

Complied from 28 Feb 06 editions of Fijivillage: "Army behind Commander Move" and "Commander Postpones VP Meeting", Fijilive: "Army chief calls off talks with PM" and Radio New Zealand International: "Fiji military boss told to stop regular meetings with PM"

Army Commander, Commodore Frank Bainimarama decided today to have no further meetings with the Prime Minister, Laisenia Qarase at the PM's office, the RFMF has today stressed that it stands united with head of the military. Military spokesperson, Lt Colonel Orisi Rabukawaqa said the decision was taken after the advice given by senior officers that the fortnightly meetings with Qarase have been fruitless as far as the RFMF is concerned. Lt Colonel Rabukawaqa said it is amazing that even ration allowances and the Job Evaluation Exercises for soldiers are yet to be granted although the budget has already been allocated and the issue has been raised with the Prime Minister.

Lt Colonel Rabukawaqa said there is also no progress on some national issues in relation to the elections and certain proposed legislations. Lt Colonel Rabukawaqa said the Commander will now only meet the Prime Minister or any of his cabinet ministers at his office at QEB or the Strategic Headquarters. He stresses that Commodore Bainimarama will not go to any meeting at the PM's office.

Army Commander, Commodore Frank Bainimarama will not meet the Acting President, Ratu Joni Madraiwiwi today due to commitments at QEB this morning. Military spokesperson, Captain Neumi Leweni said the military will traditionally welcome the Commander of the MFO in Sinai who is visiting the country this week.

Meanwhile the Prime Minister, Laisenia Qarase has refused to comment on the military's stand yesterday that the Army Commander will no longer meet Qarase at the PM's office.

The report in Fijilive suggests that the Commander Bainimarama was in fact advised by his senior officers not to meet with the PM:

The top brass of the Fiji army has advised its Commander Commodore Voreqe Bainimarama to discontinue talks with the Prime Minister because there has been no progress on issues raised in the meetings. (passage omitted on superfluous details) The meetings between Qarase and Commodore Bainimarama were brokered by the VP because of a longstanding impasse between the two parties and the Home Affairs Ministry. Army spokesman Lt Col Orisi Rabukawaqa explained that the Commander would write to the VP and the PM after his meetings with them and raise issues that the army believed specifically needed to be addressed. He said the VP replied to the letters while the PM's and Home Affairs offices did not.

Lt Col Rabukawaqa said the Commander also briefed his senior officers on the talks with Qarase but now they felt there was no sense in Commodore Bainimarama continuing with the meetings if their concerns were not addressed. He said one concern related to national security and the others were outstanding issues like the Job Evaluation Exercise and the payment of ration allowances. According to Lt Col Rabukawaqa, the government had made allocations for the payments but the army is yet to receive them. He said senior army officers were willing to meet the PM and any other official that he wanted to invite and air their concerns. The chief executive in the PM's Office Joji Kotobalavu said he did not want to comment on the matter because there was an understanding between the VP, the PM and the army commander.

This appears to be corroborated by the RNZI report which quotes the Fiji Sun:

Senior officers of the Fiji military are reported to have told their commander, Commodore Frank Bainimarama, not to hold any more meetings with the Prime Minister, Laisenia Qarase. Military spokesman, Lt Col Orisi Rabukawaqa, has told the Fiji Sun newspaper that last week's meeting between Commodore Bainimarama and Mr Qarase would be the last. The fortnightly meetings started taking place after crisis talks between the two men mediated by the acting president, Ratu Joni Madraiwiwi, at the height of the stand off between the military and the government in early January.

Bainimarama Not Happy - Hoping for yet another Presidential Solution Suva Fiji TV One text in English 27 Feb 06

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Report by Sakiusa Bolaira: "Hoping for Yet Another Presidential Solution"

: The Army Commander says he's not satisfied with the outcome, so far, of his fortnightly meetings with the Prime Minister to iron out issues that affect the military. Commodore Frank Bainimarama's concerns are expected to be on the agenda of a meeting with the Acting President Ratu Joni Madraiwiwi tomorrow. This comes as senior military officers advise Commodore Bainimarama NOT to attend any more meetings with the Prime Minister.

: The Army Commander's last meeting with the Prime Minister was just two days ago. They met for about 45 minutes. What transpired on Friday is now coming to light Bainimarama is not happy with the outcome of the meeting. The Army Commander had made his views known to One National News that the agreement in government house for regular meetings with the Prime Minister is conditional. Even the Military senior advisors had made recommendations for the Commander not to attend the next meeting. Commodore Bainimarama has written to the President's Office about his dissatisfaction and an audience has been sought. The military had wanted the Prime Minister to seek out a number of issues including allowances. Prime Minister Laisenia Qarase told One National News this afternoon that he will wait for the outcome of the meeting tomorrow at Government House.

UN Multinational Force and Observer Director to Meet Bainimarama Suva Fijilive WWW-Text in English 28 Feb 06

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Unattributed report: "MFO director to meet Bainimarama"

The director general of the Multinational Force and Observer (MFO) James Larocco will meet the Fiji Military Forces Commander Commodore Voreqe Bainimarama today. Larocco is on a weeklong official visit to the country. He will visit to the Queen Elizabeth Barracks and tour the army's facilities.

Larocco paid a courtesy call on Vice President Ratu Joni Madraiwiwi and the Prime Minister Laisenia Qarase yesterday. Larocco will meet with the Australian police commissioner, Andrew Hughes tomorrow. Fiji is one of the contributing nations to MFO in the Sinai Peninsula.

Labour Leader Ends Court Action Against Fiji TV Suva Fiji TV One text in English 27 Feb 06

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Report by Sakiusa Bolaira: "Labour Leader Ends Court Action Against Fiji TV"

: Labour Party leader, Mahendra Chaudhry has ended his court action against Fiji Television Limited on his claim of defamatory comments made by Prime Minister Laisenia Qarase. Mr Chaudhry's lawyers, Singh and Chaudhry Lawyers, have filed the necessary court documents, discontinuing legal action against Fiji TV, which was listed as second defendant. However, the legal action against the Prime Minister still stands.

: Rajendra Chaudhry, acting for Labour Leader Mahendra Chaudhry, today confirmed he has filed a notice of discontinuance for Fiji Television. The notice is dated 16th of January 2006. Fiji Television was the second defendant in a civil case where the first defendant, Prime Minister Laisenia Qarase is being taken to court for utterances broadcast by Fiji TV, which the Labour Leader claims is defamatory in nature. The defamatory comments relate to allegations by Mr. Qarase that Mahendra Chaudhry was to benefit from a multi million-dollar loan to restructure the sugar industry.

: "We have had instructions and we had conferred with our senior counsels in Sydney and who has advised us that it would be a lot easier to establish the defamation case against the Prime Minister in the first instance. As we had indicated earlier that we want an expedient hearing of this matter so that it does not drag into the General Elections campaign."

: Fiji TV lawyers, Munro Leys, had said that while it was the prerogative of Singh & Chaudhry Lawyers to discontinue proceedings against Fiji TV, they always believed Mr Chaudhry did not have a sustainable court of action against Fiji TV. As for the Prime Minister, a court date will be known tomorrow.

: "We have filed summon of directions we await a date from the court as to the filing of the various materials."

Military Finishes Trial Phase of Enquiry into Baledrokadroka Suva Fiji Times Text in English 28 Feb 06

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Unattributed report: "Military finishes trial phase"

A Military board of inquiry into the conduct of a former senior officer has finished its trial phase and is now compiling a report. Military spokesman Captain Neumi Leweni said the report would be forwarded to its legal department which would decide on what action to take against Jone Baledrokadroka. He was not in a position to say how long it would take before the report is ready. The inquiry was set up last month after allegations that the former Land Force Commander tried to overthrow army commander Commodore Voreqe Bainimarama at Queen Elizabeth Barracks on 6 January. He initially questioned the criteria used to convene the board of inquiry and made it clear that unless things were done constitutionally, he would not appear before the board. His lawyer Devanesh Sharma had said that the summons was defective as it contained irregularities in the manner in which it was prepared. The board of inquiry was headed by Lieutenant-Colonel Samu Saumatua. Mr Sharma had argued that if the specific allegation was that his client tried to usurp control of the Fiji Military Forces, then Section 28 (1) (f) of the Constitution said that every person charged with an offence has the right to adduce and challenge evidence, and not to be a compellable witness against himself or herself.

Military Unhappy with Public Service Commissioner's Handling of Their Complaint Suva Fiji Times Text in English 28 Feb 06

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Unattributed report: "Military unhappy with Huggett"

The Military is not happy with the way Public Service Commission chairman Stuart Huggett was handling its complaint against Home Affairs Ministry chief executive Doctor Lesi Korovavala. The military said Mr Huggett was practising double standards, as he refused to suspend Dr Korovavala even though he had done the same for other CEOs for less serious allegations. In a press statement issued yesterday, military spokesman Captain Neumi Leweni said the allegations against Dr Korovavala were more serious than the permanent secretary or chief executive officers in the past 35 years. The military commander Commodore Voreqe Bainimarama had filed a complaint with the PSC in which he accused Dr Korovavala of trying to incite a mutiny at the Queen Elizabeth Barracks. Mr Huggett said he would comment on the issue today.

Lawyers for Former CRW Soldiers on Trial, Seek More Time Suva Daily Post Text in English 28 Feb 06

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Unattributed report: "CRW lawyers seek more time"

The trial, of eight former Counter Revolutionary Warfare (CRW) unit officers saw another setback yesterday after a defence lawyer asked for an adjournment after the prosecution gave them a list of new witnesses. Court martial judge advocate Lieutenant-Colonel Graham Leung adjourned the case for another two weeks to give defence attorney Vodo Tuberi and his team time to view the names of the new witnesses and to re-file a pre-trial conference with the military prosecutor, Major Kitione Tuinaosara. Mr Tuberi told the court that he had not been served a notice regarding new witnesses introduced by Major Tuinaosara. He suggested that the trial be adjourned to mid-March as he had a case on 3 March 2006 in the High Court and was not going to be available at an earlier date. The prosecutors then stated that they were ready to proceed with the trial yesterday morning, but were going to make allowances in consideration of Mr Tuberi's busy schedule: Major Tuinaosara was then directed by Lt-Col Leung to supply the list of witnesses for the panel's examination. The ex-CRW soldiers are facing charges of treason for their involvement in the upheavals of 2000 and the mutiny at the Queen Elizabeth Barracks in Nabua on November 2, 2000. The trial will resume on 13 March.

Interview with the National Party's Ratu Epeli Ganilu, Former Military Commander and GCC Chairman Suva Daily Post Text in English 28 Feb 06

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Unattributed report: "Feature: UP Close and Personal - 'Make a better place'"

It's time the people of Fiji got rid of the "politics of race" and take on board the "politics of moderation". That is the key motto of the National Alliance Party of Fiji, a newcomer to Fiji's thriving political scene. The party boasts some old Alliance Party members who will be contesting the upcoming general election. The party is led by Ratu Epeli Ganilau, a former military commander and Great Council of Chiefs chairman, who is also a son-in-law of one of Fiji's last statesman, the late Ratu Sir Kamisese Mara. Fiji Daily Post reporter Jyoti Pratibha talks to Ratu Epeli on his party and his vision.

: All major parties are currently looking for coalition partners. Can you tell us if your party has any intention of forming a coalition with other parties?

: Many of our supporters are under the impression that we are already in coalition with the Labour Party, and this is just based on speculation. At this stage I would like to take the opportunity to assure people that the NAPF is not in coalition with any party. But on the same note, I can confirm that we have been having formal talks with various parties namely FLP, NFP, UGP and some others. But there is no formal commitment with any party. Then there is the matter of forming a coalition before or after the elections, and we have seen the upheaval of the past and we do not want to make the same mistakes like the ones made in the past, and this might be driving away some of our supporters who I have been thinking of coming over. The purpose we stand for is the desire to work together.

: The grand Fijian coalition has come into existence just for the 2006 general election and a number of Fijian parties have expressed interest joining it. But, the National Alliance has opted out. Can you explain the reasons behind such a decision?

: We opted out of the Grand Coalition because their philosophy of getting together the indigenous Fijians is not something we believe in; it is in contrast to the multiracial concept that our party stands for. It was good that (Grand Fijian Coalition chairman) Tomasi Vakatora came to one of our weekly meetings with the GFC concept, and it was an opportune time for Mr Vakatora and the people who came with him to see the multiracial party members we had present at the meet and to see what this party is made of. During his presentation he said the purpose of the Grand Fijian Coalition is to bring together all the Fijian political parties to have the support of the indigenous Fijians, and one of our party members, who happened to be Part-European, questioned him about the other races in the country. "What about us? Aren't you interested in the well-being of the other races in the country?" So this is one of the problems why we did not agree to go into the Grand Fijian Coalition because their idea of togetherness and unity is about bringing the indigenous Fijians together while we believe in uniting everyone in the country.

: What is the real reason behind the formation of the National Alliance?

: I formed not only a political party which will see to the benefit of just one group of people but will see to the well-being of the entire population of the country. We are not here because we want to be in Parliament. We are here because of our genuine desire to bring the people together after the events of 1987 and 2000. We cannot afford to see another breakdown between the racial groups. I am thinking about the future of my children and the future of many thousands of children yet to be born in the country, and it would be a sad thing for them to be born into a divided society. That's not the fate we want our children to see. It is a party, which believes in politics of moderation and inclusiveness and it is a party for everyone- irrespective of race, religion and gender. It is not confined to one race only or to one class of people only.

: During the coup and very soon after it, Tailevu was seen as a stronghold for coup supporters, and seeing that you recently opened a branch of NAPF there, what are some of the challenges you expect to face knowing the opposition of your party to the controversial reconciliation bill?

: We had many questions about this posed to us by people of Tailevu and I feel we have answered it to their satisfaction and made them see what the true picture behind this bill is. Actually people feel that the current Government is g because it is formulating laws are good for the indigenous Fijians, and we said yes, Government is formulating laws such as the Qoliqoli Bill, the same laws, which are yet to see the light of the day because of the strong opposition it has. Though sounds good that the Government is bringing about all these laws, the truth is that none of these bills have the support it requires for it to pass, so it has failed the test in claiming the majority it needs.

: How much support do you think you have at the grassroots, especially seeing that your party is new?

: Personally, I feel that the support is phenomenal, in the sense that we started out with absolutely nothing but with idea of a united and multiracial philosophy that is alive in you, but the true level of support can only be known after the election but person does not see what the party is all about they will not be able to gauge the level of support we have. The important thing is living in harmony and the reality of living side by side is a fact of life in Fiji, seeing all the different communities that we have in the country.

: When you chose not to go into the Grand Fijian Coalition, were you not afraid that you might be losing support from the indigenous Fijians in the country?

: You could say that but we were honest right from the beginning to let the coalition parties know that we do not support what they are doing, neither do we support the idea of leaving out certain races and disregarding their well-being. We wish them well in their endeavour but that is not the way to a united country. That is not the way to our salvation, the way - the key to our salvation, the Fijian community is in working with the other races of the country.

: What platform are you going to fight the upcoming general election on?

: We conducted a survey, a small survey to find out what people really need and their main concern was unemployment, meaning to find employment. There are many people out there who want jobs.

: What is your view on the politics of race and what is lacking in our politicians?

: The politics of race is not going to disappear in any place in the world but we should stress on the positive aspects that despite our differences we are able to work together and contribute to make this place; better. We should not see the differences between races as a weakness in fact we need to show everyone that despite differences, we are able to see past the language and other barriers and help make this country a better place.

: Is the National Alliance intending to contest all 71 seats?

: We are still in the process of selecting candidates and if the elections are called early then we will have to speed up a few processes, and selection of candidates will be one of it. So we might not be able to contest all the seats if time is against us. I am thinking about the future of my children and the future of many thousands of children yet to be born in the country, and it would be a sad thing for them to be born into a divided society.

Chaudhry Blasts PM for 'Misleading the Nation over Mahogany Venture' Suva Fiji Sun Text in English 28 Feb 06

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Unattributed report: "Mahogany: Chaudhry blasts PM"

Opposition Leader Mahendra Chaudhry yesterday said he was disgusted that the Prime Minister "continues to mislead the nation" by trying to spread lies about the Labour Government's negotiation on the mahogany venture. In a statement yesterday, Mr Chaudhry asked what the Soqosoqo Ni Duavata Ni Lewenivanua Government had done in five years to identify a joint venture to assist the landowners about their mahogany resource.

"Nothing and he is now trying to shift the blame on to the Fiji Labour Party," he said. "The PM knows full well that the Labour Government had decided that the Total Resource Management proposal was totally unacceptable because it was a rip-off and would have meant alienating our forest rights to the American company.

"It was Labour's decision to reject the TRM proposal in favour of the Commonwealth Development Corporation deal that led to an orchestrated Fijian landowner agitation against it, instigated and fuelled by politicians such as Laisenia Qarase, and which eventually ended in George Speight's coup." Mr Chaudhry also questioned Mr Qarase's claim that the FLP had done nothing to start processing the mahogany resource. He said the fact was that the SDL government had made a complete mess of the mahogany venture just as it had with the sugar and garment industries. "Landowners have received nothing from their mahogany resource except for earnings from stumpage and leases," he said. Last week Mr Qarase told Parliament the Labour government was in a position to start processing mahogany and it had the resources to develop the industry but did not do so.

Mr Qarase said the Labour Government then organised a visit to the United States to look for a strategic partner, led by deputy opposition leader Poseci Bune. "They wined and dined for about two weeks in the USA and in their intoxication, they agreed willingly to the proposal from that company to take over the management and processing of the industry in Fiji." He said considering Labour's one year in office, there was never a mention of any assistance to landowners.

Auditor Still Has Not Seen Military Accounts Suva Fiji Sun Text in English 28 Feb 06

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Unattributed report: "Auditor still to see military accounts"

The Army's medical scheme (1991-1996), Benevolent Fund, Canteen Fund and the Farm account are yet to be audited, the Auditor General Eroni Vatuloka said. In a letter to army spokesman Lieutenant Colonel Orisi Rabukawaqa, he said his office could not start auditing these accounts in the absence of draft financial statements of the Regimental Funds and all records. Mr Vatuloka was responding to media reports that the army had been accommodating to the Auditor-General's team. Mr Rabukawaqa earlier said the audit team spent three months and everything they had requested had been presented to them.

"If they had not received everything in that time, one would have to question the necessity of spending three months and griping about it after the fact," he said. He said the army believed all issues raised in the media were a distortion of the facts and was probably a result of misunderstanding. But Mr Vatuloka said in light of the non-disclosure of the financial statements and the accounts of the Regimental and other funds, the focus of the audit every year was the funds appropriated by Parliament annually to fund all the military's activities. "The three months you referred to were for 2004 accounts of funds appropriated by Parliament. These accounts are not the same as the Regimental and other Funds that are maintained by the RFMF, which have yet to be provided to the Audit Office to date," said Mr Vatuloka.People Flock for Money Handouts from SDL Suva Fiji Sun Text in English 28 Feb 06

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Unattributed report: "People flock for SDL handouts"

About 200 people mostly indigenous Fijians flocked to the Soqosoqo ni Duavata ni Lewenivanua party office to seek monetary assistance yesterday. Most of them said they heard of the assistance from their villages and others from neighbours and relatives. Rafaele Vuki, 53, employed by Water Supplies said he heard it from a workmate.

"I came straight here today and filled in an application form because two of my children are at Ratu Sukuna Memorial, one in Form Three and another in Form Six," he said. "I am an SDL member and I will only vote for the SDL government and what they are doing today is to help the public." SDL acting national director Osea Vakalalabure said that the party was only helping those that really needed assistance and they came from all over the country. He said they received 60 to 70 people daily seeking assistance.

"We are only helping genuine cases and the maximum amount given is $200 and this is given out by the party's women's wing," he said. We are also offering assistance to all races and anybody can come in for assistance. We do not just accept members of the SDL party but anyone could apply. The committee usually meets and assesses the applications and only genuine cases are given assistance and their status can only be verified by the Talatala who serve them." Yesterday, a total of $4564.05 was given out to 23 recipients for school fees and 13 for stationery. Mr Vakalalabure said it was the third time they had given out monetary assistance but were not given cash but only cheques because they were made out to the schools or the bookshops they brought their quotations from. He said applications for assistance began at the beginning of the year to help parents. Forms were also distributed for small businesses but Mr Vakalalabure said they would only refer it to the ministries concerned.

"We are not giving out any money and we will only refer their applications to the various ministries that look after it whether it be logging, fisheries, or other small businesses."

National Alliance president Ratu Epeli Ganilau said that he did not dispute the giving assistance but rather the timing. "This should have been done throughout the five-year term and not all of a sudden you see active development. But the question is why now? They should have done that all along," he said. "But if it is coming from the political coffers then good but if it is from the public then it is a serious concern. However, this is only speculation but only the party knows," he added.

Commentary Compares Current Situation in Fiji to Mugabe's Zimbabwe Suva Fiji Sun Text in English 28 Feb 06

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Unattributed commentary: "Fiji follows Mugabe's example"

Robert Mugabe, President of Zimbabwe is the current day Hitler in reverse. In the last six years he was determined to rid Zimbabwe of all white farmers, just as Fiji's racist regime had been doing with Indo Fijian cane farmers. However with the fastest shrinking economy in the world, Mugabe was forced to backtrack on his "insane and chaotic" land grab scheme. As Idi Amin did in Uganda in the 1970s with economically active Indian Ugandans, an equally jealous and envious madman had ventured on persecuting white farmers in the southern part of Africa, in Zimbabwe.

In an orgy of violence the mad President's supporters seized the land, homes, equipment and infrastructure of about 4000 white commercial farmers who produced almost half of Zimbabwe's foreign exchange. The power hungry President whose action has resulted in hunger for so many of his people was forced to make a silent U-turn, as this has become an embarrassment for his regime. There are still about 230 white farmers remaining in small portions of their stolen and pilfered farms, and they will be offered state leases for the land they used to own. They are hoping that their full land holdings will be restored at a later stage. The white farmers hope that such leases will give them some protection from local warlords who hound the vulnerable farmers for freebies without any sweat or fear. The rule of might is right works in Zimbabwe.

It is expected that in the second stage some white farmers who have already been evicted particularly where there is no activity on that land. Some fled to Britain, Australia, New Zealand or South Africa. Mugabe's government reluctantly admits that only 50 per cent of the land it seized has been used. However economists agree that figure of idle land is nearer 90 per cent. This is a mirror of the Fiji situation where the hitherto rich cane land that has been grabbed by politically and racially motivated indigenous Fijian landowners is now overgrown with jungle while Fiji's once thriving sugar industry is headed towards bankruptcy. Mugabe is trying to play down the failure of quick riches and shortcuts to prosperity, as his land grab policy has failed miserably. Similarly in Fiji, the trustees of the landowners, the Native Land Trust Board, has reluctantly admitted the politically myopic policy of its management, which has virtually reduced the main cane-farming town of the second island into a ghost town because of exodus of displaced farmers to Suva. Thankfully, in the case of Zimbabwe, some white farmers are already preparing to return to their farms. The Commercial Farmers Union has called for special protection of leases and promised that it has the capacity to restore Zimbabwe's status as the breadbasket of the sub continent. Zimbabwe's Finance Minister, Herbert Murerwa, himself is a beneficiary of this thieving. He helped himself to a white-owned farm. He has been told by the International Monetary Fund to halt land seizures if the country wanted to have a chance of halting Zimbabwe's slide into economic disaster. While this reversal in the policy has been welcomed, some farmers who lost their holdings are cynical about any offers from the Government. Many will need convincing that the offer is genuine unless it is openly endorsed by Mugabe and even then they may still be sceptical about a President who has broken promises in the past. One of Zimbabwe's top cereal producers said that the Government vastly underestimated the damage of its insane policies.

"They probably believe that allowing some of us to return will turn the economy around in a season. "We won't be able to do anything without international finance, and we won't get that until there is a political reform. "It's bloody miserable out there. All our friends have gone, our equipment is broken, our homes are wrecked, the roads are a mess, our workers have gone, so why should we return? "We should be campaigning for compensation, not going back to help people who wrecked our country."

This is exactly what is mirrored in Fiji. Near my hometown of Ba, rural cane farms in Veisaru and Namada are overgrown in grass, which can be classed as jungle. Once in these farms Indo Fijian cane farmers used to toil, the trait they obtained from their indentured forefathers, and produce healthy sugar cane to feed Rarawai Sugar Mill. But alas, thanks to the political meddling of the NLTB backed by the nationalist elements in indigenous Fijian society, renewal of the leases was refused on the ground that the landowners needed the land for their expanding families.

However, as in the case of Zimbabwe, huge portions of land that were denied to hard working Indo Fijian cane farmers are lying idle, overgrown by all forms of noxious weeds. With cane farmers departing rural Fiji, the once well-maintained roads have gone to ruin, the once well maintained feeder roads running between cane farms are turned into drains and overgrown with bush. The nearby Veisaru Indian School that at its peak had some 400 pupils hardly has 100 now as farmers are forced to depart. As in case of Zimbabwe, people are also leaving their farms because their friends and neighbours have left. In some cases, those with remaining leases also depart as others around them are evicted, because of fear of thugs and looters. As in Zimbabwe, farmers are very sceptical of the ruling indigenous regime, which is trying to woo them back because the once thriving sugar industry is on the brink of collapse. Most farmers who have been displaced and have turned to market gardening see this change as a boon because they can see cash daily, unlike in sugar industry where they were burdened by debt. Fijian leaders with no knowledge of the sugar industry accuse the farmers of amassing wealth from cane farms when in fact farmers always remained poor on farms and what wealth one sees is the cumulation of hard work of some three to four generations. In Fiji's second island town of Labasa, whole valleys have turned to bush, as farmers have been evicted on a wholesale basis, based on misplaced nationalism rather than any rational economics. Labasa is in recession and the Government is asking the farmers to return. But once kicked out, only the most desperate ones would go back and build from scratch, as they had already dismantled their houses and have little faith in the changing moods of the landowners.

One thing we learn from history is that we do not learn anything from history. What is today happening in Zimbabwe, a parallel of that is taking place in Fiji? It is hoped that the indigenous Fijian leaders in Fiji will pay heed to history and learn something from the Uganda and Zimbabwe experiences before it is too late for Fiji.

Thakur Ranjit Singh is a human rights activist and an advocate of good governance. The views expressed are his and not necessarily that of this newspaper.

Supervisor of Elections Faces Court Action Over Alleged Anomalies Suva Fiji TV One text in English 27 Feb 06

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Unattributed report: "Supervisor of Elections Faces Court Action"

: Amid speculation of an early general election, the Supervisor of Elections Semesa Karavaki faces court action for alleged anomalies in the provisional roll. The Labour MP for Vuda Indian Communal Vyas Deo Sharma says voters in his constituency have been wrongly registered in another constituency. Vyas Deo Sharma's Lawyer, Rajendra Chaudhry says he gave Karavaki two weeks to explain why voters in the Vuda Indian Constituency were wrongly registered in the Lautoka Rural Constituency, according to the provisional roll. Supervisor of Elections Semesa Karavaki says he's written to Chaudhry stating he will give him a full brief tomorrow.

Elections Office Fully Prepared for Elections By the End of March Suva Fiji Sun Text in English 28 Feb 06

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Unattributed report: "Elections Office ready"

The elections office will be fully prepared by the end of next month in case if an early election is declared. Supervisor of Elections Semesa Karavaki said they had to be well prepared so they were not caught off guard. "I think we are in quite a good position to say that we will be ready if the elections are called early," he said.

"We should be in a position to accommodate the elections because we are actually trying to prepare for an early election so that we don't get caught off guard," he said. He said although the elections office would be ready, they had to consider the other parties that contributed to a success full election. Of the errors listed in the Provisional Rolls, Mr Karavaki said the purpose of the rolls were for people to scrutinise and point out those irregularities. "The purpose for the Provisional Rolls being put up for public scrutiny is for them to see if there are any irregularities and we correct them." He said the decision on an early election was the prerogative of the Prime Minister and it was often decided in an attempt to spring a surprise' on political opponents.

Editorial Commentary on the State of the Electoral Roll Suva Fiji Sun Text in English 28 Feb 06

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Unattributed Editorial: "Role of the rolls"

If the Prime Minister, Laisenia Qarase, does decide on a May election - and the decision is entirely his to make - the public service will have to look extremely sharp about ensuring that the rolls are correct. That means that every eligible voter should be registered with his or her correct name and address on the electoral roll. It is a mammoth task that will be difficult to complete in time. And any problems with the roll will immediately become ammunition for losing candidates and political parties. Already the parties are complaining that there is insufficient time to prepare the rolls adequately - and they may well have a valid point. Anecdotal evidence abounds of anomalies, irregularities and good old-fashioned mess-ups.

It will be difficult if not impossible to sort them all out before the end of next month. Nevertheless, the fact remains that the date of the election is decided by the Prime Minister and the Prime Minister alone. If he decides to take his case to the country in May, the electoral apparatus had simply better be ready. It won't be good enough to say after the election that there was insufficient time and resources to adequately prepare the rolls and educate the electorate on how to use them. If there is sufficient evidence that the rolls were not adequate or incomplete, losing candidates will have no hesitation in running to the courts to have results set aside. The result would be chaos with months or even years required to unravel the true composition of the Lower House. It's something to be avoided.

The nation - and the political parties - need a clear cut decision from the voters to ensure a smooth transition from one government to the next with a minimum of disruption and uncertainty. And that can only be done if the electoral rolls are reliable. So the team responsible for ensuring that reliability bears an enormous burden. Fortunately there seems to be a full realisation of that responsibility among the team members and their leader. It is inevitable that there will be errors and confusion. The purpose of publishing provisional rolls is so that people can check to ensure that their details are correctly recorded so that they will be able to vote when the day comes. If they are not, that can be rectified. What electoral officials and political parties now have to do is ensure that people take the trouble to check. On election day it will be too late.

POLYNESIA

Tonga Tongan Move to Link with Its Citizens Overseas Welcomed Wellington Radio New Zealand International WWW-Text in English 27 Feb 06

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Unattributed report: "Tongan Move to Link with Citizens Overseas Welcomed"

A Tongan community leader in New Zealand says he supports moves in Tonga to develop a new department for Tongans abroad. The Tongan Cabinet has approved the establishment of a new department to look after the interests and concerns of Tongans living overseas. Tonga's acting Prime Minister, Dr Feleti Sevele, said it was important to maintain links with the community living overseas and acknowledge the contribution they made through remittances.

The chairman of the Tongan Advisory Council, Melino Maka agrees, saying many Tongans abroad welcome the move. "This is a very positive development and we need to start to look at it in a positive way that will help Tonga move in more transparent ways and that's what Tongans in Australia and New Zealand have always been looking for in the past." The chairman of the Tongan Advisory Council in New Zealand, Melino Maka said.

Tongan Public Servants Threaten To Strike Again OSB Report in English 28 Feb 06

Compiled from 27 Feb 06 edition of Nukualofa Matangi Tonga WWW-Text in English

Tonga's Public Servants Association has issued another ultimatum to government and threatened to go on strike if their demands are not met. At a meeting on Friday 24 February 2006, the PSA decided to oppose the Cabinet decision of 3 February to reduce the size of the Public Service.

Dr 'Aivi Puloka, the president of PSA, said today that the public servants agreed on Friday to present government with two recommendations that:

- the 40% of the 60, 70, and 80% salary rise left to be paid during this financial year should be paid before July 2006.

- the PSA strongly opposes the Government's move to offer a redundancy package because they think there are other options.

'Aivi said that PSA members on Friday agreed that they will go on strike if government neither responds nor gives in to their demand.

On 16 February 'Aivi wrote to the Minister of Finance, Hon. Siosiua 'Utoikamanu, and pointed out that the cabinet decisions to reduce the size of the public service breached the Memorandum of Understanding that was signed on 3 September 2005 between the striking PSA and the Cabinet. The PSA also requested from the Government that a consultant come and meet with PSA executives to explain the details of the cabinet decision.

'Aivi said that the Minister of Finance denied their request for a consultant because it was not under their responsibility, instead referred their request to the Secretary of the Public Servants Commission, Kelepi Makakaufaki. A meeting with Kelepi Makakaufaki to detail the Cabinet's decision never took place that was why the PSA called a general meeting of its members last Friday.

With the wrangling that is going on between the government and the Public Servants Association (PSA), to find a way forward there is obviously a need for both to revisit the Memorandum of Understanding they signed on 3 September 2005, ending the six-week national strike of Tonga's public servants. The stumbling block is that the MOU has outlived its usefulness, which was simply to offer a way out for both parties and to end the strike. They have signed an MOU, which makes it impossible for them to find sensible solutions to their problems.

While government is pleading poverty that it can't finance the salary rise, Clause 8 of the MOU said that there would be no increase of any taxes because of the salary increase. While the down-sizing of the public service was fundamental in the $40m Economic Reform Programme; Clause 5 of the MOU said that "Civil servants who are on strike will not be disciplined or discriminated against."

Talk about interfering with justice, Clause 6 of the MOU reads "Students enrolled at Government schools who supported the strike will not be disciplined." So what about those who vandalised buildings, and have been charged with criminal offences? The demand for the resignation of the Secretary of the Public Service Commission and the director and three deputy directors of the Ministry of Education appears to be very unfair, particularly if they are not to be given any right to defend themselves.

A revisit to the MOU, as proposed by the ADB economic experts who came to look at it, will show that there were ambiguous and open ended clauses, some containing human rights violations and even outright illegal demands. So that on this reflection, it becomes quite clear that both parties should renegotiate the MOU or we will be stuck with a document that has became irrelevant, and an obstacle to progress.

Tuvalu Tuvalu Hopes Fiji Meeting will Settle Repatriation Difficulties for Workers in Nauru Wellington Radio New Zealand International WWW-Text in English 27 Feb 06

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Unattributed report: "Tuvalu hopes Fiji meeting will settle repatriation woes"

Tuvalu's Prime Minister says he hopes a meeting in Fiji tomorrow will finalise who is funding the repatriation of Tuvaluan and I-Kiribati workers stranded on Nauru. Representatives from the governments of Tuvalu, Kiribati and Nauru, the International Organisation for Migration and the Pacific Islands Forum Secretariat will meet in Suva to thrash out the issue. Several hundred mainly phosphate company workers and their families are stuck on Nauru, waiting for outstanding wages and sponsorship to pay for their return home.

Tuvalu's Prime Minister, Maatia Toafa, says he believes Australia and New Zealand will foot some of the bill and is keen for a solution. "We expect the outcome of the meeting to sort of confirm the funding or to meet the costs for the repatriation process." Mr Toafa says it would cost more than half a million New Zealand dollars to ship his people home, provided they used a Tuvaluan vessel.

Samoa Samoa Election Candidate on Gun Related and Drug Charges Wellington Radio New Zealand International WWW-Text in English 27 Feb 06

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Unattributed report: "Samoa election candidate on drugs charge"

It has been revealed in Samoa that one of the six people facing drug charges as a result of a police raid earlier this month is an election candidate. Tofele Lata Tavui is charged with possession of unlawful ammunition (four rounds for a .38 calibre gun) without lawful purpose and possession of narcotics weighing six grams. He is a candidate for the main opposition Samoa Democratic United Party.

French Polynesia Temaru to Celebrate First Year in Office Next Week Pape'ete Oceania Flash Regional News Service Text in English 28 Feb 06

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Report by Patrick Antione Decloitre: "Temaru to celebrate first year in office next week"

French Polynesia's President Oscar Temaru will next week celebrate the first anniversary of his election, on 03 March 2005, to the helm of the French Pacific country. Temaru was returned to power last year after a four-month stint between June and October, 2004 and a protracted tug of war with his long-time opponent, Gaston Flosse, who had ruled French Polynesia for most of the previous decades. Last year, Temaru's election was a direct result of by-elections in the main constituency of French Polynesia, which caused a shift of majority within the local legislative assembly.

For the past twelve months, Temaru has had to face strong opposition from a Flosse-created Intervention Group of Polynesia" (GIP) which blockaded key access points and the wharf of the capital Pape'ete. The group was eventually disbanded last month and most of their staff was reintegrated in other parts of the local public force. The former GIP men are however still opposing the appointment of a new head.

On the economic front, since December, the Temaru government's first budget has been referred by French High Commissioner Anne Boquet to a panel of French auditors in Pape'ete, who last week ruled that some parts of the appropriation act had to be revised, especially on the income side of the balance. The local government now has to comply with the auditors' recommendations within one month.

Late last year, Temaru also had to back down on a 'solidarity' project that was strongly opposed by local companies. The government had to fall back on an increase in alcohol and tobacco taxes. Meanwhile, latest available figures have shown that during the 2005 financial year, taxes have cashed in an excess of the equivalent of twenty to thirty million US dollars, the daily newspaper La Depeche de Tahiti reports.

French Overseas Territories Minister Baroin to Arrive in Tahiti on 30 March Pape'ete Oceania Flash Regional News Service Text in English 28 Feb 06

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Report by Patrick Antione Decloitre: "French minister to arrive in Tahiti on March 30: report"

French minister for overseas territories, Francois Baroin, is tipped to visit French Polynesia between March and April 3, the daily newspaper Les Nouvelles de Tahiti reports. Baroin's Pacific trip would also include New Zealand, where the French minister is planning to meet government members in Wellington. Later this week, Baroin will also travel to New Caledonia (March 4-9) and immediately before (March 2-3), to Australia, where he is also scheduled to hold talks with cabinet members, including Prime minister John Howard, according to local media reports in New Caledonia.

One of the aims of the minister's visit would be to officially extend an invitation by French President Jacques to all 16 Pacific Islands Forum leaders (including Australia and New Zealand) for a "France-Oceania" summit to be held in Paris on 26 June. During the Australian leg of his trip, New Caledonia's member of the French National Assembly, former New Caledonian President Pierre Frogier, will join Baroin. The Presidential invite would also coincide with the official opening of a Museum in Paris, which is dedicated to the world's most ancient cultures and is dedicating a significant part to Australia and South Pacific arts and cultures.

France, Australia, New Zealand mull joint fisheries policing initiative:

While in Australia and New Zealand, Baroin would also hold more specific talks with his counterparts on a tripartite project mooted since last year by France, Australia and New Zealand. The project would consist of a joint offer from those three countries to South Pacific states and would purport to put in place a kind of police within Pacific waters, in order to curb a perceived increasing trend in illegal fishing activities. "This (initiative is) regard(ing) a set of precise measures in terms of fisheries policing and there could be a joint statement in the near future", France's newly-appointed ambassador to the Pacific, Patrick Roussel, told Oceania Flash last week.

PNG & BOUGAINVILLE

PNG: Military Claims Ammunition Theft an 'Inside Job' Port Moresby The National (Internet Version-WWW) in English 28 Feb 06

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Unattributed report: "Military 'solves' ammo mystery"

The PNG Defence Force now has a "clear picture" of who were involved in the theft of ammunitions at the Goldie River Barracks outside Port Moresby. Chief of Staff Captain Tom Urr said yesterday it was an "inside job" involving people who knew where the ammunition was kept. Capt Urr said they believed the ammunition was stolen between 2 and 5 January 2006. He said the ammunition was old stock from Bougainville which was (being) kept there for destruction.

"On military standard, those ammunition were exposed and they were no longer safe for further use because there is a danger of them blowing up in the face of those intending to use them," he told reporters during a briefing at Murray Barracks. He said that the theft was the work of ex-soldiers who had links to airlines. "Now we know exactly who were involved. "It was an inside job with people from outside and our ex-members from the force," he added. "We know exactly their links with our airlines and our investigators are working closely with police and in the next few weeks, arrests will be made," the military's Chief of Staff said.

He said the Defence hierarchy did not pick up the theft quickly "because there was no evidence of any break-in until "we did a detailed investigation of our units, and we realised there was a break-in". He declined to disclose names and the quantity of what was taken, but said that would be revealed after arrests and people were actually put behind bars. "It's the work of evil people within the system. We are fortunate that from their own problems, they are able to give away and report on those who moved those ammunition to Mt Hagen," said Captain Urr. He was hinting at informers who provided the vital information that led police to the seizure of the ammunition at Kagamuga Airport and the arrest of one person.

PNG Defence Force Retrenchment Exercise to End in May Port Moresby The National (Internet Version-WWW) in English 28 Feb 06

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Report by Philbert Aisaisa: "Army retrenchment exercise ends in May'

The retrenchment exercise in the PNG Defence Force (PNGDF) which started in 2000 as part of a reform will be completed by May this year, Defence top brass told reporters in Port Moresby yesterday. Defence Chief of Personnel Col Paul Mai told reporters that of the 1,300 personnel identified for retrenchment, 1,141 have so far been retrenched. Col Mai said another 100 would collect their cheques at the end of the week and be repatriated, while 220 will receive their final handshake in May. "We are on target to achieve this part of the Defence reform in May, before we move to the next phase, that is revitalisation and rebuilding the force," he said.

Col Mai said the retrenchment exercise was part of the PNGDF reform programme introduced by the Morauta Government and is funded by the Australian Government. The Australian Government had allocated A$40m (K92m) for the PNGDF reform programme. Col Mai explained that it was wrong for some servicemen to say that what they had received was only from the Australian Government, and they were yet to receive payments from the PNGDF. He said this was a PNG Government exercise, and the Australian Government was only funding it, and no one should be misled. He said there were others who were retrenched before 2000, who had gone to court to claim entitlements.

"There are five groups who are in court. We have paid all their entitlements by a court direction to the court trust account, and this is being dealt with by lawyers." He said these groups, consisting of about 300 to 400 servicemen, were still being accommodated in the barracks, but they would be repatriated once their cases were resolved. He also said that following a court order, 188 ex-servicemen who left between 1982 and 1989 were paid ex-gratia payments. "But they are claiming a second payment and the new list has 970 ex-servicemen. This includes those who were discharged dishonourably and who do not have entitlements from the State, and those discharged on request." He said they were dealing with this, which include a massive claim of K32m, case in court.

Judge Proposes Life Sentences for Misuse of Public Funds Port Moresby The National (Internet Version-WWW) in English 28 Feb 06

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Report by Peter Miva: "Judge mulls life sentence for misuse of public funds"

Increasing the maximum penalty for misuse of public funds from 10 years to life imprisonment may be the only way to break the culture of misuse of public funds, a judge has proposed. Lae National Court Judge Justice George Manuhu said this when sentencing a former LLG officer to two years in jail with hard labour for misappropriating K3,500 belonging to the Nanima-Kariba LLG in Menyamya district, Morobe province. Justice Manuhu said misuse of public funds had become a hindrance to the effective delivery of goods and services.

Hans Luther Suten, 39, and married with three children, committed the offence when he was the LLG executive officer in May 2004. Justice Manuhu, when passing sentence, told Suten that on 12 May 2004, he and LLG president Paul Anis had collected K20,350 from two cheques cashed that day. He said from the cheques, the accused was given K300 in travelling allowances, K2,000 for mattresses and utensils for himself, and a K1,200 advance for school fees. He said the president only wanted the accused to return to Aseki the next day with at least K14,000. Justice Manuhu told the accused that he was entitled to a day's travelling allowance of K39 and not K300 as he was in Lae on a private trip. He told Suten that he was not entitled to K2,000 to buy household items. Justice Manuhu said public money was not for loan and therefore he was not entitled to the K1,200 advance for school fees. The judge considered that Suten had expressed remorse; he was married with three children and was a first time offender. The judge deducted a month and two weeks from the total sentence.

French Assist PNG with Aid, Fisheries Surveillance Port Moresby The National (Internet Version-WWW) in English 28 Feb 06

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Report by Veronica Manuk: "Envoy: France is proud contributor"

France is a proud contributor to PNG's development through the European Union, said its Ambassador to PNG Jacques-Olivier Manent. The ambassador told leaders in East New Britain that the EU was a major donor and partner in major development projects in PNG spanning several years, and although France was not contributing physically to PNG, in monetary terms, it contributed about one-fifth of aid to PNG through the EU. He said it meant that if the EU gave K5m in aid to PNG, K1m from that amount would be from France as its contribution. He was speaking in Rabaul during an occasion to mark the visit to the town by French Naval frigate Vendemiaire, based in New Caledonia. Mr Manent said that following an agreement between the French government and the fisheries authorities of most South Pacific nations, Vendemiaire would be among a number of French naval vessels assisting in surveillance and monitoring duties in the Pacific.

Villages Close Morobe Provincial Government Office, Threaten to Shut off Water to Lae Port Moresby The National (Internet Version-WWW) in English 28 Feb 06

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Report by Philip Dowa: "Wenge under attack"

Morobe Governor Luther Wenge came under attack yesterday as Ahi villagers closed down the Morobe provincial government head office and demanded an audience with the governor over many outstanding issues. Hundreds of people from six Ahi villagers travelling in truckloads converged on the provincial government building and lashed out their fury on the Deputy Governor Utikita Siserta, Provincial Administrator Manasupe Zurenuoc and his deputy, Patiliaus Gamato. They threatened to close down water and power services to Lae city by 10.30am today (Tuesday) if the governor fails to meet them and hear their problems. The angry villagers shouted down the administration officials, while calling the governor many names including a "conman", an "oppressor" and a "highlander being adopted into Morobe".

"Mr Wenge has never fulfilled many of his commitments to the people of Ahi and Morobe and, when there is crisis, he tends to use public servants to attend," Ahi spokesman William Kising said. Mr Kising added: "This shows he does not have the guts to address crisis situations." He said the governor was fully aware of the appointment with the Ahi people through the provincial administrator and the media, yet he has decided to avoid the meeting by taking a trip to Port Moresby. Ahi woman leader Mrs Martha Nadu declared that they do not have faith in the leadership of Governor Wenge any more. Chairman of the Ahi Association Jonathan Saing said his people set up the first government for Morobe called "Modipe Association" and Wenge should understand history and respect them. Provincial administrator Zurenuoc assured them that Governor Wenge would be in Lae today to hear their grievances. The people want to discuss with Mr Wenge their demand to retake the old Lae airport land, the old government staff land, compensation for the water pipe running through their land, removal of illegal settlers and support to churches in the fight against HIV/AIDS.

Meanwhile, assistant commissioner of police Giossi Labi has instructed metropolitan commander Simon Kauba to keep his men posted at key installations in the city. Mr Labi also spoke to the Ahi leaders and reminded them that the repercussions of destructions will also include them and their families. "The Ahi leaders are also mindful of the consequences of their actions and I am sure they will not destroy anything," he said. The meeting between Ahi people and the governor would be held at the provincial government headquarters.

Interview with Sir Peter Barter on Electoral Boundaries Commission Report Port Moresby EMTV in English 27 Feb 06

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Unattributed report: "Time running out for a decision for the Boundaries Commission report"

Minister for Inter-Government Relations Sir Peter Barter says time is running out for parliament to make a decision on the Electoral Boundaries report. He's concerned that with the National Elections just 12 months away parliament may not be able to muster the numbers to make a decision. Parliament rejected the decision last week during a special session.

: Following parliament's rejection of the report last week, the Electoral Boundaries Commission headed by Electoral Commissioner Andrew Trawen has been given another 40 days to amend the report and bring it to parliament. Under the law MPs are supposed to advise the Commission of specific issues that they want amended. This, Minister responsible Sir Peter said, did not happen and he's concerned that the time is running out with the National Elections just 12 months away.

: Members felt they will go in to election and perhaps (if)the electoral roll had been changed it would make it more difficult for them to be elected. The other concern was that because it's so late, has the Electoral Commission got time to put the electoral rolls together to make everything possible to happen by 2007.

: Once the report comes back in the April sitting, it can be accepted with simple majority or rejected with a two-third absolute majority of 73 MPs. If parliament cannot muster 73 that would mean the 23 proposed electorates come into place and if regional seats remain, PNG will have a total of 135 MPs which Sir Peter said is too expensive.

: It's unaffordable, truly unaffordable. You finish up having to spend another K200m of maybe more million to be able to fund the extra seats.

: Although many MPs did not point out the specific issues they want amended, they're concerned about the timing of the presentation of the report. The Electoral Boundaries Commission delayed twice last year to present its report to parliament because the report was not ready.

: There is a risk involved and it's not being able to get the 73 to reject it or alternatively to get the numbers together to abolish the open provincial seats so it becomes effective but what we don't want to happen is the two together.

PNG on the Verge of Collapse: Governor-General Port Moresby Post Courier (Internet Version-WWW) in English

OSB Transcribed Text

Unattributed report: "G-G pushes governance"

Papua New Guinea is on the verge of collapse due to greed, nepotism, graft and corruption, says Governor-General Sir Paulias Matane. Delivering a key note address at the ninth Information Systems Audit and Control Conference (ISACA) in Port Moresby yesterday Sir Paulias said due to greed, nepotism, graft and corruption, the foundation of good governance and that of the Constitution was collapsing. "These devalue our wealth and we as a country are all the poorer for it," Sir Paulias said. "Assurance is lost and insecurity is forever. As a strong nationalist, I feel for the future generations and I believe that you too feel as I do." Sir Paulias said he was pleased to know of the close association of ISACA PNG chapter with the newly launched PNG Institute of Internal Auditors and added that their close relationship should be a united force against poor governance. He also congratulated Francis Poko, from the Bank of Papua New Guinea, and Kaspar Kula for attaining certified auditors after completing the Certified Information Systems Auditors exams and he urged more Papua New Guineans to pursue this reputable certification. "On this day and age where information technology is an integral and essential part of every day business, we can assure ourselves nationally as well as internationally by ensuring our information technology is being managed well and efficiently," Sir Paulias said. "Information assurance is the basic principle on which a government or business organisation's decision is made. Without assurance, government or business organisations can not feel certain that information on which they base their decision is reliable, secure and available when needed."

PNG Investigators Uncover Human Smuggling Syndicate Suva PACNEWS1 in English 28 Feb 06

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Unattributed report: "PNG investigators uncover human smuggling syndicate"

New Guinea's internal police investigators have uncovered a human smuggling syndicate involving a senior police officer. PNG's assistant police commissioner, Raphael Huafolo says the senior police officer will be arrested over allegations of accepting bribes from an Asian crime syndicate in the capital, Port Moresby. He is alleged to have received a vehicle and accommodation allowances from another man to prevent police from investigating the operator of a casino and brothel syndicate. Commissioner Huafolo says such officers have no place in the PNG police force. "We would not want to see corrupt officers serving in the public sector and more importantly in the police service and at the same time try to fight crime," he said. "It is an embarrassing situation and it does not look right on competent police officer. This is an endemic problem within the public sector and I think every citizen of this country must put our heads together and fight this very very bad contagious disease."

Jakarta: June 2006 is the scheduled release date for Abu Bakar Ba'asyir from his imprisonment for immigration violations. However he must remain in prison until May 2007 on charges relating to his connection to the Bali I bombing (October 2002). So what is the situation?

The Head of the National Police Criminal Investigations Division, Commissioner-General Makbul Padmanegara has agreed that Ba'asyir should be set free once he has served his sentence.

"Once he has served his sentence he is a free citizen, we must respect the law, "he said in Jakarta on Monday 27 February.

He gave the reminder that all concerned parties must be working from the same benchmark which states that once a person has served their sentence they are deemed to be a citizen free of any problems.

"What we look for is, are there any other crimes involved?," said Makbul, while not offering any further explanation.

He went on to ask that all concerned parties keep a positive outlook and that they respect Indonesian law.

So, will Ba'asyir be freed, only to be arrested again, or will he continue his detention until May 2007? All will be revealed later!

(Description of Source: Jakarta detikcom in Indonesian -- Internet website updated regularly to cover fast-breaking national news. Widely read by urban, educated, middle-class readership)

On 27 Feb 06, Detikcom carried an article on ASEAN regional police cooperation. The following is a brief report.

In light of the trans-national nature of terrorism and drug trafficking, ASEAN regional police cooperation needed to be increased. According to Indonesia's chief detective, Commissioner General Makbul Padmanegara, Indonesia would shortly sign an MOU with the Philippines police on issues related to the border area with Nunukan and Malaysia. He added that Indonesia was open to expanding cooperation with other states.

Retired Indonesian Police Chief General Da'i Bachtiar emphasised that dealing with terrorism was not just about prevention efforts, but required cooperation between the government and community for the eradication of terrorism. He cited the Japanese community police as an example of government-community cooperation.

(Description of Source: Jakarta detikcom in Indonesian -- Internet website updated regularly to cover fast-breaking national news. Widely read by urban, educated, middle-class readership)

The following report on police investigations into criminal cases in Poso was extracted from an article in the online edition of Suara Pembaruan on 25 Feb.

After two and a half months in force, the Central Sulawesi Security Operations Command (Koopskam) has successfully solved several criminal cases in Poso and the surrounding areas.

Koopskam Commander Inspector General Paulus Purwoko announced that three people suspected of shooting Ivon and Siti Nuraen, two school children, in November 2005 in Poso, had been identified. The suspects were only referred to by their initials, IM, IS and AK. He also stated that a woman, referred to as Lld and suspected of being involved in the bombing of the Toraja Church at Tolitoli in December 2005, had also been caught. Others recently arrested included Ipong and Yusuf, who were suspected of murdering Poso Post reporter, I Wayan Sumaryase, in 2001. A former district head of Poso, Andi Asikin Suyuti, eight staff members from the Central Sulawesi Social Welfare Service, a Poso subdistrict head and three contractors who were involved in an aid project in Palu were all arrested for embezzling funds allocated to Poso refugees between 2002 and 2003.

He explained that a number of the suspects in the above cases were being questioned at National Police Headquarters in Jakarta. Regional police had finished questioning suspects involved in the first two cases and they had been handed over to the courts.

Despite these accomplishments, police were yet to identify those involved in the slaying of three high school students in October 2005, the bombing of the Tentena Market in July 2005 and the bombing of the pig market in Maesa, Palu in December 2005. According to Paulus, failure to make any progress with these cases was due to a lack of evidence.

(Description of Source: Jakarta Suara Pembaruan in Indonesian -- Protestant daily newspaper)

PNG & BOUGAINVILLE

PNG: World Health Organisation Aids PNG to Develop Bird Flu Strategy Suva PACNEWS3 in English 24 Feb 06

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Unattributed report: "WHO expert warns of bird flu spread in region"

A World Health Organisation (WHO) expert is assisting Papua New Guinea (PNG) health, quarantine and agriculture authorities prepare a contingency plan for the arrival of the avian flu (H5N1) virus. Disease specialist Dr Luo Dapeng believes it is inevitable avian flu will reach PNG and will quickly spread south to Australia with migratory birds crossing the Torres Strait. This month, more than a dozen countries reported their first outbreaks of the deadly strain which has killed more than 90 people worldwide and prompted mass culling of poultry. "If something happens here, Australia cannot escape. I think Australia will have to help," Mr Luo said. "What Australia could do is help Papua New Guinea set up a good surveillance system and get a preliminary diagnosis system in place so they can take action quickly. That's the way to protect people both in Papua New Guinea and in Australia." Mr Luo said ensuring good preparedness in PNG for an outbreak was extremely important to delay the spread of the virus.

The same applied if the worst-case scenario happened and the virus evolved into a human-to-human form, sparking a deadly pandemic, he said. PNG authorities also needed to launch a public awareness campaign to ensure remote villagers understood the dangers of avian flu and the need to cull their chickens if there was an outbreak. Villagers might be reluctant to cull an important protein source so authorities might have to pay compensation for culled birds. The PNG government has set up a coordinating committee to develop a bird flu outbreak and human pandemic response strategy based on a WHO model.

Mr Luo said migratory birds flying from Central Asia via Indonesia or from China via the Philippines were the most likely birds to carry the virus into PNG, but fighting cocks smuggled by Asian workers into logging camps also posed a threat. Western province and the Sepik River region with their vast wetlands populated by migratory water birds and waders were the high risk areas, he said. Quarantine inspection and tests are currently being done on chickens and ducks in Western province for the virus but blood samples have to be sent to Australia for analysis. Mr Luo said preliminary diagnosis labs had to be set up in PNG quickly. Australian Deputy High Commissioner to PNG Ann Harrap said the PNG government had yet to ask the Australian government or other donors for funding to help prepare for the avian flu threat. "Were they to do so, we would obviously consider it in the context of other priorities and demonstrated performance in that area."

Sixty-Six Police Officers Involved in Corruption Port Moresby The National (Internet Version-WWW) in English

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Unattributed report: "Sixty-six police officers charged"

An internal police investigation has found that 66 officers have been involved in some form of official corruption, including receiving money from Asian crime syndicates operating in Port Moresby, a senior investigator has revealed. One of those to be charged but who allegedly went into hiding two weeks ago was Chief Superintendent Awan Sete, the director of Fraud and Anti-Corruption who is facing three charges, assistant commissioner of police Raphael Huafolo said in a statement released last Friday. Mr Sete, from Morobe province, is believed to be a relative of police commissioner Sam Inguba, and works in the same division as Mr Huafolo.

"I and some of my most committed officers are taking a no-nonsense approach in dealing with corruption within the police force. Investigations that we have carried out have so far resulted in 66 officers in the police force either served with departmental or criminal charges for their corrupt activities. Officers were charged for corruptly receiving money from Asian crime syndicates in PNG that are involved in the horse race gaming machines. And involving themselves in business deals with these Asians undermines their roles as police officers," Mr Huafolo said of the investigations which began in 2003.

He said police are investigating Asians connected with human smuggling, illegal entry, overstaying their visas, passport and identity fraud, illegal casinos, prostitution, illicit drugs. They are also investigating their own officers who are associated with these Asians. Of the charges against Mr Sete, he said: "It is an irony that someone who is at the helm of investigating fraud and anti-corruption in PNG is now wanted on charges of corruption. Three warrants of arrests were issued for his arrest for corruptly receiving free accommodation, free car and abuse of office with his dealings with Asians suspected of human smuggling," he said.

He said Chief Supt Sete went into hiding after warrants of arrest were issued by the Waigani District Court. Mr Huafolo said Mr Sete has obtained a court order to restrain police from arresting him. The order was served on police last Friday. He said police lawyers are seeking to set aside the restraining order so that arrest warrants could be executed.

Report on Adoption of International Maritime Organisation's Security Requirements OSB Report in English 27 Feb 06

Report compiled from 27 Feb 06 editions of Port Moresby Post Courier (Internet Version-WWW) in English, and Port Moresby The National (Internet Version-WWW) in English

The Transport Department has adopted new regulations to protect shipping in Papua New Guinea from possible terrorist attacks. Minister for Transport and Civil Aviation Don Polye said for PNG to have continued access to international shipping, it must comply with the international maritime security requirements agreed to by the International Maritime Organisation (IMO) in the International Ship and Port Facility Security (ISPS) code. Mr Polye said the regulations were to safeguard against the unlawful interference with maritime transport in PNG waters, which means that ports are to be no longer open to public vessels, including coastal shipping and small watercraft like canoes. He said anyone who did not comply with the new regulation and breached the guidelines or the standards set throughout the nation would be faced with penalties of up to K100,000 or imprisonment. "As a result of terrorist attacks around the world, the international community recognised the need to protect the maritime transport sector against the threat of terrorism," Mr Polye said.

The maritime transport sector in PNG will soon adopt stringent security measures in the sector as required by the International Maritime Organisation. This is in a bid to curb cross-border drug and firearm smuggling and prevent possible terrorist activities in the country. Minister for Transport and Civil Aviation Mr Don Polye said last Friday that if PNG was to continue to have access to international shipping, it must adopt and be compliant with international maritime security requirements. He said this was highly recommended by the IMO under its International Ship and Port Facility Code (ISPSC). Mr Polye said under this requirement, PNG was obliged to strengthen its border security to prevent terrorist activity and, improve existing security mechanisms at international ports so that maritime and customs authorities can be able to detect and /or deter drug and firearm smuggling along the PNG-Australian border.

"To enforce the ISPSC in PNG, the Government has introduced regulations against unlawful interference with maritime transport in PNG waters, our ports and port facilities," said Mr Polye. Fences will be built around port areas, detectors, scanners and sniffer dogs, cameras and other related electronic machinery put in place at international ports and port facilities to deter and/or detect any unauthorised access into the ports. "There will be well articulated security checks by well qualified people in the customs, maritime and the police department to ensure that ports and port facilities are clear of unauthorised access and security risks," he said. He said the new international maritime security requirements would be put in place at all 17 international seaports operated by PNG Harbours Ltd and all logging, fisheries and mining ports in the country.

FIJI

Commodore Frank Bainimarama Refrains from Making Any Public Comments Suva Fiji ONE in English 24 Feb 06

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Unattributed report: "Bainimarama Refrains from Making Public Comments"

: The Army Commander Frank Bainimarama appears to have been advised NOT to make any further public comments against the ruling SDL government. Commodore Bainimarama who has been authorising the issuance of public statements against government, this morning refrained from making any further comments after he met with the Prime Minster in their regular meeting. Commodore Bainimarama arrived as scheduled this morning for his regular meeting with Prime Minister Laisenia Qarase. The meeting, which began at eight sharp, lasted for 45 minutes. The Army Commander in the past week has been authorizing the release of public statements against the SDL-led government and their recent merger between CAMV. Statements are now appearing in the vernacular. When approached for comments, Commodore Bainimarama had a change of heart. In an interview yesterday afternoon, Prime Minister Laisenia Qarase reaffirmed that the SDL's association with CAMV is constitutional. With the GCC meeting just around the corner it will be interesting to see whether this is the last of the controversial statements from the Military.

Army Rules Out Any Further Talks with Prime Minister Suva Fiji Sun (Internet Version-WWW) in English 27 Feb 06

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Unattributed report: "Army rules out talks with PM"

Senior army officers have advised the commander not to hold any more meetings with Prime Minister Laisenia Qarase, saying he was taking them on a wild goose chase. Republic of Fiji Military Forces spokesman Lt-Col Orisi Rabukawaqa said last week's meeting between Mr Qarase and Commodore Voreqe Bainimarama would be the last. "We feel that he was just making a fool of us and we have advised the commander not to hold any more meetings with him," said Col-Lt Rabukawaqa. He said that the army had raised issue with Mr Qarase which he forwarded to the Ministry of Home Affairs.

"There were certain issues that the army had requested for the ministry to look at but nothing was done," said Lt-Col Rabukawaqa. He said the army had waited but there was no feedback on the issues." That is why we have made public statements," he said.

Mr Qarase and Commodore Bainimarama had agreed that they meet every fortnight. Lt-Col Rabukawaqa said the commander was meeting Vice President Ratu Joni Madraiwiwi every Tuesday. After the impasse between the army and the Ministry of Home Affairs, the Prime Minister had called the commander and agreed that they meet fortnightly. Lt-Col Rabukawaqa said these meetings had failed to show anything positive.

Army Remains Defiant on Appointment of President Suva Fiji Sun in English 25 Feb 06 p1

OSB Transcribed Text

Unattributed report: "Army defiant on coup convicts"

The army stood defiant yesterday in its resistance to the appointment of a coup convict to the post of the President or Vice-President. This follows comments by Attorney General Qoriniasi Bale that there is no provision in the Constitution to prevent someone who has been implicated in the coup to be appointed to the highest office in the land. In a strongly worded statement yesterday, the army questioned whether the AG's statement was morally or ethically correct. Army spokesman Lieutenant Colonel Orisi Rabukawaqa said since Mr Bale was the legal adviser to the Government and also the Great Council of Chiefs, this confirmed that the Government supported the illegal activities of 2000.

"This confirms to the RFMF that the Government has condoned and acquiesced to all the illegal activities and gross violations of human rights that took place in 2000," said Lt Col Rabukawaqa. He said it was sad to note that the AG "should try to equate the fight against the tyranny of apartheid for which Nelson Mandela was imprisoned with the circumstances that took place in Fiji, and to justify what is morally and ethically wrong. The Government has accepted convicted persons back as ministers and senators and hence the advice that a coup implicated or convicted person may hold the highest office in the land would be logical and it augurs well with the agenda." Lt Col Rabukawaqa said just because it was legally correct does not make it ethically correct.

"The RFMF will continue to stick to its views on character and virtues of the holders of the Office of the President as the position symbolises the unity of the state and will be the Commander-in-Chief of the military forces," he said. "To select a person who has been involved in the coup would be incongruent with the stance for the truth, justice and social integrity that the military has been standing for." Labour Senator Anand Singh said a person convicted in 2000 for trying to abrogate the constitution could not be in such a high office where he should uphold the constitution, which he tried to undermine. "It will bring confusion and it is important that the Great Council of Chiefs elect a person that doesn't have a criminal record," he said. National Federation Party General Secretary Pramod Rae said what was important was the credibility of the President's Office. "The person who holds the office should be a person of character and I am sure the GCC would take that into account as they are responsible persons," he said.

General John Abizaid Holds Talks with Commodore Frank Bainimarama Wellington Radio New Zealand International WWW-Text in English 1855 GMT 26 Feb 06

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Unattributed report: "Top US General in Iraq and Afghanistan visits Fiji"

The top American general in command of all United States forces in Iraq and Afghanistan, General John Abizaid, visited Fiji at the weekend. General Abizaid, who is the commander of US Central Command, had talks with Fiji's military commander, Commodore Frank Bainimarama. The Sunday Times quotes a military spokesman, Captain Neumi Leweni who said the two men discussed military issues. General Abizaid also called on the Vice President, Ratu Joni Madraiwiwi, and the Prime Minister, Laisenia Qarase. General Abizaid says he has served with Fijian troops in Lebanon, Sinai and Iraq. He says he knows how good they are and has praised their peacekeeping abilities. The General's talks in Fiji followed similar discussions in New Zealand and Australia.

Nationalist Party Abandons Desire to Free Coup Prisoners Wellington Radio New Zealand International WWW-Text in English 1855 GMT 26 Feb 06

OSB Transcribed Text

Unattributed report: "Nationalist party in Fiji says it has abandoned idea of freeing coup prisoners"

An extreme right political party in Fiji that has merged with the ruling party claims it abandoned the idea of freeing all coup prisoners soon after the 2000 takeover. The President of the Conservative Alliance Matanitu Vanua made the comment after the party merged with the ruling SDL party ahead of the general elections. Ratu Tanoa Visowaqa claims members of the CAMV - most of who have coup-related convictions - decided back in 2002 that they couldn't flout the law.

"We had to reconsider everything, in the beginning we were all out for everything, but then we realised that there's something called the law that we had to respect, we had to follow. And through that process most of my party members, except myself, went to gaol."

Ratu Tanoa says his party gave up little to join the centre-right SDL. And he says it's taken the CAMV the past four years to convince high chiefs among others that the merger was a good thing.

Fiji Yet To Ratify UN Convention on Mercenaries Suva Fijilive WWW-Text in English 26 Feb 06

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Unattributed report: "Fiji yet to ratify convention on mercenaries"

Only 25 countries have ratified the UN convention on mercenaries and most Pacific countries, including Fiji, have yet to do so. Fiji's Human Rights Commission Director Dr Shaista Shameem says the most important issue facing the various states right now is whether they agree with the definition of mercenary that is in the current UN Convention. Speaking in an interview on ABC Television, Dr Shameem said there was a kind of a lacuna in the law with respect to how one may define private military and private security companies.

"Are they in fact mercenaries within the terms of the Geneva Convention or the United Nations convention or should they be analysed for a completely different perspective. And this is something the working group is actually studying at the moment".

Dr Shameem is a member of the UN working group on mercenaries. The ratification of the treaty comes at a time when ex-Fiji soldiers are plying their military skills in areas like Iraq, Afghanistan, Kuwait and Bougainville.

May Elections Highly Likely: Opposition Leader Suva Fijilive WWW-Text in English 25 Feb 06

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Unattributed report: "May elections highly likely: Beddoes"

Opposition United People Party leader Mick Beddoes believes the general elections would be held in May. Prime Minister Laisenia Qarase is keeping details of the elections close to his chest. However, Beddoes said there are indications the country could go to the polls during the first term school holidays in May.

"But if you just look at it realistically, the rolls are being scrutinised and being updated till about the middle of March so probably the ballot papers would be ready by 31 March. There is the dissolution of Parliament, the timing mechanisms for candidates and others. And I just think May make sense because it's the school holidays and you need schools for polling stations."

Beddoes said the UPP would be ready to contest the elections by April. "I haven't done anything in the last five years that would disappoint my electorate. I am going to win my seat comfortably in the first count," Beddoes said. Meanwhile government sources say Qarase may inform Cabinet Ministers of the elections in the Cabinet meeting next Tuesday. They say ministers have not been told anything yet.

Doctor Warns of HIV/AIDS Epidemic in Fijian Gaols Suva Fiji Sun (Internet Version-WWW) in English 27 Feb 06

OSB Transcribed Text

Article by Alumeci Nakeke: "Jail AIDS cases go up, Doctor warns of crisis"

A doctor has warned of an HIV/AIDS epidemic in Fiji's prisons if inmates are not tested and condoms distributed to them. Dr Aiyas Saleem, who inspects prisoners, said homosexuality was rife in the country's correctional facilities but condoms were not issued to inmates, putting everyone in gaol at risk of infection.

He told a meeting of the parliamentary sector committee on social services on the prisons and corrections Bill that the problem was serious because the safety of each prisoner could not be guaranteed. "Sexual relations do happen. It is a fact that we cannot deny but we cannot go around distributing condoms in prisons," he said, adding that the law against segregation in prisons allowed the risk to exist.

Prisons Commissioner Aisea Taoka shared the same sentiment, saying compulsory testing should be done. "I had raised in the previous session that upon admission and before discharge, each prisoner shall be examined by a medical officer but there should be no programme or policy," he told the committee

He said compulsory testing was not the issue but confidentiality of the result of the test. "We agree that compulsory testing should be done but the confidentiality of the result of that test should be intact," he said. Minister for Health Solomoni Naivalu said that health officials were doing their part but "we cannot force anyone to be tested".

Dr Saleem said they used to test for HIV/AIDS and infectious diseases "but we have stopped now. We used to check for venereal diseases and so far we have about four or five HIV/AIDS positive prisoners in the system but only one was detected when he came in. It was a new case. The others were known cases. They were found out to be positive on their previous admission to prisons."

He said that most of the times when a person is HIV positive, he would also be a hepatitis B positive and VTRL positive. Dr Saleem looks after prisoners at Naboro, Nasinu and Suva, which has 300 prisoners alone.

He said the best thing was to test the prisoners when they come in and, if they are positive, they should be separated from the rest and given treatment. "If we do not test them, and we do not know that they are positive later on and someone contracts HIV from that person, who is going to be responsible for them? Will it be the prisoner or the officer?" he asked.

Dr Saleem said it was also dangerous for prison officers because they would be the first to attend to an injured prisoner. "If in that process he gets it, who is going to be responsible?" An inmate doctor, Dr Rajesh Sharma, who has served seven years and seven months of his sentence, said there was a misconception about HIV testing.

He said if a prisoner comes in and is HIV negative, "it does not mean that he is negative because there is always a window period of three to six months. You have to balance out the rights of the non-HIV patients who want to be a healthy guy or a HIV guy who does not want to be tested," he said. "The balancing out, I believe, as a doctor, we should err on the person who is healthy. The question is if a person comes in and becomes HIV positive in prison and makes a compensation claim to the government that is something that has to be addressed. Not only the rights of the individual but of the government too, to protect themselves," Dr Sharma said.

63 per cent of Men with HIV Have Unsafe Sex: Ministry of Health Report Suva Fiji Sun (Internet Version-WWW) in English 27 Feb 06

OSB Transcribed Text

Unattributed report: "63pc of men with HIV have unsafe sex"

More than 63 per cent of males are infected with HIV through unprotected sex compared to females in the country. A report by the Ministry of Health revealed that 37 per cent females who had HIV was through unprotected sex. Suva Private Hospital Chief Executive Officer Dr Tim Smart said that sexually-transmitted diseases in prisons are an international problem but comparing Fiji with other countries, "it is a national disaster for our nation". His concern was raised after a prisoner at Naboro Prison complained that homosexuality was rife in prison. "Sexually attacked men can become infected by HIV/AIDS. It has been revealed that large groups of males who have been left for a longer period of time sexually transmit diseases," he said. Mr Smart said a prisoner cannot be forced to undergo HIV/AIDS test as it was against human rights and law does not allow it.

More Indications of an Early Election Suva Fiji ONE WWW-Text in English 24 Feb 06

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Unattributed report: 'More Indications of an Early Election"

There are strong indications tonight of an early General Election. As the Parliament Secretariat prepares to complete the current process with Senate in a week's time it leaves the Parliament calendar open ended for an announcement towards the end of March. It may well be a unanimous agreement to an April General Election. And for some here, this may well be the last time they participate better still see the inside of the August House. Parliament officials have been advised of an early General Election. Now the secretariat has left its calendar open despite a resolution in November last year to continue the session until the five year term of all these MPs end in September.

Sources close to the Prime Minister say the delayed announcement is in respect to the Upper House which must be allowed to complete the current sitting. This means, senators must endorse in TWO weeks 10 bills which MPs swept through during the same period. Then what happens to seven proposed legislations referred to committees. The school break begins on 29 April 2006 and ends on 15 Ma. And if all goes according to plan then political parties and election officials will have to act now as polls are expected to be even earlier than expected.

Prime Minister Hints at Early Election Suva Fijivillage WWW-text in English 27 Feb 06

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Unattributed report: "Qarase hints of early elections"

The Prime Minister has today hinted that we will have an early election following the Elections Office's revelation that they would be ready by the end of March. In an exclusive interview with Village News, Laisenia Qarase agreed that we are very close to the announcement of the election dates. Qarase said he is happy that the elections office is on track with its preparations and this would make it easy for him to make the decision. Qarase also confirms that the SDL is expected to announce its line-up of candidates for the elections by mid March. Former Works Minister in the SVT government, Viliame Cavubati will contest the Lau Fijian Communal seat against Prime Minister, Laisenia Qarase in this year's general election. Cavubati will contest the election under the National Alliance Party banner. While speaking to Village News, Cavubati said he believes that he still has the support in Lau as he did a lot for the people during his term as minister.

Police to Receive Vehicles for Policing Upcoming Election Suva Fiji Times in English 25 Feb 06 p18

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Unattributed report: "Police to receive $1m worth of vehicles"

Police will get $1m worth of vehicles from the Electoral Commission in a tripartite agreement between Australia, New Zealand and the Fiji governments. The funds will be sourced from the Elections Office budget, which is funded by NZAID and AusAID. Police's uniform operations director Jahir Khan confirmed the deal yesterday. Senior Superintendent Khan welcomed the injection of much needed resources to carry out police work. SSP Khan said the vehicles would be used for election purposes before they were turned over to police at the end the general election. Police have a shortage of vehicles, with some major divisional police stations having to make do with a single vehicle. SSP Khan said police resources would be stretched during the election as polling hours for some stations had been extended.

"We're worried about making sure the election goes without a hitch and at the same time about our core functions which is to keep general law and order around the country," SSP Khan said.

He said police would have to send extra officers to islands and rural polling stations during the general election and this could have an effect on their capabilities. He said at least 35 officers would be needed to attend to polling booths on Kadavu and that kind of logistics would mean more officers would be mobilised outside of their jurisdiction. "The number of officers we have is sufficient. We are happy that police officers will now be paid full allowances like election officials whereas before they were only paid meal allowances," SSP Khan said. Police officers will present in all voting processes -- being present at polling booths, transporting ballot boxes and watching the counting of votes.

REGIONAL Production stops at a Papuan gold mine after protesters block a road Wellington Radio New Zealand International 23 Feb 06OSB

Transcribed text

Unattributed report: "Production stops at a Papuan gold mine after protesters block a road"

Production at the huge Freeport gold mine in the Indonesian province of Papua has been suspended because of a demonstration by local illegal miners. Protesters, some armed with bows and arrows, have blocked a road leading to the mine complex, which is being protected by some 400 police and soldiers. Clashes between the two sides have left two security guards injured.

The head of Asian and International Affairs at the University of Victoria in Melbourne, Dr Richard Chauvel believes an increase in political tensions explains this latest protest. "This incident does come just a couple of weeks after the military shooting of three unarmed papuans in another part of the Highlands so the broader political tensions between Papua and Jakarta are very much part of this." Richard Chauvel of Victoria University in Melbourne.

Children 'violated' Everyday in the Pacific in the Name of Discipline Suva Fiji Times 23 Feb 06

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Unattributed report: "Kids 'violated' everyday"

Violence and child abuse are often seen as a form of discipline in Pacific culture and children are violated in homes everyday. This was the view of Save the Children Fiji, chief executive Irshad Ali, who said that parents and caregivers fail to realise the impact of violence on children. Speaking at a workshop in Suva on the Implementation of the concluding observations of the UN committee on the rights of the child, Mr Ali said violence and abuse on children in Fiji has increased and that violence is becoming a norm/a way of life. "The impact of emotional abuse is not visible or understood by our cultures," Mr Ali said. He questioned the participants at the workshop on what practical actions Fiji should take to address this issue, saying there has been considerable discussion on the issue but these have remained within the confines of these discussions.

Mr Ali said the physical and emotional abuse of children has been identified as a cross cutting issue which impacts on most program areas - education, children's participation, health, disability, status of children in the society and family. "Eradicating a culture of punishing children through violence sets the ground to eradicate other forms of serious violence, for example rape, sexual abuse, severe maltreatment, negligence in institutions, schools and even death," said Mr Ali. Mr Ali said this violence and abuse has caused many children to crime.

"If one looks at crime today-perpetrators are getting younger and more violent," Mr Ali said. He said that Fiji should learn from situations of other countries such as Africa, Asia, Europe, and Latin America, where around 300,000 children are directly involved in conflicts as child soldiers. "Although we are fortunate that Fiji's children are not directly involved in institutional violence of such, the reality is that our children are at risk of being involved or close to such participation during crisis situations," Mr Ali added. Deputy secretary of the Ministry for Women, Social Welfare and Poverty Alleviation, Tokasa Buinimasi said the issue of children's rights in Fiji's culture is a sensitive issue. "It may not be well received but we are creating awareness, telling parents that there are other ways of disciplining children rather than violence or abuse," said Ms Buinimasi. She said that changing laws may be easy but changing the mentality and beliefs of people is difficult.

PNG Retaliates Over Fiji's Stance on PNG Beef Exports Suva Fiji Daily Post 23 Feb 06

OSB Transcribed text

Unattributed report: "PNG retaliates over beef"

Papua New Guinea and Fiji are in a trade war over the corned beef issue with the Trade and Industry Minister threatening to increase by over 100 per cent tariffs .on Fiji's Island Beef. Minister Paul Tiensten told the PNG parliament yesterday that he would make a submission for the Treasury Minister to increase the tariff rate from the current 25 per cent to 55 per cent to "teach Fiji a lesson and bring them to a round-table discussion". Mr Tiensten told The National later that if that does not work, all Fijian companies in the country will face tariff increase on their products.

PNG's WTO Warning Could Do More Harm than Good to the Region Suva Fiji TV One 22 Feb 06

OSB Trascribed text

Report by Geoff Smith: "PNG's Warning Could Do More Harm than Good"

NEWSCASTER: Threats by Papua New Guinea to file a dispute against Fiji with the World Trade Organisation over corned beef exports could do more harm to the region than good. That's the warning from Foreign Affairs here who say its pointless for PNG to ban exports of all canned corned beef products from Fiji because we are still trying to clear our beef industry of Mad Cow disease.

REPORTER: 'Made in Fiji' and now the subject of heated regional free trade, with PNG threatening to ban all imported canned corn beef from Fiji, Foreign Affairs argues this shouldn't be happening because while this might be 'Made in Fiji', its contents are actually NZ beef. Foreign Affairs says for PNG to threaten a ban on all Fiji corned beef products will be a slap in the face of regional free trade. New Zealand experts are currently in the process of clearing our beef industry of Mad Cow Disease. Well versed with the intricacies of WTO affairs, Foreign Affairs Minister Kaliopate Tavola cautions PNG might be making a hasty move. Clearing our beef industry of the dreaded mad cow disease should be finalised in a few weeks time. Foreign Affairs says they hope that by then, PNG would have changed its mind. Geoffrey Smith reporting for One National News

Bully beef spat heats up Port Moresby Post-Courier WWW-Text in English 24 Feb 06

OSB transcribed text

Unattributed report: "Bully beef spat heats up"

Trade and Industry Minister Paul Tiensten has brushed aside assertions by Fiji that Papua New Guinea needed to prove its beef was free of the deadly strains of mad cow disease. Responding to comments by Fiji Foreign Minister Kaliopate Tavola in the Fiji Times newspaper, the Pomio MP said the Government had ensured the makers of the Ox & Palm corned beef met stringent health and sanitary requirements. And he is seriously considering hiking the tariff on the Fiji's Island Beef corned beef from 25 per cent to 55 per cent or more, as the Fiji beef industry could be lobbying its government to maintain the blockade. He said Solomon Islands and Vanuatu -- two long-term markets for the PNG-made corned beef -- had yet to report cases of mad cow disease triggered by the consumption of Ox & Palm. "I have not heard of any people dying in PNG from mad cow (after consuming Ox & Palm), there's no recorded case, we've met all the sanitary and technical health requirements" Mr Tiensten said. "Their veterinary officers came here to inspect our establishments and yet every time they talk about this, they come up with another excuse. "For me it's really frustrating because I've tried to resolve and say lets make it fair. All this issues about mad cow, I think its nonsense. "In PNG, we eat a lot of stakes that is produced locally and none of us are dying from mad cow. "I think that's a shallow argument and its nonsense."

Urging Fiji to come clean on the reasons behind its decision to continue to impose restrictions on the selling of Ox & Palm, Mr Tiensten said the Melanesian state could not continue to say PNG should use Australian and New Zealand beef as they were free of the deadly disease. "As I said, most meat processed by Hugo Canning (makers of Ox & Palm) is actually from Australia and New Zealand so why are they saying we have not met that requirement?," Mr Tiensten said. "What is their excuse now? What is the excuse Tavola can give us?"

VANUATU & NEW CALEDONIA

Vanuatu: Australia rebuilding Vanuatu's police and judiciary Wellington Radio New Zealand International WWW-Text in English 0824 GMT 21 Feb 06

OSB Transcribed Text

Unattributed report: "Australia rebuilding Vanuatu's police and judiciary"

The Australian Government is to provide tens of millions of dollars to strengthen law and order and fight corruption in Vanuatu. Through its aid agency AusAID, Canberra's is to spend around 28 million US dollars to reform the police and strengthen the justice system over the next five years. The bulk of the money will go towards rebuilding the police force. The Government says reinforcing Vanuatu's cornerstone law enforcement and legal institutions is integral to restoring peace and stability. It says, with Australia's support, the Vanuatu Government is working to create a professional, accountable and community-oriented police force while enhancing existing crime prevention and victim support services.

AusAID funded Rural Economic Development Initiative Unit Opens Loan Scheme Port Villa Vanuatu Daily Post in English 22 Feb 06 p5

OSB Transcribed Text

Unattributed report: "AusAID funded REDI beaming up"

Rural Economic Development Initiative (REDI) Unit in the Sanma Provincial Council is in the process of launching the opening of loan scheme shortly. The Loan comes as a grant from the province under the REDI Program to assist the communities. People in the rural area could use this avenue to borrow money if they do not go to the commercial Banks. Meanwhile, the REDI program will be hosting a meeting in March with loan borrows and review on the current status of this community program.

The REDI unit is in the process of formulating a community request forms whereby communities have access to small funds to create income-generating projects of their own. Apparently, under this program, a review will be carried out to see how much has been done to assist the communities and what still needs to be done.

Live stock officer Darol Massing has been working with .the communities in the rural area helping them improve the farming of small livestock such as poultry farms and pig farms through the awareness he presents during the REDI project site visits. These are the main resources in many villages that if well managed, will be able to generate income to the farmers. With this, the Provincial Technical Advisory Group (TAG) will be hosting its first meeting on 27th of this month. The meeting gathers together representatives of other organization in 5anto and aims to give advice on REDI programs and how they could help improve work in each area in the communities.

The tourism office of the northern region has been working closely with the REDI and there are already a line up of programs to be carried out this year inline with the work of tourism in the rural area.

PNG & BOUGAINVILLE

PNG: Editorial on Threats to PNG's National Security Port Moresby Post Courier (Internet Version-WWW) in English 22 Feb 06

OSB Transcribed Text

Unattributed Editorial: "Air, shipping and food at risk"

The Indonesian border is a high quarantine risk for Papua New Guinea while the Torres Strait is the highest quarantine risk border for Australia.

Many animal and plant pests and diseases in Indonesia and PNG are threats to Australia's environment and agricultural and livestock industries. These threats include blood disease of bananas, classical swine fever and Japanese encephalitis. PNG's health status is better than that of West Papua Province, in Indonesia. The classical swine fever in Indonesia is a real threat to PNG. It is highly contagious, is easily spread and often results in the death of pigs and serious loss of production in surviving animals. The deadly H5N1 "bird flu" is another potential killer if it reaches PNG. The National Agriculture Quarantine Inspection Authority undertakes regular animal and plant surveys along the PNG-Indonesia border and this helps to strengthen the capabilities of quarantine authorities in both countries.

Other security concerns are associated with air safety. If air certification regulatory issues are not resolved, PNG's international airline operations could be jeopardised. Recognition of Civil Aviation Authority certification of PNG's airlines to authorise them to land in Australia was recently due for review. If the Australian Civil Aviation Safety Authority does not extend this certification recognition, PNG's main international air services could be disrupted and Air Niugini, and perhaps others, will be unable to operate these very profitable routes. Serious questions have arisen over airport and airline security in PNG, particularly at Jackson's Airport, in Port Moresby. Recognition of PNG's airport security is subject to continuous review by CASA in Australia and withdrawal of certification could have serious international ramifications. If Air Niugini and other airlines cannot operate internationally, the national interests, such as governmental and business linkages, would be affected.

Shipping and port security are subject to major international pressures. The new International Ship and Port Facility Security Code oblige governments to take preventive measures to protect international shipping against security risks. PNG Harbours Ltd's ability to deliver an internationally acceptable maritime safety regime is highly questionable. The United States has indicated that it intends to take a zero tolerance stand on non-compliance and that it may audit ports to check compliance. Recognised international shipping lines could refuse to enter PNG ports because of the risk to their own certificates. Shipping lines that are not concerned with international compliance, that is rogue lines, could provide some alleviation but only in the short-term. The humanitarian and political consequences of international bans could be devastating, especially in relation to food imports. Food prices would rapidly increase, leading to hoarding, smuggling and black marketeering. If shortages become serious, public demonstrations could lead to civil disorder targeted at port authorities, the Government, American and Australian interests. The whole country could descend into political instability and social unrest, as export income dried up. In a worst case scenario, refugee flows into Australia and Indonesia could develop. If PNG does not meet ISPS requirements, some of these consequences can be expected to develop.

The smuggling of narcotics in PNG does not have the same urgency, but narcotics smuggling could lead to a major increase in crime and disease. PNG is wide open to the smuggling of hard drugs. The greatest fear is that crack cocaine could quickly lead to high levels of drug addiction, increases in robbery and prostitution and the more rapid spread of HIV/AIDS, even across the Torres Strait into communities in northern Australia. Increased action against narcotics is in PNG's national interest.

Lack of co-ordination, capacity, and resources among state agencies has resulted in non-compliance with international standards for transport security and the belief is that PNG faces possible transport sanctions and trade isolation. Revenue loss through poor customs administration and porous borders increase the risk of the illegal movement of people, aircraft, vessels and goods. These risks present threats to PNG's economic development and expose the region to unauthorised arrivals and potential criminal activities. The Enhanced Co-operation Program stated it would provide a program of inter-agency co-operation to help PNG address key challenges in the areas of law and justice, economic and public sector management and border and security management. The five-year package focused on Australian staff working alongside their PNG colleagues as police, law and justice specialists, economic management officers, management officers and specialists in immigration, transport and Customs agencies. At the same time, PNG and Australia signed a memorandum of understanding on counter-terrorism.

The ECP was devised because of concerns that PNG could become a "failed state" and attract international criminals and terrorists who could eventually target Australia. However, following a successful constitutional challenge in the Supreme Court by the Governor of Morobe Province, the policing component of the program ceased. The free movement of people and goods is one of the major international benefits of globalisation but this freedom can be exploited. International boundaries can give international criminals greater opportunities to profit from crime and smuggling and terrorists would have more opportunities to generate political, social and economic instability. Negotiations between the governments of PNG and Australia are continuing, with the hope that ECP Mark II will become a legally approved program that will achieve the original objectives in addressing law and order and other related challenges. However, issues such as immunity of police have still to be overcome.

Lt-Col James Laki is a senior research fellow and acting head in the Political and Legal Studies Division at the National Research Institute.

Bougainville: Bougainville needs New Gaol Port Moresby Post Courier (Internet Version-WWW) in English 22 Feb 06

OSB Transcribed Text

Unattributed report: "Buka lock-up 'threat'"

There is an urgent need for a proper prisoners' lock up in the Autonomous Region of Bougainville as the cells at the Buka police station cannot take any more detainees. More than 80 prisoners scurrying for space to take a nap will have to wait longer as the land where a proposed new lock-up was supposed to be built is in dispute. The land, at the back of Hutjena Secondary School which was identified by the Government and earmarked to accommodate a K30m semi-permanent lock-up for the detainees, is at the centre of a dispute between the landowners and the Autonomous Bougainville Government. Buka police station commander Sergeant Oscar Tugen yesterday told the Post-Courier the overcrowding was a great concern to the safety of police officers and the public. He said the problem of overcrowding was not the responsibility of police but for Correctional Services (CS).

When the Post-Courier visited the station premises, detainees could be seen lying in workshops, roof tops and anywhere they could find space. There is funding already available from the law and justice sector program to build the new lock-up at Hutjena pending the land dispute. "The land dispute is the only hindrance to the quick establishment of the prison lock-up. A proper lock up could minimise the law and order problem," Sgt Tugen said. As the land dispute problem drags on, so too is the problem of prisoners overcrowding in the cells. Sgt Tugen warned that at the moment prisoners can not be sorted out to their respective cells, in their type of age groups and types of offences. "This type of situation does not allow as there are no proper cells and detainees are just so many," Sgt Tugen said. The internal security of the police premises is of great concern because the detainees are roaming around the premises at their own will and even sleeping in workshops among the tools and parts of old car engines that could be turn into dangerous weapons to attack police officers, Sgt Tugen said. Some of them sleep on roof tops and can easily walk off and jump out and escape, he said. Police are appealing to the provincial administration and the ABG to make it a priority and negotiate with the landowners

Spain warned of Islamist attack months before 2004 bombings

Spain's intelligence services warned the government of the day of the mounting risk of an Islamist terror attack in the country four months before the 11 March 2004 Madrid bombings, according to a Spanish daily. It says they even managed to signal the suspected leader of the cell which planted bombs on a series of the capital's commuter trains, killing almost 200. The following is the text of the report, published on the Spanish newspaper El Pais web site on 27 February; subheadings inserted editorially:

Madrid: Four months before the 11 March 2004 (Madrid train) attacks, the National Intelligence Centre (CNI) warned the PP (Popular Party) government, led at the time by (former Prime Minister) Jose Maria Aznar, of the growing risk of an Islamist attack in Spain and even managed to identify the alleged ringleader of the commando (i.e. cell) which carried out the massacre: the Algerian national Allekema Lamari, one of seven terrorists who committed suicide on 3 April 2004 in (the dormitory town of) Leganes (Madrid (Province)) by detonating explosive charges when they were surrounded by the police.

This is what appears in two secret service intelligence notes which were declassified last 17 September (2005) by the cabinet and sent to National High Court judge Juan del Olmo for their inclusion in the 11 March indictment.

One of these notes, which is reproduced at the foot of this page, was sent along with a photo of the Islamist who was to become the "emir" (chief) of the group responsible for 11 March to the office of the secretary of state for security, headed by Ignacio Astarloa, and the police's general intelligence headquarters on 6 November 2003.

The text explains that the CNI has had knowledge "via a sensitive source, whose reliability is considered medium-high" - the identity of who it logically does not disclose -, that on 17 and 20 October 2003 Lamari had sent five money orders to an equal number of Islamist prisoners. These were Nourredine Salim Abdoumalou, Bachir Belhakem, Abdelkrim Benesmail, Mohamed Amine Akli and Souhbi Khouni.

All of them were in prison for being members of the Algerian Armed Islamic Group (GIA), a splinter group of the Islamic Salvation Front (FIS), a Salafist-inspired organization. As the note recalls, Lamari was arrested in Valencia (east) in April 1997 within the framework of the so-called Operation Africa. The National High Court sentenced him to 14 years in prison, which the Supreme Court reduced to nine. Because of a mistake, he was freed in June 2002, when he had spent just five years behind bars.

The CNI note adds that the fact that Lamari distributed that money, in spite of his "economic precariousness", could only be explained, in the opinion of its source, as a "farewell"; "either because he (Lamari) is going to leave Spain or because violent action might be imminent".

The secret service was inclined to go for this last theory, recalling that "in the middle of September the same source had mentioned the intention of some Algerian individuals to carry out some kind of attack in Spain, possibly starting a large-scale forest fire on some useful target (an option which was apparently ruled out for different reasons) or action by means of a vehicle driven by a 'martyr'". It goes on to say that "the source indicated Allekema Lamari as one of the organizers and a possible executor of the commando".

Danger

The document does not go as far as expressly requesting Lamari's capture, but its title speaks for itself ("Intelligence note on Allekema Lamari, his activities, the danger he poses, his intentions and his photo"), as does the last paragraph ("this information is transmitted because of the seriousness which Allekema's attitude and activities might represent"). The Interior Ministry, headed by Angel Acebes, did not take any measures to arrest Lamari, though the National High Court had already ordered his capture after confirming the irregularity of his release.

Ten days before warning of the danger which Lamari posed, the CNI issued another note which was less useful from an operational point of view, but more relevant politically. For that reason it was not sent, like the previous one, to the heads of the state security forces, but rather to the government at the time, led by Jose Maria Aznar.

The report, from 27 October 2003, was an analysis of the risk of an Islamic fundamentalist attack taking place in Spain and its conclusions could not be more disturbing.

The CNI confirmed that the "visibility of Spain in the Arab world" had increased considerably in the previous few months, which it attributed to several factors: the Spanish government's support for the invasion of Iraq in the United Nations Security Council debates; the deployment of Spanish troops in southern Iraq as of August that year; the dismantling of fundamentalist cells in Spain (such as the arrest of the so-called "Dixan commando" (named after a brand of detergent because those held were found in possession of cleaning materials which could possibly be used to manufacture a bomb) in Catalonia (northeast) in January 2003) or the staging in Madrid of the Donors Summit for the Reconstruction of Iraq, on 23 and 24 October that year.

The rise in Spain's "visibility" was very noticeable in the Arab media, according to the note, which cited the broad interest aroused by the arrest in Granada (south) on 5 September 2003 of Taysir Alluni, the correspondent of Al-Jazeera television channel and the only journalist to have interviewed (Usamah) Bin-Ladin during the war in Afghanistan.

If that were not enough, the deployment of Spanish troops in the south of Iraq, "in spite of performing civilian security tasks, is mostly perceived by Arab societies as the military occupation of an Islamic territory", the secret service said.

In short, in the opinion of the CNI, the idea had caught on among Islamic radical groups that Spain "does the USA's dirty work" and the Spanish government "has aligned itself with the enemies of Islam".

The image would not have been so serious if the CNI had not registered, at the same time, an increase in Islamic radical groups in Spain. Indeed, the note warned that "the increase in militants close to the international jihad on our soil is an additional element of risk".

"Prophetic references"

The document contains two references which appear to be prophetic: the first is the reference to the presence in Spain of "radical Islamist elements" which "to date" have devoted themselves to tasks of logistic support and whose activities appeared to be "linked to petty crime". The mixture of common crime and religious fanaticism was one of the most surprising elements of the group which perpetrated 11 March.

The paragraph which says that "Moroccan police repression following the Casablanca attacks encourages the Islamist radicals' tendency towards 'taking refuge' in Spain" also proves prophetic. Indeed, the investigation after 11 March revealed connections between some of those on the run following the bombs on 16 May 2003 in Casablanca, which cost the lives of 45 people (four Spaniards among them), and those responsible for the Madrid massacre.

But what triggered the CNI note was the message aired on 18 September 2003 by Bin-Ladin. "We reserve the right to respond, at the appropriate time and place, against all the countries involved in this unjust war (Iraq), particularly Great Britain, Spain, Australia, Poland, Japan and Italy", the Al-Qa'idah leader said.

"The broad dissemination of the statement", the secret service said, "is a reference to follow for numerous radical individuals and groups", including those located on Spanish soil.

During their appearances before the Congress (of Deputies) commission of inquiry into 11 March, the politicians in charge of the previous PP government always maintained that the warnings which they received before 2004 about the risk of Islamic terrorist attacks were of a very general nature.

The CNI report itself appears to respond to this argument in advance when it says: "Explicit threats to Spanish interests have grown significantly in recent months. While many of them are vague or not specific, as a whole they are indicative of the considerable rise in the level of risk on national territory and especially in some countries with a Muslim majority".

Lastly, the secret service recommends: "It appears necessary to reinforce protection measures in these fields, considering among them the flights of official aircraft to sensitive zones". This last reference appears to be related to the trip which from 19 to 23 October 2003 the king and queen (Juan Carlos I and Sofia) made to Syria and to several emirates in the Persian Gulf and responds to the concern for air security which grew following the 9/11 attacks on New York and Washington.

There is no record of the PP government taking measures to step up security in the face of possible fundamentalist attacks after receiving these intelligence notes. In fact, no meeting ever came to be held between CNI chiefs and the Interior Ministry to address the phenomenon of Islamist terrorism in the style of those which were held on ETA.

(Description of Source: Madrid El Pais (Internet Version-WWW) in Spanish -- center-left national daily)

February 27, 2006, Monday

Volume XV, Issue 34 (3700)

INDICATORS Chief Russian Financial

and Macroeconomic Indicators

02.27.2006

02.23.2006

Official Exchange Rate of Ruble to Dollar (ruble/$1)

28.1550

28.1827

Official Exchange Rate of Ruble to Euro (ruble/EUR1)

33.4397

33.5741

02.26.2006

02.22.2006

RTS Index ($), points

1516.46

1465.62

02.23.2006

02.22.2006

Russia stock market capitalization, $bln

635.532

633.647

02.17.2006

02.10.2006

CBR Forex and Gold Reserves ($bln)

195.4

194.2

January 2005

December 2005

Consumer Price Index (%)

+2.4

+ 0.8

Dollar RTS index

I N T H I S I S S U E:

HEADLINE NEWS............................................................................................................................

DIGEST OF HEADLINE NEWS...............................................................................................................................................

COVER STORY...................................................................................................................................

AGREEMENT ON RUSSIAN-IRANIAN URANIUM JOINT VENTURE REACHED IN PRINCIPLE -IRANIAN VICE PRESIDENT....................................................................................................................................................

RUSSIAN FIRMS TO GET PRIORITY IN IRANIAN NUCLEAR PLANT PROJECTS...................................................

POLITICS. ECONOMY.....................................................................................................................

ECONOMICS MINISTRY TO SUBMIT PROPOSAL TO ABOLISH EQUIPMENT DUTIES BY MAR 1....................

MINFIN PROMISES RECORD OIL EXPORT DUTY FROM APRIL 1..............................................................................

COMPANIES & MARKETS...............................................................................................................

(sect) ENERGY & RESOURCES..............................................................................................................................................................

GAZPROM BOARD APPROVES BUYING 51% OF NORTH EUROPEAN GAS PIPELINE CO.FROM AFFILIATED CO.............................................................................................................................................................

GAZPROM MAY BUY GAZPROMBANK OUT OF ROSUKRENERGO FOR EUR2.3 MLN...........................................

BSPC APPOINTS NEW BOARD CO-CHAIRMAN.................................................................................................................

ROSNEFT NETS APPROX $5.5 BLN IN 2005 - BOGDANCHIKOV...................................................................................

ROSNEFT AFTER ASSETS IN RUSSIA AND KAZAKHSTAN - HEAD..............................................................................

ROSNEFT CHIEF HAPPY WITH KURMANGAZY PROJECT............................................................................................

REPSOL PLANS TO HELP BUILD LNG PLANT IN PRIMORYE....................................................................................

RUSSIA ASKS LUXEMBOURG FOR ASSISTANCE IN YUKOS CASE................................................................................

YUKOS TO HOLD AGM ON JUNE 21......................................................................................................................................

PETROBRAS, ROSUKREENRGO TO TAKE PART IN TENDER FOR PSA ON PRIKERCHENSKY SHELF............

LITHUANIA MAY SELL MN TO AUSTRIAN CO - NEWSPAPER...................................................................................

RUSSIA, KAZAKHSTAN TO SIGN DEALS ON CASPIAN OIL FIELDS............................................................................

KAZAKHSTAN PLANS TO BOOST OIL OUTPUT 30% BY 2010 - MINISTER................................................................

KAZAKHSTAN TO UP OIL PRODUCTION 1.6%, GAS 5.3% IN 2006.................................................................................

KAZAKHSTAN DRAFTS AGREEMENT ON JOINING BTC PROJECT IN DAYS..........................................................

KAZAKH MINISTRY EXPECTS TO RESUME CPC EXPANSION TALKS IN MARCH OR APRIL............................

KAZAKHSTAN TO BEGIN FULL-SCALE OIL EXPORTS TO CHINA IN MAY - MINISTRY.....................................

CNPC TO WAIVE PREEMPTION RIGHT TO 50% IN KAZGERMUNAY JV.................................................................

(sect) ELECTRICITY PRODUCTION & DISTRIBUTION...............................................................................................................

UES BOARD APPROVES APPENDIX TO OGC 5+5 STRATEGY......................................................................................

UES TO RAISE UP TO $3 BLN WITH GENCO IPOS - CHUBAIS....................................................................................

UES PLANS TO TRIPLE INVESTMENT IN NEXT THREE YEARS - CHUBAIS........................................................

(sect) METALS & MINERALS...............................................................................................................................................................

NORILSK NICKEL MAY UNVEIL LONG-TERM STRATEGY IN MARCH..................................................................

KAPITAL BUYS 66% OF SEVERSTAL....................................................................................................................................

ALROSA ANNOUNCES TENDER TO SELECT VALUATOR............................................................................................

FAS REQUESTS MORE INFO ON NOVOLIPETSK'S PROPOSED VIZ-STAL ACQUISITION...................................

MAGNITOGORSK CALIBRATING PLANT RECOMMENDS DIVIDEND WAIVER...................................................

MINISTRY TO DECIDE ON LARGE-DIAMETER PIPE IMPORTS IN 2 WKS............................................................

UKRAINIAN PIPE MILLS IMPROVE FINANCIAL RESULTS........................................................................................

KAZZINC TO BUILD COPPER SMELTING, ELECTROLYSIS PLANTS IN E. KAZAKHSTAN...............................

BELARUS REDUCES ROUGH DIAMOND IMPORTS 41% IN 2005.................................................................................

BELARUS BOOSTS FERROUS OUTPUT 18.3% IN JAN......................................................................................................

(sect) COMPUTING & INFORMATION TECHNOLOGY...............................................................................................................

GOVT APPROVES RULES FOR COMMUNICATIONS SERVICES..................................................................................

SISTEMA OPEN TO ALLIANCE WITH ANY BIDDER FOR SVYAZINVEST...............................................................

SISTEMA BUYS 7.3% OF COMSTAR-UTS FROM DEUTSCHE BANK IN REPO DEAL..............................................

MCT CORP. SELLS SHARES OF 3 MOBILE OPERATORS IN VOLGA REGION........................................................

TELE2 UPS STAKE IN OBLCOM TO 100%..........................................................................................................................

(sect) METAL GOODS & ENGINEERING.........................................................................................................................................

SEVERSTAL-AUTO'S CORE OWNER SELLS 5% OF SHARES.........................................................................................

ROSTVERTOL TO DELIVER 12 MI-2 HELICOPTERS TO INDONESIA......................................................................

(sect) FOOD & AGRICULTURE. PROCESS INDUSTRIES...............................................................................................................

BIRD FLU DISCOVERED IN SIX RUSSIAN REGIONS......................................................................................................

(sect) CONSTRUCTION & PROPERTY...............................................................................................................................................

FUND FOR DIRECT INVESTMENT IN RUSSIAN REAL ESTATE TO BE LAUNCHED..........................................

(sect) MEDIA.............................................................................................................................................................................................

STS MEDIA CONFIRMS IPO PLANS.....................................................................................................................................

FINANCIAL & BUSINESS SERVICES............................................................................................

MDM-BANK UPS SHARE IN LATVIJAS TIRDZNIECIBAS BANKA TO 100%..............................................................

TATFONDBANK PLACES DEBUT CLN ISSUE FOR $90 MLN........................................................................................

SEB BUYING PETROENERGOBANK TO SUPPORT EXISTING CLIENTS - SPOKESMAN...................................

JP MORGAN SELLS $100 MLN IN BONDS IN KAZAKHSTAN........................................................................................

FINANCIAL MARKETS....................................................................................................................

DOLLAR, EURO BOTH LOSE 11 KOPECKS ON SUNDAY................................................................................................

CENTRAL BANK OF RUSSIA RUBLE EXCHANGE RATES FROM 27.02.2006.............................................................

RESULTS OF FOREX TRADING ON MICEX ON 26.02.2006............................................................................................

MOSCOW INTERBANK BID, OFFERED & ACTUAL RATE.............................................................................................

SECURITIES......................................................................................................................................

GAZPROM, MTS TO BE INCLUDED IN RTS INDEX MARCH 15..................................................................................

(sect) STOCKS. CORPORATE BONDS..................................................................................................................................................

STOCK MARKET HITS NEW HIGH ON HEAVY RUSSIAN DEMAND.........................................................................

MAIN INDEXES OF THE RUSSIA STOCK MARKET FOR FEBRUARY 26....................................................................

RESULTS FOR TRADING OF SHARES IN RUSSIAN TRADING SYSTEM....................................................................

RUSSIAN CORPORATE BOND INDEX FOR 02.22.2006.....................................................................................................

(sect) GOVERNMENT SECURITIES...................................................................................................................................................

ISOLATED DEALS MADE ON OFZ MARKET ON SUNDAY...........................................................................................

RESULTS OF INTERREGIONAL TRADING FOR GKO & OFZ.......................................................................................

NO EUROBOND COMMENTARY, TABLES ON SUNDAY..............................................................................................

HEADLINE NEWS Digest of headline news

***, Iranian Vice President Golam Reza Agazade said at a press conference in Bushehr.

An agreement in principle on setting up a joint venture was reached, he said, adding that negotiations on the issue will resume soon.

We had detailed negotiations on Russian proposals, the Iranian vice president said, adding that these proposals are an element of a packet of proposals and a number of measures on settling the Iranian nuclear problem. Moreover, the Iranian vice president said that he is satisfied with the negotiations.

***, head of the Russian Federal Atomic Energy Agency (Rosatom) Sergei Kiriyenko said at a press conference on Sunday in Bushehr.

***, Moscow Mayor Yury Luzhkov said.

The victims include 45 Azerbaijanis, eight Georgians, six Tajiks, three Uzbeks, two Russians of Georgian nationality and one Dagestani, he said.

***

***

***

***, Alexander Sakovich, deputy head of customs payments at the Russian Finance Ministry, told Interfax.

"There'll be a new record. The only way to avoid this is for the price of Russian crude to fall below $28 per barrel," Sakovich said.

***, the Central Bank reported on Friday.

***

The government decided to create a Russian register of hydrocarbon units in order to track the storage, delivery, acquisition, annulment and withdrawal from circulation of units of emission reduction, certified reduction of emissions, as well as the set number and adsorption, the governmental press service said.

***, the RTS said in a press release.

The exchange reached the decision on February 20.

***, Gazprom said in a press release.

NEGPC was founded in Switzerland on November 30, 2005 in accordance with an agreement to build the North European Gas Pipeline signed by Gazprom, E.ON AG and BASF AG. The company was set up to build the undersea section of the pipeline.

COVER STORY Agreement on Russian-Iranian uranium joint venture reached in principle - Iranian vice president

BUSHEHR (Iran). Feb 26 (Interfax) - Russia and Iran have reached an agreement in principle on setting up a uranium enrichment joint venture, Iranian Vice President Golam Reza Agazade said at a press conference in Bushehr.

An agreement in principle on setting up a joint venture was reached, he said, adding that negotiations on the issue will resume soon.

We had detailed negotiations on Russian proposals, the Iranian vice president said, adding that these proposals are an element of a packet of proposals and a number of measures (on settling the Iranian nuclear problem). Moreover, the Iranian vice president said that he is satisfied with the negotiations.

"Implementation of the proposal (on creating a joint venture) will give time and will increase confidence," head of the Russian Federal Atomic Energy Agency (Rosatom) Sergei Kiriyenko said. Russia and Iran "have almost no organizational, technical or financial problems (in setting up a joint venture): however, the Russian proposal is just an element of a complex approach," Kiriyenko said. "More work is needed in the area," he said.

There is a solution that could reaffirm each country's right to acquire nuclear energy and would guarantee the non-proliferation regime. "Thus there is a possibility to resolve problems linked to the Iranian nuclear program within the framework of the International Atomic Energy Agency (IAEA)," the Rosatom head said.

Iran JV talks possible only in context of entire nuclear problem - source

Russia will discuss the joint venture project with Iran only within the context of the entire Iranian nuclear problem, a source in the Russian delegation told the press.

This context includes Tehran's return to the uranium enrichment moratorium, he said.

Regarding the Iranian president's statement claiming that a basic agreement has been reached to form a uranium enrichment joint venture, the source said, "this proposal had been on the table until this moment. Now it is in Iran's hands."

Russian, Iranian talks to resume soon - Kiriyenko

Russian-Iranian nuclear negotiations will soon resume in Moscow, head of the Russian Federal Atomic Energy Agency (Rosatom) Sergei Kiriyenko said at a press conference on Sunday in Bushehr.

"We have agreed that our negotiation will soon resume in Moscow," Kiriyenko said.

At the same time "the required actions by the parties was defined in order to finish construction of the nuclear power plant (in Bushehr) in a relatively short time," he said.

Russian firms to get priority in Iranian nuclear plant projects

Russian companies will be given priority in building new nuclear power plants in Iran, Economy and Finance Minister Davud Danesh-Jafari announced following negotiations with Russian Federal Atomic Energy Agency chief Sergei Kiriyenko in Tehran on Saturday.

Iran has had good experience with Russian companies that are currently building the Bushehr nuclear power plant, he said.

"Except for a number of minor problems that have delayed commissioning of this facility, we assess all other issues positively" he said.

POLITICS. ECONOMY Economics Ministry to submit proposal to abolish equipment duties by Mar 1

MOSCOW. Feb 26 (Interfax) - Russia's Economic Development and Trade Ministry will submit a proposal to the government by March 1 that would abolish import duties on more than 700 kinds of technical equipment, Galina Balandina, head of the ministry's department to regulate foreign trade and customs, told reporters on Sunday.

The Interagency Commission on Protective Measures in Foreign Trade approved abolishing the import duty on technical equipment last year. Economic Development and Trade Minister German Gref said agreement on this issue is dragging out because of the negotiation process for Russia's accession to the World Trade Organization.

"We will submit it by March 1. Most likely today or tomorrow," Balandina said.

The proposal to abolish import duties will affect more than 700 kinds of products, she said.

MinFin promises record oil export duty from April 1

MOSCOW. Feb 26 (Interfax) - Russia will impose a record high oil duty of more than $186 per tonne on April 1, Alexander Sakovich, deputy head of customs payments at the Russian Finance Ministry, told Interfax.

"There'll be a new record. The only way to avoid this is for the price of Russian crude to fall below $28 a barrel," Sakovich said.

The previous record high duty was $179.6 a tonne, effective from December 1, 2005 until January 31, 2006. The duty was lowered to $160.8 a tonne from February 1.

Sakovich said Russian Urals crude had averaged at $58.23 a barrel in the observation period between January a and February 26. At that rate, the export duty would be $186.87 a tonne.

Sakovich said that the duty would be around $185 a tonne if oil fell to $50 a barrel and $187 a tonne if oil rose to $60 a barrel, but that neither was likely. "The duty is most likely to be $186.3-$186.5 a tonne," he said.

Sakovich also said that export duty on light oil products might be around $138 a tonne and duty on dark products $74 effective April 1.

The government sets the oil export duty every two months following a two-month observation period. It will publish the final duty by March 20.

COMPANIES & MARKETS ENERGY & RESOURCES Gazprom board approves buying 51% of North European Gas Pipeline Co. from affiliated co.

MOSCOW. Feb 26 (Interfax) - The board of directors of Gazprom approved at a Sunday meeting acquiring 51% of shares in the North European Gas Pipeline Company SA (NEGPC) from ZGG GmbH, a German subsidiary of OOO Gazexport, Gazprom said in a press release.

NEGPC was founded in Switzerland on November 30, 2005 in accordance with an agreement to build the North European Gas Pipeline signed by Gazprom, E.ON AG and BASF AG. The company was set up to build the undersea section of the pipeline.

Gazprom, E.ON Ruhrgas AG and Wintershall AG signed a preliminary shareholders' agreement in November 2005 that stipulates that ZGG will be a shareholder in NEGPC. The preliminary agreement stipulates that shares owned by ZGG GmbH will be handed over to Gazprom after the gas giant's board approves a corresponding decision.

Gazprom may buy Gazprombank out of RosUkrEnergo for EUR2.3 mln

MOSCOW. Feb 26 (Interfax) - Gazprom is offering Gazprombank 2.3 million euros for its stake in RosUkrEnergo, a source familiar with the agenda for Sunday's meeting of the Gazprom board of directors told Interfax.

"Gazprom is proposing to buy the stake in RosUkrEnergo for EUR2.3 million in cash," the source said.

BSPC appoints new board co-chairman

MOSCOW. Feb 26 (Interfax) - Gazprom Deputy Chairman and Gazexport General Director Alexander Medvedev has replaced the former Gazprom deputy board chief Yuri Komarov as co-chairman of the Blue Stream Pipeline Company B.V. (BSPC) supervisory board, a Gazprom report states.

Gazprom plans to boost Blue Stream pipeline capacity so it can increase gas exports to Europe via Turkey, bypassing Ukraine.

Medvedev, it was reported earlier, also replaced Komarov as Gaztransit board chairman. Gaztransit is a joint Ukrainian-Russian-Turkish company that is working to increase the capacity of the Ananiev-Tiraspol-Izmail pipeline.

Ukraine and Poland carried out board reshuffles in the fourth quarter of 2005 at Gaztransit, International Consortium for the Management and Development of the Ukrainian Gas Transport System, a Russian-Ukrainian company, and EuRoPol Gaz, a Russian-Polish company.

The report states that Russian-Italian company Volta S.p.A. (Milan) replaced Julio del Ninno with Marco Peruzzi as board chairman in the fourth quarter.

Gazprom also said its Tula subsidiary Gazstroidetal had replaced Alexander Fedorov with Eduard Dubovitskiy as board chairman.

Rosneft nets approx $5.5 bln in 2005 - Bogdanchikov

ASTANA. Feb 26 (Interfax) - Rosneft had estimated net profit of just over $5.5 billion in 2005, Sergei Bogdanchikov, the Russian oil company's CEO, said at a press conference in Astana, Kazakhstan.

"By preliminary counts the company's net profit was just over $5.5 billion last year, and we paid $10 billion in taxes," Bogdanchikov said.

Rosneft said in a press release distributed at the press conference that taxes paid into the federal budget soared 630% last year to 167.5 billion rubles, and taxes paid to local budgets rose 240% to 49.7 billion rubles.

Overall taxes, including customs duties, rose 560% to 396.6 billion rubles.

Rosneft after assets in Russia and Kazakhstan - head

ASTANA. Feb 26 (Interfax-Kazakhstan) - Russian oil company Rosneft needs to acquire more assets, both in Russia and in Kazakhstan, Rosneft head Sergei Bogdanchikov said on Thursday.

"Despite the fact that to date our company ranks first in the world for oil reserves (according to the generally accepted international methods of assessment), a pace of development of no less than 7% a year is planned for our company. This calls for constant increases in our raw material base," Bogdanchikov told a news conference in Astana.

He said Rosneft sought to become "one of the leaders of the Russian oil and gas industry and join the leading oil companies of the world." "This is the goal we seek to achieve within the next 10 years," Bogdanchikov said.

Rosneft chief happy with Kurmangazy project

ASTANA. Feb 26 (Interfax) - Rosneft chief Sergei Bogdanchikov is happy with progress being made with the joint project to develop the Kurmangazy field in Kazakhstan's sector of the Caspian Sea.

"Russia is pleasantly surprised by the urgency and the level of organization that we have achieved with our partner KazMunaiGaz in forming all governing bodies and preparing to drill exploration wells, the first of which will start to be drilled in April or May," Bogdanchikov told a press conference in Astana.

Some $66 million will be invested in the Kurmangazy project this year, he said.

The field will be developed in strict accordance with international standards and Kazakh law, Bogdanchikov said.

This also applies to training local specialists and placing orders with local enterprises, he said.

Repsol plans to help build LNG plant in Primorye

MADRID/MOSCOW. Feb 26 (Interfax) - Spanish oil and gas company Repsol YPF, one of the biggest players on the liquefied natural gas (LNG) market, is planning to take part in a Gazprom (RTS: GAZP) project to build a liquefied natural gas (LNG) plant in Primorye, Repsol said in a report.

"In February, a memorandum of agreement was signed with the Russian state-owned company, Gazprom, to develop joint ventures in liquefied natural gas. Under this MOU, Repsol YPF will participate in the "Baltic LNG" project for the construction of an LNG plant in St. Petersburg, producing gas for the American and European markets. Apart from its experience in the LNG business, Repsol YPF contributes in this venture with its regasification capacity, excellent position on the Atlantic markets, and in particular its major role in the Spanish market," the report says.

Cooperation with Repsol in the LNG sector would be very beneficial for Gazprom from the point of view of logistical supplies of LNG, a source in a Russian company told Interfax. Repsol currently supplies LNG to Spain from Caribbean countries. If Gazprom could organize its own LNG deliveries to Spain, then favorable swap deals could be organized for Repsol gas on the North American markets from the Caribbean, the source said.

Interfax was not able to get any comments from Repsol because of the weekend.

Russia asks Luxembourg for assistance in Yukos case

MOSCOW. Feb 26 (Interfax) - The Russian authorities have requested assistance from law enforcement bodies in Luxembourg in the Yukos (RTS: YUKO) investigation, a Yukos press release says.

"The request was filed at Luxembourg judicial institutions in accordance with the European convention on mutual support in the criminal sphere," the press release says.

"Under the law, a Yukos affiliate in Luxembourg, Yukos Capital S.a.r.l. is fully cooperating with the investigation. Nevertheless, Yukos objects to Russia's operating methods, and Yukos Capital S.a.r.l. has filed a plea in Luxembourg court to stop the investigation," the statement says.

Yukos Capital S.a.r.l. is a major creditor of Yukos - controlling over 12% of Yukos's debts in 2004 - as well as a Yuganskneftegaz creditor.

Yukos to hold AGM on June 21

MOSCOW. Feb 26 (Interfax) - Directors at Yukos (RTS: YUKO) have scheduled this year's AGM for June 21, a company representative told Interfax.

The board at a February 22 meeting discussed the oil company's 2005 results and plans for 2006, the source said.

The directors met in person in Moscow, the source said.

Petrobras, RosUkrEenrgo to take part in tender for PSA on Prikerchensky shelf

KYIV. Feb 26 (Interfax) - Brazil's Petroleo Brasileiro SA (Petrobras) and Switzerland's RosUkrEnergo A.G. will participate in a tender for a production sharing agreement (PSA) on a deposit at the Prikerchensky part of the Black Sea continental shelf.

"RosUkrEnergo was interested in the tender. Petrobras applied to participate in the tender (on February 23)," Chornomornaftogaz president Ihor Franchuk said on Friday.

About 15 foreign oil companies, including Exxon, Shell and Chevron, have submitted applications for the tender, he said. Ukrainian enterprises have not applied yet, he added.

Franchuk said that Chornomornaftogaz will participate in the tender along with the U.S. company Hunt Overseas Oil Company. "Our chances of winning the tender are very high," he said. The joint participation of a foreign company with vast experience of working at large depths and a Ukrainian enterprise would be expedient considering legislative requirements and the conditions of the tender, he said.

Chornomornaftogaz is currently developing a program aimed at bringing in the maximum number of Ukrainian enterprises, organizations and specialists to carry out the project of developing the Prikerchensky shelf, he said. "Today, any foreign company would be more interested in working for itself instead of developing the area for Ukraine. If a Western company ends up working here without the participation of a Ukrainian one, the personnel will naturally be comprised of foreign specialists," he said.

Franchuk also said that the project should be carried out in the shortest timeframe possible.

A Ukrainian interagency commission responsible for arranging the conclusion and implementation of production sharing agreements announced in December 2005 that a tender would be held to conclude a PSA on the hydrocarbons to be extracted at the Prikerchensky field on the Black Sea shelf.

Bids for the tender will be accepted until March 24, 2006 inclusive. The fee for participation in the tender is $10,000.

The terms and conditions of a tender on concluding a PSA on the Prikerchensky field were endorsed by Ukrainian Cabinet directive No. 1263 of December 22, 2005. The field is 12,960 square kilometers in size and the depth of the sea in the area ranges from 70 to 2,000 meters.

Lithuania may sell MN to Austrian co - newspaper

VOLNIUS. Feb 26 (Interfax/BNS) - The Lithuanian government may sell shares in the Mazeikiu Nafta (MN) petroleum concern to Austria's Baltic Holding (BH), the Verslo zinios newspaper said, quoting its own sources.

The paper said that was why the government was taking so long to negotiate the sale with Yukos, which owns 53.7% of MN, and so reluctant to meet with companies like KazMunaiGaz and PKN Orlen, which have offered good prices. This also explains talk of nationalizing the MN shares.

The paper said the Austrian company might join forces with a Russian oil company to operate in Lithuania if it buys the MN shares.

Baltic Holding has expressed an interest in the MN shares, and has offered to invest around 4 billion litai (3.4528 litai/EUR1) in Lithuania's petrochemicals industry, but it did not bid when Yukos announced a tender.

The newspapers said that BH's core shareholder Petrochemical Holding has already invested several million litai in a plant to make raw material for the plastics industry near Klaipeda, and that the MN oil refinery could supply the petroleum products to the plant if the right equipment is installed.

Russia, Kazakhstan to sign deals on Caspian oil fields

ASTANA. Feb 26 (Interfax-Kazakhstan) - Russia and Kazakhstan will sign production sharing agreements developing the Khvalynskoye and Tsentralnoye offshore oil fields in the Russian sector of the Caspian Sea after the two countries ratify amendments to a protocol on Caspian floor division, a Kazakh minister said.

"(The amendments, agreed by the Russian and Kazakh governments in January 2006,) need ratification by the State Duma and the parliament of our country. After that we will have the opportunity to work under a production sharing agreement without additional permission prescribed by Russian legislation," Energy and Mineral Resources Minister Baktykozha Izmukhambetov told Interfax.

A 1998 agreement on the division of the northern Caspian floor and a 2002 protocol to it give Kazakhstan sovereignty over the Kurmangazy oil field and give Russia sovereignty over Tsentralnoye and Khvalynskoye. The two countries decided to develop these fields jointly.

There already exists a 55-year production sharing agreement on Kurmangazy.

"Naturally, as soon as we've gone through ratification, negotiations will start on production sharing agreements on (Khvalynskoye and Tsentralnoye)," Izmukhambetov said.

Kazakhstan plans to boost oil output 30% by 2010 - minister

ASTANA. Feb 26 (Interfax-Kazakhstan) - Kazakhstan hopes its oil production, buoyed by increases in oil output at the western Tengiz oil deposit, will grow 30% by 2010, as compared with 2005, the country's Energy and Mineral Resources Minister Baktykozha Izmukhambetov told Interfax-Kazakhstan.

"I can say that oil production is projected to increase by no less than 30% by 2010, as compared with today's levels. That will become possible thanks to the completion of the Tengiz project, after which annual output at the Tengiz field is expected to reach 24 million tonnes," he said. Over 61.457 million tonnes of crude oil and gas condensate were extracted in Kazakhstan last year.

The Kazakh authorities are also considering "expanding two major oil pipelines: Atyrau-Samara and the Caspian Pipeline Consortium's oil pipeline linking the Tengiz deposit and the Black Sea's port of Novorossiisk," Izmukhambetov said.

"Further increases in oil output will largely depend on the development of Kazakh fields off the Caspian Sea coast," the minister said.

The Tengiz deposit is developed by TengizChevrOil, which extracted 13.6 million tonnes of oil and 3.4 billion cubic meters of associated gas in 2005.

Kazakhstan plans to boost gas output to more than 40 bcm and double exports to 15 bcm by 2010, Izmukhambetov said.

"By 2010 we expect gas output to grow to 40 bcm or more. In this regard, we are looking at how to use the extra volume. By then, we expect to be exporting nearly 15 bcm cubic meters. The remaining volume will be reinjected and used for domestic consumption, including power generation needs," he said.

Izmukhambetov said that Kazakhstan is determined to seek a significant rise in export gas price. Currently, he said, the average price for 1 cubic meter of gas exported from Kazakhstan stands at $31 per 1,000 cubic meters.

He said talks on this issue with Russia were on-going.

Regarding tariffs to transit Central Asian gas across Kazakhstan, Izmukhambetov said that starting January 1, the tariff has been raised by more than 50% from $0.7 to $1.1 per 1,000 cubic meters for 100 km.

Kazakhstan to up oil production 1.6%, gas 5.3% in 2006

ASTANA. Feb 26 (Interfax) - Kazakhstan plans to raise oil production 1.6% and natural gas production 5.3% in 2006.

The Kazakh Energy and Mineral Resources said in a press release that the country was aiming to produce 62.5 million tonnes of oil and gas condensate and 27.6 bcm of gas in 2006.

Oil production grew 4.1% to 61.5 million tonnes and gas production was up 27.7% to 26.2 bcm in 2005 compared with 2004, the ministry said.

Alexei Pirogov, head of the ministry's Gas Industry Department, said at a meeting hosted by the ministry on February 23 that liquefied gas production grew 2.3% in 2005 to 1.25 million tonnes. Pirogov said domestic supplies grew 5% to 430,000 tonnes and that 818,000 tonnes were exported.

He also said that Kazakhstan transited 115 billion cubic meters (bcm) of natural gas across its territory in 2005 - 11% more than in 2004.

Kazakhstan plans to produce 87.3 million tonnes of coal and 73 billion kilowatt-hours of electricity in 2005, the ministry's press release said.

Kazakhstan exported 54.6 million tonnes of oil and gas condensate in 2005 - 3.2% more than in 2005.

The country produced 86.385 million tonnes of coal in 2005. Power generation rose 1.3% to 67.819 billion kWh.

Kazakhstan drafts agreement on joining BTC project in days

ASTANA. Feb 26 (Interfax) - Kazakhstan will finish drafting the text of an agreement on joining the Baku-Tbilisi-Ceyhan (BTC) oil pipeline project within days, Kazakh Energy and Mineral Resources Minister Baktykozha Izmukhambetov said at a meeting hosted by the ministry on February 23.

"The document should be ready early next week. Azerbaijan has been waiting for us a long time and we are, by and large, ready to sign," he said.

Kazakh Ministry expects to resume CPC expansion talks in March or April

ASTANA. Feb 26 (Interfax-Kazakhstan) - Kazakh Energy and Mineral Resources Minister Baktykozha Izmukhambetov said he expected that shareholders of the Caspian Pipeline Consortium (CPC) will conduct the next round of negotiations on CPC expansion in March of April this year.

"We plan to resume the talks in March or April," Izmukhambetov told Interfax-Kazakhstan.

The minister praised significant developments in the negotiation process and said that the parties needed "to resolve fix two or three key positions," including the oil pumping tariffs via Tengiz-Novorossiisk oil pipeline.

Kazakhstan to begin full-scale oil exports to China in May - ministry

ASTANA. Feb 26 (Interfax) - The Atasu-Alashankou pipeline is due to begin pumping large amounts of Kazakh oil to China in May, the Kazakh Energy and Mineral Resources Ministry said in a press release.

"The completion of the construction of the Atasu-Alashankou oil pipeline on December 16 was one of last year's major events. We plan to begin full-scale oil exports via the pipeline in May 2006," the release reads.

The Atasu-Alashankou oil pipeline, which is part of the Kazakhstan-China oil transportation project, started operation in mid-December 2005. Its initial annual capacity of 10 million tonnes is expected to rise to 20 million tonnes in the future.

CNPC to waive preemption right to 50% in KazGerMunay JV

ASTANA. Feb 26 (Interfax-Kazakhstan) - China National Petroleum Corporation (CNPC) has undertaken not to exercise its preemption right to acquire 50% in the KazGerMunay joint venture to be sold by the venture's shareholders, Kazakh Energy and Mineral Resources Minister Baktykozha Izmukhambetov told Interfax-Kazakhstan.

"We have reached preliminary agreement with the Chinese party that it will waive its preemption right to the 50% shareholding in KazGerMunay joint venture," Izmukhambetov said.

Kazakhstan's national oil and gas company KazMunaiGaz is negotiating the purchase of 50% of the joint venture from Germany's RWE and Erdgas and the International Finance Corporation (IFC), which own 25%, 17.5% and 7.5% of KazGerMunay, respectively. PetroKazakhstan owns the other 50% of the joint venture, which is capable of producing 3.3 million tonnes of oil per year.

ELECTRICITY PRODUCTION & DISTRIBUTION UES board approves appendix to OGC 5+5 strategy

MOSCOW. Feb 26 (Interfax) - The Unified Energy System (UES) board of directors approved an appendix at a Sunday meeting to its 5+5 strategy for 2003-2008, which envisions additional issues by the thermal Wholesale Generating Companies (OGC) to acquire investment, UES said in a press release.

The appendix partially envisions floating additional shares in thermal OGCs to raise investment as well as use debt-financing instruments, including Eurobonds and credit-linked notes, the release says.

The appendix stipulates that the OGCs plan to split shares proportionately among UES shareholders, and the government, which owns 52.7% of UES, will try to reduce its stake in thermal OGC capital in the future.

UES to raise up to $3 bln with genco IPOs - Chubais

KAZAN. Feb 26 (Interfax) - Unified Energy System (UES) plans in the next 18 months to two years to raise $2.5 billion-$3 billion in investment via initial public offerings (IPO) by at least two or three generating companies, Anatoly Chubais, the national power utility's CEO, said in Kazan.

Chubais told reporters following a meeting Mintimer Shaimyev, the president of Tatarstan, that UES would "finish selecting the generating companies which will carry the IPOs out in two or three weeks" and formally submit them to the government.

"We're talking about at least two or three new generating companies, which have emerged as the result of the (power sector) reforms and splitting up generating capacity from the grids," Chubais said.

"Analysts estimate that these companies could raise $2.5 billion-$3 billion on the market within a year to 18 months, not more," Chubais said.

There is "huge interest in the gencos on the market," he said. "This is clear if only because UES's share price has doubled on the Russian stock market in the last four months. I don't think there's been anything like that recently. It's a terrific result, one which is connected to the reform - investors believe it will be carried out entirely," Chubais said.

"And we want to float the gencos not just to sell them but also to obtain an investment resource from the market - that's our primary goal," he said.

"The time has come to stop discussing (power industry reforms) and carrying out preparations. It's now time to start raising substantial investment which the Russian power industry needs so badly," he said.

UES plans to increase investment in its development to $15 billion from $5 billion in the next three years, Chubais said speaking at the Kazan State Energy University on Saturday.

"In the next three years, investments in UES should at least triple. Today's figure is about $5 billion. We believe that we should triple the amount in three years, to $15 billion," he said.

The bulk of this should be private investment, which should finance chiefly the development of generating facilities, while the government should invest in the development of distribution companies, he said.

"It is obvious that the volume of private investment should be several times larger than government investment, and this should lead to a full replacement of all fixed assets," Chubais said.

UES plans to triple investment in next three years - Chubais

KAZAN. Feb 25 (Interfax) - Russia's electricity monopoly Unified Energy System (UES) plans to increase investment in its development to $15 billion from $5 billion in the next three years, UES Chairman Anatoly Chubais said speaking at the Kazan State Energy University on Saturday.

"In the next three years, investments in UES should at least triple. Today's figure is about $5 billion. We believe that we should triple the amount in three years, to $15 billion," he said.

The bulk of this should be private investment, which should finance chiefly the development of generating facilities, while the government should invest in the development of distribution companies, he said.

"It is obvious that the volume of private investment should be several times larger than government investment, and this should lead to a full replacement of all fixed assets," Chubais said.

METALS & MINERALS Norilsk Nickel may unveil long-term strategy in March

MOSCOW. Feb 26 (Interfax) - MMC Norilsk Nickel may unveil its long-term production strategy in March, press reports in the city of Norilsk said, quoting Mikhail Prokhorov, the mining and smelting giant's general director.

The company said in the middle of last year that it was drafting the long-term strategy. We're looking at plans to increase production, but also at the costs and the consequences that this may have," Denis Morozov, the company's deputy general director, said at the time.

Norilsk Nickel said in 2004 that it did not have the capacity to increase nickel production substantially. Morozov said the company would produce more in the way of other metals, in particular palladium, if it did raise nickel output.

Targeted nickel output by the world's biggest producer of the metal is 243,000-248,000 tonnes in 2006. Norilsk also aims to produce 422,000-427,000 tonnes of copper, 90-92 tonnes of palladium and 21-22 tonnes of platinum this year.

Kapital buys 66% of Severstal

MOSCOW. Feb 26 (Interfax) - OOO Kapital has acquired 66% of Severstal (RTS: CHMF), the Russian steel giant said in a statement.

The company increased its stake in Severstal charter capital to 66.12% from 0%.

Alrosa announces tender to select valuator

MOSCOW. Feb 26 (Interfax) - Russian diamond-mining monopoly Alrosa is announcing a tender to select a company to determine the market value of its shares, Alrosa said.

Bids will be accepted until March 13 and the tender will be held on March 15.

Alrosa's supervisory board made a decision earlier to organize a tender to select a company to determine the value of Yakutalmaz. The Republic of Yakutia will conduct its own parallel valuation.

The company said that MAK-Bank, in which it owns shares, started to buy the shares back on Alrosa's behalf on February 22. The process will take until April 28.

Maxim Kasatkin, the bank's first deputy chairman, told Interfax that the bank would offer 338,000 rubles per share, that it planned to buy back 10% of Alrosa's shares and that it would spend $240 million of its own money and borrowed money on the buy-back. He did not say where the bank intended to borrow the money.

The buy-back price works out at $12,000 a share, which is less than half of the $30,000 valuation put on the shares by Professional Valuation Center, hired by Alrosa and the Russian Property Fund (Rosimushestvo), last year. Professional Valuation Center has valued 100% of Alrosa at around $6 billion.

The federal government is seeking to increase its stake in Alrosa to 50% plus one share, from 37% at present. It has been reported that the federal government plans to achieve this by buying some of Alrosa's shares from employees, who own 23% of Alrosa.

Additional shares will be issued after the valuation of Yakutalmaz is completed. A source at Alrosa said the indications were that the new share issue would be equivalent to at least 50%-70% of Alrosa's existing shares.

FAS requests more info on Novolipetsk's proposed VIZ-Stal acquisition

MOSCOW. Feb 26 (Interfax) - The Federal Antimonopoly Service (FAS) has requested further information to support a request by Novolipetsk Steel for clearance to buy Yekaterinburg-based silicon sheet steel producer VIZ-Stal, FAS Deputy Director Andrei Tsyganov told Interfax.

"We haven't reached a decision yet, and we have asked Novolipetsk Steel for more information," Tsyganov said, when asked when the FAS might give its reply to the steel major's request.

FAS Director Igor Artemyev visited Novolipetsk Steel on February 22 in the hope of "deciding on location how the acquisition would affect the market," the FAS has said.

The FAS branch in the Sverdlovsk region has said it would not back the acquisition, claiming that Novolipetsk Steel would monopolize the transformer steel market and control 100% of the Russian market for this type of product if it buys VIZ-Stal.

VIZ-Stal planned to increase steel output 6.5% to 196,500 tonnes in 2005. Italy's Duferco is currently the limited liability company's core owner.

Magnitogorsk Iron & Steel Works (MMK) (RTS: MAGN), a long-standing metal supplier to VIZ-Stal, is also interested in the plant.

Magnitogorsk Calibrating Plant recommends dividend waiver

MOSCOW. Feb 26 (Interfax) - Directors at Magnitogorsk Calibrating Plant (MKZ) are recommending a dividend waiver at this year's AGM on April 13, the company said.

The agenda will contain standard items, plus the approval of a number of transactions.

Registration to take part in the meeting closed on February 26.

Magnitogorsk Iron & Steel Works (MMK) (RTS: MAGN) is the biggest shareholder in MKZ with 45.52%.

MKZ is part of MMK's metalware division, MMK-Metiz. It is due to complete a merger with MMK-Metiz this quarter.

Ministry to decide on large-diameter pipe imports in 2 wks

MOSCOW. Feb 26 (Interfax) - The Russian Economic Development and Trade Ministry intends to reach a decision on imports of large-diameter pipes within two weeks, Galina Balandina, the ministry's head of Foreign Trade and Customs Regulation, told reporters.

"We'll reach a decision in the very near future, perhaps in the next week or two," Balandina said. "The matter has dragged on too long," she said.

Balandina attributed the delay with a decision to cap a special safeguard investigation into large-diameter pipe imports from Ukraine and elsewhere to the fact that the issue affects some of Russia's biggest steel producers.

A "thorough analysis is being rounded off" and there will be no more extensions to the special probe, she said.

Balandina said she could not say what action if any might be taken with respect to the imports.

The economy ministry extended its special probe into large-diameter pipe imports by three months in November last year.

Ukrainian pipe mills improve financial results

KYIV. Feb 26 (Interfax) - Most Ukrainian pipe mills improved their financial results in 2005, an official at the Ukrainian Industrial Policy Ministry told Interfax.

The source said the pipe mills had better transparency and favorable domestic and external market trends to thank for their improved performance.

But the source said higher gas prices could dent finances in the industry in 2006.

Ukrainian pipe industry performance 2005:

Company

Sales in 2005, '000 UAH

Sales, % of 2004

Profitability in 2005, %

Profitability in 2004, %

Pretax profit in 2005, '000 UAH

Pretax profit in 2004, '000 UAH

Dnipropetrovsk Pipe Plant(DTZ)

736660

163,1

2,6

-2,2

5701

1916

Novomoskovsk Pipe Plant (NTZ)

607845,6

99,1

-

-

-

-

Nizhnedniprovsky Pipe Plant(NDTZ)

3191,614

121,3

40,9

19,7

729138

161217

NZNT (stainless tubes)

413153,8

199,6

4,2

2,9

13798,5

2147,3

Niko Tube

874980

134,7

24,5

12,9

84117,4

17052

UtiST

330091

119,0

11,4

8,8

6494,6

3785,4

Kominmet

393996,3

112,1

2,4

-2,2

20003

-22213

* Source: Interfax-Ukraine

Kazzinc to build copper smelting, electrolysis plants in E. Kazakhstan

UST-KAMENOGORSK. Feb 26 (Interfax) - Kazzinc plans to build a copper smelter and electrolysis plant in Ust-Kamenogorsk, East Kazakhstan.

The zinc producer's management presented the project to the regional and local authorities on February 22.

Kazzinc president Nikolai Popovich said construction of the plants would be completed in 2009. The future copper smelter will produce 70,000 tonnes of cathode copper per year.

"The imbalance in mining and beneficiation capacities forces us to sell about 30,000 tonnes of copper concentrate on the side per year and at the same time buy lead concentrate abroad in order to supply the lead plant," Popovich said.

This project will make it possible to balance the company's mining and concentrating potential with its metallurgy capacity, he said. "The project is being carried out as part of a state resource conservation policy, as new technology will make it possible to recover additional amounts of metal," he said.

The project will use the latest, environmentally friendly technology from Australia's Isasmelt, the principal advantage of which is its combination of several technological operations in one unit, Popovich said. "Thanks to this technology, we will be able to very quickly completely resolve the problem of sulfur dioxide air pollution in Ust-Kamenogorsk," he said.

Construction of the copper smelter and electrolysis plant next to the lead and zinc facilities will create a metallurgical complex that will maximize recovery of useful elements, Popovich said.

Kazzinc is a major integrated producer of zinc and associated copper, precious metals and lead based in East Kazakhstan.

Switzerland's Glencore International AG controls 99% of Kazzinc through subsidiaries.

Glencore increased its stake in the zinc producer to 71% after Filippino company Pasar Holding Inc., which is 69%-owned by Glencore, bought the state-owned 22.65% of Kazzinc for 14.74 billion tenge at a December 9 tender.

The tender winner pledged to build a copper smelter in the East Kazakhstan region with capacity of 70,000 tonnes of refined cooper per year to refine concentrates produced by Kazzinc's Ust Kamenogorsk Metallurgy Combine.

Pasar Holding must launch the smelter by December 31, 2010, with the transfer of right to manage the state stake in Kazzinc to the buyer.

Belarus reduces rough diamond imports 41% in 2005

MINSK. Feb 26 (Interfax) - Belarus reduced rough diamond imports 41% to 50,800 carats in 2005, the Belarussian Finance Ministry told Interfax.

The imports in value rose, by 34.2% to $21.573 million, the ministry said.

The ministry said imports fell in carats because prices for rough diamonds grew much faster than prices for cut and polished diamonds. Rough diamonds rose 20% in price last year, while cut diamonds grew just 6%-8% in price.

Belarus imported 13,300 carats of rough valued at $16.25 million in the fourth quarter of 2005. The country exported 531.95 carats for $6,610 in 2005 as a whole.

The Kristall diamond cutting plant in Belarus has ordered around 80,000 carats of rough from Russia's Alrosa mining company in 2006 and it is anticipated that a similar order will be placed with Russia's Gokhran or State Repository.

Belarus boosts ferrous output 18.3% in Jan

MINSK. Feb 26 (Interfax) - Belarus increased ferrous metals output 18.3% year-on-year in constant prices in January to 252.5 billion Belarussian rubles (2,151 Bel. rubles/$1 on Feb 26), the Statistics and Analysis Ministry told Interfax.

Production grew 7% to 198,100 tonnes of crude steel, 22.3% to 234,200 tonnes of finished roll, 32.7% to 12,300 tonnes of ordinary-grade wire, 20.8% to 6,800 tonnes of steel wire, 6% to 8,200 tonnes of steel cord and 16.3% to 9,300 tonnes of steel pipes.

COMPUTING & INFORMATION TECHNOLOGY Govt approves rules for communications services

MOSCOW. Feb 26 (Interfax) - The Russian government has approved regulations for providing communications services which opens way to privatizing Svyazinvest, the national telecom holding.

The government's press office said that Russian Prime Minister Mikhail Fradkov on February 22 signed a resolution (No. 103) on approving the regulations for using the unified fixed line network in Russia in order to preserve the interests and functioning of special purpose networks.

A law which protects the rights of special operators needs to be passed before the Russian president can sign a decree authorizing the Svyazinvest sale.

The Russian Security Council made this a condition for the Svyazinvest sale at the end of last year when the draft decree was submitted to the president's staff.

Sistema open to alliance with any bidder for Svyazinvest

MOSCOW. Feb 26 (Interfax) - The Sistema holding company is open to an alliance with any main Russian bidder for shares in Svyazinvest, Alexei Kurach, Sistema's investor relations manager, told Interfax.

"We know perfectly well that a consortium of several players that everybody recognizes ought to be formed. Sistema is not concerned who it teams up with," Kurach said.

Bloomberg reported that the Alfa-Group's chief, Mikhail Fridman, would consider an alliance with Sistema if the government goes ahead with the Svyazinvest sale this year.

Kurach said Alfa was a potential partner for Sistema, just like any other potential bidder.

"We have nothing against joining up with Alfa, just as we have nothing against joining up with Telecominvest or Access," he said.

The government still owns 75% minus two shares in Svyazinvest, which is the national telecom holding.

Alfa, Sistema and Telecominvest have all said they would be interested in buying into Svyazinvest.

Sistema buys 7.3% of Comstar-UTS from Deutsche Bank in repo deal

MOSCOW. Feb 26 (Interfax) - AFK Sistema (RTS: AFKS) has bought 7.3% of Comstar-United TeleSystems (Comstar-UTS) from Deutsche Bank in a repo deal, Comstar-UTS said.

Sistema has thus increased its stake in Comstar-UTS to 36.42% from 29.12%. Companies that are part of the Sistema Group increased their stakes to 72.25% from 64.95%.

This transaction was carried out in order to meet conditions to enter the London Stock Exchange, a Sistema spokesman told Interfax.

Deutsche Bank bought 10.945% of Constar-UTS from Sistema in December of last year for $132 million. Its stake in Comstar-UTS charter capital fell to 7.3% after additional shares were floated in the framework of an initial public offering.

At the start of February Comstar-UTS received $1.54 billion from an IPO. Sistema placed 139 million shares in a new Comstar-UTS issue in the form of GDR on the LSE at $7.25 and 7.5 million shares were placed by ECU GEST Holding S.A., which is 99% owned by Sistema and 1% - by the company's founder and main co-owner Vladimir Yevtushenkov, on the Moscow Stock Exchange.

MCT Corp. sells shares of 3 mobile operators in Volga region

MOSCOW. Feb 26 (Interfax) - The U.S. telecommunications company MCT Corp., which works in Russia and Central Asia under the Indigo trademark, has sold a financial investor 100% of Vostok Mobile Volga B.V., which owns part of three mobile operators in the Volga region, the company said in a press release.

The company has not disclosed the cost or details of the deal.

Vostok Mobile Volga B.V. owns a 50% stake in Saratov Mobile, a 70% stake in Chuvashia Mobile and a 60% stake in Penza Mobile. VolgaTelecom (RTS: NNSI) owns the rest of the shares in these operators.

All three operators have licenses for GSM-1800 standards, which gives them the right to provide cell phone services in the Saratov region, the Republic of Chuvashia and the Penza region, respectively, the release says.

"MCT is satisfied with the successful development of its Volga companies, which currently serve more than 130,000 subscribers, and is anxiously waiting to expand and develop other companies in the holding, which are mainly concentrated in Northwest Russia and Central Asia," Garth C. Self, president and CEO of MCT Corp. in Russia, is quoted as saying in the release.

MCT Corp. currently owns assets in four mobile operators in Central Asia: it has a 77.5% stake in Uzbekistan's Coscom, a 60% share each in Tajikistan's Indigo-Tajikistan and Somoncom, and a 12.5% stake in Afghanistan's Roshan. In Russia, MCT Corp. owns 75% of Arkhangelsk Mobile Networks, 75% of Murmansk Mobile Networks, 100% of Nizhny Novgorod Telecommunications and 75% of Parma Mobile.

All other operators owned by MCT Corp. have licenses to provide GSM services to a total of 60.4 million people.

Tele2 ups stake in Oblcom to 100%

ST. PETERSBURG. Feb 26 (Interfax) - Swedish telecoms firm Tele2 has increased its stake in St. Petersburg cellular operator Oblcom to 100% from 97.24%, Tele2 said in a press release posted on its website.

Oblcom received a license in April 2002 to provide GSM-1800 standard mobile services in Leningrad region and outside of St. Petersburg. It launched a GSM-1800 network in Leningrad region in December 2003.

Tele2 has controlling stakes and is the owner of 13 Russian mobile companies: in St. Petersburg and the surrounding Leningrad region, and in Irkutsk, Rostov-on-Don, Kemerovo, Izhevsk, Chelyabinsk, Belgorod, Nizhny Novgorod, Omsk, Smolensk, Voronezh and Kursk.

Tele2 works in 25 countries. In Russia, the company provides GSM-standard mobile services in 12 regions: St. Petersburg and the surrounding Leningrad region, the Irkutsk, Kemerovo, Rostov, Omsk, Nizhny Novgorod, Smolensk, Kursk, Belgorod, Chelyabinsk and Voronezh regions.

METAL GOODS & ENGINEERING Severstal-Auto's core owner sells 5% of shares

MOSCOW. Feb 26 (Interfax) - Severstal-Auto's (RTS: SVAV) core shareholder, the Cyprus-registered Newdeal Investments Limited, has sold 4.99% of the company to portfolio investors acting on behalf of international investment banks, Severstal-Auto told Interfax.

Newdeal Investments Limited owned 62.58% of Severstal-Auto prior to the sale.

"The shares were well-subscribed," the company said.

The company sold the shares in order to increase liquidity and free float, to 37% from 32%.

The company did not say how much it sold the 4.99% for.

Rostvertol to deliver 12 Mi-2 helicopters to Indonesia

SINGAPORE. Feb 26 (Interfax) - The Rostvertol helicopter plant will supply Indonesia with 12 light multi-purpose Mi-2 helicopters, Rostvertol general director Boris Slyusar said.

"We signed a contract on delivering 12 Mi-2 helicopters to Indonesia in January 2006," Slyusar told Interfax at an aviation exhibition in Singapore on Friday.

Rostovmil, a Rostvertol subsidiary, earlier supplied Indonesia with two Mi-2 helicopters, which led to the recommendation of the next batch of Mi-2 helicopters, he said.

"The Mi-2 is rather widespread throughout the world, it is one of the largest helicopters. Up to 1,500 Mi-2 helicopters are currently in use in various parts of the world. About 700 of them are at Russian aviation companies alone," he said.

A contract was recently signed with Myanmar on carrying out repair work on six Mi-2 helicopters, which should be delivered to the plant in the next few days for repairs, he said.

FOOD & AGRICULTURE. PROCESS INDUSTRIES Bird flu discovered in six Russian regions

MOSCOW. Feb 26 (Interfax) - Bird flu had been registered in six Russian regions as of February 26, the Agriculture Ministry's press service said citing the Federal Veterinary and Phytosanitary Control Service (Rosselkhoznadzor).

Migrating birds have brought avian flu to the republics of Kabardino-Balkariya, Dagestan, Chechnya and Kalmykia in addition to the Krasnodar and Stavropol territories, the press service said.

Bird flu was discovered among domesticated birds in Dagestan, Kalmykia and the Krasnodar and Stavropol territories.

A total of 17 infected areas have been registered in Dagestan. In the Krasnodar territory, the Tbilisskaya poultry plant in the north of Sochi and communities in the Labinsky and Kazkazsky districts are suspected of having the disease.

CONSTRUCTION & PROPERTY Fund for direct investment in Russian real estate to be launched

MOSCOW. Feb 24 (Interfax) - A fund for direct investment in Russian real estate is being launched.

Sistema, the largest corporation working on the services market in the CIS, the asset management company group Renova and the Whitehall Street Real Estate Funds investment group, financed and managed by The Goldman Sachs Group Inc and its affiliates have signed an agreement to set up the fund, says a Sistema press release issued on Friday.

The fund will initially total $300 million and be managed by the partners on a parity basis. The main investment areas are commercial, office and elite housing real estate, and the development of other projects in Moscow.

Sistema is the largest consumer services private sector company in Russia and the CIS, managing market-leading businesses in fast-growing service-based industries, including telecommunications (MTS, MGTS, Comstar United Telesystems), technology (NIIME and MIKRON, STROM telecom, Sitronics, Quasar Micro), insurance (ROSNO), banking (MBRD), real estate (Sistema-Hals), retail (Detsky Mir Group) and media (Mass Media Systems). In February 2005, Sistema raised $1.3 billion in a share placement on the London stock exchange.

Sistema-Hals manages operations at over 50 companies, whose specialties enable a comprehensive approach to implementing all project phases, from development to construction and subsequent operation of a property.

The Renova group owns shares and invests strategically into Russian companies and holdings working in the metallurgy, oil, machine building, mining, chemical, construction, energy, utilities and financial spheres. Renova is a shareholder in major extraction and industrial structures, such as TNK-BP, the Sual holding, the Complex Energy Systems, the Russian Communal Systems, the Koltsovo airport in Yekaterinburg and the non-state Bolshoi Pension fund. The group also includes investment companies working in real estate (Renova Development, Renova Stroi Group), portfolio investment (Direct Investments Fund) and intangible asset management (Corporate Development Institute)."

Goldman Sachs is a leading international investment company, managing finances, securities and investment projects.

MEDIA STS Media confirms IPO plans

MOSCOW. Feb 26 (Interfax) - STS Media is planning an IPO, Alexander Rodnyansky, the TV holding company's chief, told Interfax on Sunday. "We are indeed planning an offering. We've already said in a press release distributed in the West that we intend to register with the Securities and Exchange Commission," Rodnyansky said.

"But the regulations state that we can't make further comment," he said.

Sources in banking circles told Interfax that STS Media, which is thought to be worth $2 billion, was planning to float on the Nasdaq in the first half of 2006, and that the company had appointed Deutsche Bank, UFG and Morgan Stanley to advise it on the IPO.

FINANCIAL & BUSINESS SERVICES MDM-Bank ups share in Latvijas tirdzniecibas banka to 100%

MOSCOW. Feb 26 (Interfax) - MDM-Bank increased its share in the charter capital of Latvijas tirdzniecibas banka from 63.3% to 100% starting from February 20, MDM-Bank said in a release.

Latvijas tirdzniecibas banka is part of the MDM financial group, which also comprises three Russian banks - MDM-Bank, MDM-Bank St. Petersburg and MDM-Bank Ural.

The MDM financial group's unaudited net assets dropped 24.8% year-on-year to 135.21 billion rubles in January-September 2005.

The group's net profit fell 39.6% to 2.702 billion rubles over the nine-month period from 4.476 billion rubles in the same period of 2004.

Operational profit dropped 19.7% year-on-year to 7.478 billion rubles in the reporting period.

MDM-Bank was Russia's 11th largest bank by assets at the end of the third quarter of 2005, according to the Interfax-100 ranking of the country's biggest lending institutions, compiled by the Interfax Center for Economic Analysis.

Tatfondbank places debut CLN issue for $90 mln

MOSCOW. Feb 26 (Interfax) - Tatfondbank has placed a debut issue of two-year credit-linked notes for $90 million at an annual yield of 9.5%, Trust Bank (RTS: HBTT), the organizer of the issue, said in a press release.

The CLN envision a put option that can be used one year after the bonds are placed.

Demand was significantly higher than the offer at more than $110 million. After consultations with the issuer it was decided to increase the CLN issue to $90 million from the originally planned $50 million-$70 million, the release says.

Investors from Sweden, Britain, Singapore, Germany, Luxemburg, the Netherlands, Hungary, Chili, Italy, Russia, the Baltics and other countries took part in the placement. More than 75% of the issue was placed on the Western market. More than 40 investors took part in the placement.

Tatfondbank was Russia's 57th biggest bank by assets at the end of the third quarter of 2005, according the Interfax-100 ranking of the country's biggest lending institutions, compiled by the Interfax Center for Economic Analysis.

SEB buying Petroenergobank to support existing clients - spokesman

MOSCOW. Feb 26 (Interfax) - SEB Group is buying Petroenergobank in order to provide support to its existing clients in Scandinavia, Germany and the Baltic countries and for their operations in Russia, Per Anders Fasth, head of investor relations at SEB, told Interfax.

The details of the bank's development strategy will be announced once the Central Bank of Russia approves the transaction between SEB and Petroenergobank, Anders said. Changing the trademark under which Petroenergobank works will be brought up later, he said.

The purchase of Petroenergobank is actually a purchase of a banking license and the possibility to enter the market, Anders said.

A representative of the SEB banking group, the third largest in Scandinavia, said in January 2005 that the group plans to expand its business in Russia using its own banks in the Baltics as its base.

Petroenergobank was set up in 1995 with charter capital of 130 million rubles. Lenenergo (RTS: LSNG) was the main shareholder until the middle of 2002, with 89.111%, however after the company floated additional shares, its stake in the bank fell to 21.59%.

Petroenergobank is a member of the deposit insurance system.

Petroenergobank was Russia's 348th biggest bank by assets at the end of the third quarter of 2005, according the Interfax-100 ranking of the country's biggest lending institutions, compiled by the Interfax Center for Economic Analysis.

JP Morgan sells $100 mln in bonds in Kazakhstan

ASTANA. Feb 26 (Interfax) - JP Morgan Chase Bank has sold ten-year bonds worth 13.2 billion tenge (around $100 million) in Kazakhstan.

"This was the first international tenge-denominated issue on the local market," reads a press release from Kazkommerts Invest, which arranged the issue.

According to the statement, the coupon rate is pegged to inflation.

The entire issue was successfully placed among local investors, mainly pension funds.

S&P assigned an 'AA-' rating to this issue. The bonds are listed at Luxembourg Stock Exchange and the company expects them to be listed on the Kazakhstan Stock Exchange soon.

FINANCIAL MARKETS Dollar, euro both lose 11 kopecks on Sunday

MOSCOW. Feb 26 (Interfax) - The Russian ruble strengthened by roughly 11 kopecks against both the U.S. dollar and the euro in trading on the Moscow Interbank Currency Exchange (MICEX) on Sunday due to banks making speculative sales and the lack of trading on the international Forex market.

Metallinvestbank dealer Alexander Panasenko said Sunday trading in theory should not have changed the exchange rates significantly from Wednesday's level since there was no Forex trading on Sunday and the level at which the Forex closed on Friday was fairly close to that of Wednesday evening. However, he said dollar and euro quotations changed as a result of banks playing speculative games.

"Banks were selling currency rather aggressively today and likely took on a speculative position in their calculations that the dollar may fall. It appears that the ruble will become slightly stronger in the near future, or at least such feelings are present," he said.

Elaborating on his belief that the speculative games played by banks led to the strengthening of the ruble on Sunday, Panasenko said: "This is exclusively the mood of the banks. It appears that the banks that were selling currency did not find support from the Central Bank at a certain level that corresponded to previous trading and the market dropped," he said. As before, banks are now inclined to sell currency, he said.

The last transaction carried out with Tomorrow dollars on the MICEX on Sunday totaled 28.1125 rubles/$1, which is 10.75 kopecks less than the closing price on Wednesday, February 22. The dollar's official exchange rate was set at 28.155 rubles/$1, which is 2.77 kopecks lower than the previous level.

The average weighted exchange rate of the dollar dropped 5.6 kopecks to 28.1446 rubles/$1 from February 22. Combined dollar trading on the MICEX on Sunday amounted to $798 million with a total of 545 deals being made.

The euro's exchange rate in Tomorrow deals on Sunday fell 11 kopecks to 33.435 rubles/EUR1. The average weighted cost of the euro totaled 33.4797 rubles/EUR1, compared to 33.5802 rubles/EUR1 on Wednesday. Trading amounted to EUR 4.9 million.

There was no trading with Today deals on the Russian currency market on Sunday since U.S. and European currency markets do not operate on Sundays.

CENTRAL BANK OF RUSSIA RUBLE EXCHANGE RATES FROM 27.02.2006

Currency

Per

Australia ($)

1

20.8516

Canada ($)

1

24.5082

Switzerland (Fr)

1

21.3733

Denmark (Krone)

10

44.8221

U.K. (Pound STG)

1

49.2009

Iceland (Krona)

100

42.3638

Belarus (Rubel)

1000

13.0847

Japan (Yen)

100

24.0847

Kazakhstan (Tenge)

100

21.6131

Norway (Krone)

10

41.5419

Sweden (Krona)

10

35.4905

Singapore (Dollar)

1

17.3358

Ukraine (Hryvna)

10

55.0903

United States ($)

1

28.1550

EURO

1

33.4397

Turkish (Lira)

1

21.2973

SDR*

1

40.4190

* SDR - Special Drawing Rights.

It is the unit of account for the International Monetary Fund

Results of forex trading on MICEX on 26.02.2006

Instrument

Min.

Max.

Closing

Average

"Volume,"

Quan-

price

price

price

price

$

tity

USDTOM--UTS

28.1101

28.2

28.1125

28.1446

797900000

545

EURTOM--UTS

33.43

33.5199

33.435

33.4797

4912000

67

Moscow interbank bid, offered & actual rate

26.02.2006

Rate/term

overnight

1 week

1 month

3 months

6 months

1 year

MIBID

2.35

2.78

3.43

4.37

5.09

6.15

-

(0.34)

(0.17)

(0.26)

(0.05)

(0.05)

(0.14)

MIBOR

3.73

4.34

4.89

6.38

7.32

8.19

-

(0.32)

(0.12)

(0.03)

(0.02)

(0.05)

(0.08)

MIACR

3.76

3.03

3.60

-

-

6.00

-

(0.78)

(-0.77)

(-0.27)

-

-

-

MIBID - Moscow Interbank Bid

MIBOR - Moscow Interbank Offered Rate

MIACR - Moscow Interbank Actual Credit Rate for previous day

SECURITIES Gazprom, MTS to be included in RTS index March 15

MOSCOW. Feb 26 (Interfax) - Shares in Gazprom (RTS: GAZP) and Mobile TeleSystems (MTS) (RTS: MTSS) will be included in the RTS index from March 15, the RTS said in a press release.

The exchange reached the decision on February 20.

It set free-float ratios of 0.4 for Gazprom and 0.45 for MTS. The free float ratios are being introduced for Gazprom, Lukoil (RTS: LKOH) and Surgutneftegas in keeping with the exchange's regulation that no single issuer can take up more than 15% of the index.

Common shares in Ufimskoye MPO (RTS: UFMO) are being removed from the index to make room for the new shares.

Common shares in Moscow City Telephone Network (RTS: MGTS), OGK3 generating company (RTS: OGKC) and OGK5 generating company (RTS: OGKE) are on the waiting list for inclusion in the index. Common shares in Avtovaz (RTS: AVAZ) are waiting to be removed from the index.

STOCKS. CORPORATE BONDS Stock market hits new high on heavy Russian demand

MOSCOW. Feb 26 (Interfax) - The Russian stock market hit a record high on Sunday in the absence of foreign investors.

Benchmark stocks grew 1%-8% on the Russian Trading System (RTS) and the Moscow Interbank Currency Exchange (MICEX). The RTS index grew 3.47% to 1516.46, past the psychologically important level of 1,500, and the MICEX grew 3.74% to 1399.08.

First one stock took the lead, then another took over on the market on Sunday, Renaissance Capital's Alexei Bachurin said. "There's a lot of money on the market. The rally is continuing and there is still more money than shares," he said.

Specialists said there was demand for almost all stocks that have some sort of growth idea. "If a stock is doing badly, if there is something bad about it or if there are no ideas for it, it isn't growing. Stocks are being bought where there is at least some sort of idea," Bachurin said.

Many experts said the main driver of the market was a sharp jump in oil prices on the world market after an attempted terrorist act on an oil refinery in Saudi Arabia, which pushed oil prices up by more than $2 per barrel. "The growth in world oil prices amid the explosions in Saudi Arabia made blue chip oil companies attractive again even they looked overbought last week," said Yevgeny Shago, senior analyst at Region.

Tatneft (RTS: TATN) common shares grew 5.83% on the MICEX, Surgutneftegas (RTS: SNGS) rose 5.35%, Lukoil (RTS: LKOH) was up 3.13% and Sibneft (RTS: SIBN) was up 2.73%.

Unified Energy System (UES) (RTS: EESR) soared 7.38% on the MICEX and 7.86% on the RTS after the board of directors approved an appendix at a Sunday meeting to its 5+5 strategy for 2003-2008, which envisions additional issues by the thermal Wholesale Generating Companies (OGC) to acquire investment.

Telecoms also performed well on Sunday. Rostelecom (RTS: RTKM) common shares, which had been lagging behind the market, grew 4.77%, Uralsvyazinform (RTS: URSI) soared 7.17% and Northwest Telecom (RTS: SPTL) rose 2.84%.

Telecoms grew after Prime Minister Mikhail Fradkov signed a resolution on approving the regulations for using the unified fixed line network in Russia in order to preserve the interests and functioning of special purpose networks. This is a necessary requirement for the signing of the decree on Svyazinvest privatization. "The closer it gets to Svyazinvest's privatization, the more demand there is for the holding's subsidiaries. Investors think the appearance of a private owner will stimulate growth in the capitalization of regional telecoms by improving transparency and increasing the effectiveness of the business," Olma's Vladimir Detinich said.

Norilsk Nickel (RTS: GMKN) posted gains of 1.17% and Sberbank (RTS: SBER) grew 2.53%. Gazprom (RTS: GAZP) grew 0.93% on the St. Petersburg Stock Exchange and 0.89% on the MICEX.

RTS classic market trading was $65.9 million, and trading volume on the MICEX stock section was 36.7 billion rubles.

The growth could continue for some time, Bachurin said. "It could continue for a long time and fundamental factors don't mean anything here," he said. Falling oil prices could be the level for a change in the market if the situation surrounding Iran is regulated. "But the correction will start without any reasons as usual, and then people will start searching for reasons," Bachurin said.

Main indexes of the Russia stock market for February 26

Index

Value

% Change

Net

Change

Dollar

1516.46

3.47

50.84

Ruble

9610.51

3.44

319.53

Ruble

1399.08

3.74

50.41

Ruble

2299.56

3.95

87.42

Dollar

1083.80

5.61

57.62

Dollar

413.68

2.78

11.19

Ruble

1956.16

2.75

52.36

Dollar

484.56

2.49

11.77

Ruble

2291.32

2.46

55.05

Dollar

183.22

6.25

10.78

Ruble

866.39

6.22

50.74

Dollar

98.39

3.11

2.97

Ruble

465.26

3.09

13.93

Dollar

250.79

0.69

1.71

Ruble

1185.90

0.66

7.74

Results for trading of shares in Russian Trading System

26.02.2006

Company

Average

"Volume,"

"Volume,"

Min

Max

"price,$"

$

shares

"Price,$"

"Price,$"

Arkhenergo

0.0448

18682

417030

0.042

0.049

AVTOVAZ Pref

46.9

46900

1000

46.9

46.9

ANK Bashneft

17.1

34200

2000

17.1

17.1

ANK Bashneft Pref

13.3

133000

10000

13.3

13.3

Chelyabinsk Pipe Works

1.64

9840

6000

1.64

1.64

GAZ Auto Plant

85.8333

128750

1500

85.5

86.0

Gazprom

8.0975

5208292

643200

8.035

8.15

Kashirskaya GRES-4

0.0147

51450

3500000

0.0147

0.0147

Magnitogorsk Metall. Comb.

0.715

107250

150000

0.71

0.725

Slavneft-Megionneftegaz Pref

37.0

37000

1000

37.0

37.0

Moscow City Telephon Pref

17.5

21875

1250

17.5

17.5

Mobile TeleSystems Open Joint Stock Company

7.315

36575

5000

7.315

7.315

Nizhnekamskneftekhim

1.16

23200

20000

1.16

1.16

Nizhnekamskshina

3.4

68000

20000

3.4

3.4

OGK-3

0.0691

138200

2000000

0.0691

0.0691

Sakhalinmorneftegaz

19.0

19000

1000

19.0

19.0

Sakhalinmorneftegaz Pref

13.37

33425

2500

13.37

13.37

Stavropol Power Station

375.0

39375

105

375.0

375.0

Transneft Pref

2599.7619

2729750

1050

2595.0

2600.0

Uralkaliy

1.5345

23631

15400

1.515

1.545

Volzhsk Hydro.St.

0.293

58600

200000

0.293

0.293

YUKOS

1.91

95500

50000

1.91

1.91

Zagorskaya PSPP

0.0175

52500

3000000

0.0175

0.0175

Aeroflot

1.946

97300

50000

1.94

1.95

Severstal

12.6977

811393

63901

12.6

12.75

United Energy System

0.7214

17385575

24100000

0.699

0.741

United Energy System Pref

0.61

152500

250000

0.61

0.61

Sibirtelecom

0.0924

551885

5970805

0.09

0.0935

Sibirtelekom Pref

0.0819

81900

1000000

0.0818

0.082

Centertelecom

0.7041

373115

529952

0.7

0.7075

Centertelecom Pref

0.5925

34869

58850

0.5925

0.5925

Dalsvyaz

3.58

89500

25000

3.55

3.6

GMK Norilskiy nikel

95.1622

3521000

37000

94.0

95.5

ILETSKSOL

0.172

24080

140000

0.172

0.172

Irkutskenergo

0.595

119000

200000

0.595

0.595

Irkut

1.045

104500

100000

1.04

1.05

Kalina

47.5

475000

10000

47.5

47.5

KamAZ

2.0

60000

30000

2.0

2.0

Lukoil Holding

86.1121

16249355

188700

84.4

86.7

Mosenergo

0.195

68250

350000

0.195

0.195

Mechel Steel Group

9.95

99500

10000

9.95

9.95

VolgaTelecom

4.5147

185781

41150

4.5

4.54

VolgaTelecom Pref

3.84

84480

22000

3.84

3.84

NOVATEK

3150.0

315000

100

3150.0

3150.0

RBK informational systems

8.6

86000

10000

8.6

8.6

RITEK

9.8

147000

15000

9.8

9.8

Rostelecom

3.2446

2595650

800000

3.12

3.35

Rostelecom Pref

2.2698

476650

210000

2.265

2.27

Sberbank RF

1619.8214

3628400

2240

1590.0

1640.0

SIBNEFT

4.8

240000

50000

4.8

4.8

Surgutneftegaz

1.5916

1750750

1100000

1.55

1.615

Surgutneftegaz Pref

1.2415

3351995

2700000

1.2

1.25

Northwest telecom Pref

1.03

6538

6348

1.03

1.03

Tatneft

5.3

53000

10000

5.3

5.3

Tatneft Pref

3.4703

1110500

320000

3.35

3.51

Uralsvyazinform

0.042

1848400

44000000

0.04

0.043

Uralsvayzinform Pref

0.0363

468050

12900000

0.035

0.0366

Verkhnaya Salda Metallurg.

224.0

44800

200

224.0

224.0

Zeisky Hydro. Station

0.2554

108640

425400

0.255

0.2575

Russian corporate bond index for 02.22.200 6

Index

Value

Changes against 02.21.2006, %

Changes for the week,%

Changes for the month, %

Changes for the year, %

RUXCbonds

189.8142

-0.01

-0.01

0.39

9.98

RUXCbonds-P

113.4806

-0.04

-0.18

-0.37

0.02

GOVERNMENT SECURITIES Isolated deals made on OFZ market on Sunday

MOSCOW. Feb 26 (Interfax) - Negligible amounts of transactions were carried out on the federal loan bonds (OFZ) market on Sunday as negative trends with quotations prevailed and traders were not very spirited.

MDM-Bank trader Yevgeny Lysenko said the low level of trade activity was caused by the fact that no trading occurred on Sunday in the U.S. or Europe since the Russian market uses these financial markets as its reference points.

"Virtually nothing occurred on the market as almost half of the players weren't on the market and the spreads were so wide that it wasn't clear where the market prices were. That is, the market didn't even start operating in full since everyone decided to wait for the European and U.S. financial markets to open so as not to put the cart in front of the horse," he said.

The negative trends on the market are attributable to the high cost of ruble loans, he said. "The end of the month and tax payments are approaching, thus the overnight rates are high right now, which negatively reflects on the dynamics of the market," he said.

The rates of ruble loans at large banks on February 26 remained at an annual 4%-4.5% almost all day, while those of medium-sized banks were an annual 4.7%-5.75%. Rates are likely to remain high on Monday due to tax payments and the end of the month, analysts said.

Of the most liquid ruble OFZ issues, quotations on three issues dropped, one grew negligibly and only the OFZ 25057 significantly increased.

Quotations on the OFZ 46003 (maturing in 2010) fell 0.12 percentage points, the OFZ 46017 (maturing in 2016) dropped 0.14 percentage points and the OFZ 46014 (maturing in 2018) fell 0.53 percentage points.

The OFZ 25058 (maturing in 2008) rose 0.05 percentage points and the OFZ 25057 (maturing in 2010) grew 0.32 percentage points.

Total trading on the OFZ secondary market on February 26 amounted to 878.883 million rubles. The average weighted yield on the OFZ-AD and OFZ-PD markets grew 0.01 percentage points to an annual 6.56%.

One deal worth 9.865 million rubles was made with third-series Bank of Russia (OBR-3) issues on Sunday. As a result, the average weighted yield of the OBR-3 rose to an annual 4.6%.

Results of Interregional Trading for GKO & OFZ

26.02.2006

Mat.

Issue

Days

"Trade vol,"

"Close, %"

Chg.

YTM

Quantity

to mat

Mln.Rbs

02.11.12

26198

2441

27.687

96.110

-0.03

6.73

3

18.07.07

27019

507

0.000

0.000

-

5.38

0

08.08.07

27020

528

0.000

0.000

-

5.35

0

19.04.06

27024

52

0.000

0.000

-

2.59

0

13.06.07

27025

472

0.000

0.000

-

5.79

0

11.03.09

27026

1109

6.765

102.500

-

6.06

1

15.11.06

45001

262

0.000

0.000

-

4.80

0

02.08.06

45002

157

0.000

0.000

-

4.98

0

10.09.08

46001

927

0.000

0.000

-

6.04

0

08.08.12

46002

2355

72.254

111.160

0.00

6.48

1

14.07.10

46003

1599

0.025

112.670

-0.08

6.37

3

17.05.28

46010

8116

0.000

0.000

-

7.50

0

20.08.25

46011

7115

0.000

0.000

-

6.95

0

05.09.29

46012

8592

0.000

0.000

-

7.37

0

29.08.18

46014

4567

3.281

109.350

0.06

6.78

1

15.03.06

04002

17

0.000

0.000

-

3.50

0

15.06.06

04003

109

9.865

98.645

0.05

4.60

1

20.01.10

25057

1424

455.973

104.120

0.67

6.45

6

30.04.08

25058

794

10.339

100.620

0.02

6.13

4

19.01.11

25059

1788

0.000

0.000

-

6.41

0

29.04.09

25060

1158

0.000

0.000

-

6.30

0

09.01.19

46005

4700

0.000

0.000

-

6.87

0

03.08.16

46017

3811

301.696

106.600

-0.30

6.72

6

24.11.21

46018

5750

0.000

0.000

-

6.74

0

20.03.19

46019

4770

0.000

0.000

-

6.82

0

06.02.36

46020

-25588

0.000

0.000

-

7.00

0

31.10.18

48001

4630

0.000

0.000

-

7.04

0

No Eurobond commentary, tables on Sunday

MOSCOW. Feb 26 (Interfax) - There will be no Eurobond commentary or quotation tables published on Sunday because of low trading on the Russian Eurobond market due to the weekend in the U.S. The next commentary will be published on February 27.

(Description of Source: Moscow Interfax in English -- non-government information agency known for its aggressive reporting, extensive economic coverage, and good coverage of Russia's regions)

INDICATORS

CHIEF RUSSIAN FINANCIAL AND MACROECONOMIC INDICATORS

BOT

02.27.2006 02.23.2006

Official Exchange Rate of 28.1550 28.1827

Ruble to Dollar (ruble/$1)

Official Exchange Rate of 33.4397 33.5741

Ruble to Euro (ruble/EUR1)

02.26.2006 02.22.2006

RTS Index ($), points 1516.46 1465.62

02.23.2006 02.22.2006

Russia stock market 635.532 633.647

capitalization, $bln

02.17.2006 02.10.2006

CBR Forex and Gold Reserves 195.4 194.2

($bln)

January 2005 December

2005

Consumer Price Index (%) +2.4 + 0.8

DOLLAR RTS INDEX

(+3.47%

EOT

HEADLINE NEWS

DIGEST OF HEADLINE NEWS

*** RUSSIA AND IRAN HAVE REACHED AN AGREEMENT IN PRINCIPLE ON SETTING UP A URANIUM ENRICHMENT JOINT VENTURE, IRANIAN VICE PRESIDENT GOLAM REZA AGAZADE SAID AT A PRESS CONFERENCE IN BUSHEHR.

An agreement in principle on setting up a joint venture was reached, he said, adding that negotiations on the issue will resume soon.

We had detailed negotiations on Russian proposals, the Iranian vice president said, adding that these proposals are an element of a packet of proposals and a number of measures on settling the Iranian nuclear problem. Moreover, the Iranian vice president said that he is satisfied with the negotiations.

*** RUSSIAN-IRANIAN NUCLEAR NEGOTIATIONS WILL RESUME SOON IN MOSCOW, HEAD OF THE RUSSIAN FEDERAL ATOMIC ENERGY AGENCY (ROSATOM) SERGEI KIRIYENKO SAID AT A PRESS CONFERENCE ON SUNDAY IN BUSHEHR.

*** AS OF SUNDAY, 66 BODIES HAD BEEN RETRIEVED FROM UNDER THE RUBBLE OF MOSCOW'S BASMANNY MARKET, WHICH COLLAPSED ON THE MORNING OF FEBRUARY 23, MOSCOW MAYOR YURY LUZHKOV SAID.

The victims include 45 Azerbaijanis, eight Georgians, six Tajiks, three Uzbeks, two Russians of Georgian nationality and one Dagestani, he said.

*** THE LOWER HOUSE OF THE RUSSIAN PARLIAMENT PASSED A BILL ON SUNDAY MEANT TO FIGHT TERRORISM IN THE THIRD AND FINAL READING.

*** THE RTS INDEX HIT A NEW RECORD ON SUNDAY, REACHING 1500.11 BY 11.55 A.M. MOSCOW TIME.

*** THE RUSSIAN GOVERNMENT HAS APPROVED REGULATIONS FOR PROVIDING COMMUNICATIONS SERVICES WHICH OPENS WAY TO PRIVATIZING SVYAZINVEST, THE NATIONAL TELECOM HOLDING.

*** RUSSIA WILL IMPOSE A RECORD HIGH OIL DUTY OF MORE THAN $186 PER TONNE ON APRIL 1, ALEXANDER SAKOVICH, DEPUTY HEAD OF CUSTOMS PAYMENTS AT THE RUSSIAN FINANCE MINISTRY, TOLD INTERFAX.

"There'll be a new record. The only way to avoid this is for the price of Russian crude to fall below $28 per barrel," Sakovich said.

*** THE NARROW MONETARY BASE IN RUSSIA STOOD AT 2.179 TRILLION RUBLES ON FEBRUARY 20, UP FROM 2.162 TRILLION RUBLES ON FEBRUARY 13, THE CENTRAL BANK REPORTED ON FRIDAY.

*** RUSSIAN PRIME MINISTER MIKHAIL FRADKOV HAS SIGNED A DECREE MEANT TO FULFILL RUSSIAN OBLIGATIONS STEMMING FROM THE KYOTO PROTOCOL OF THE UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE.

The government decided to create a Russian register of hydrocarbon units in order to track the storage, delivery, acquisition, annulment and withdrawal from circulation of units of emission reduction, certified reduction of emissions, as well as the set number and adsorption, the governmental press service said.

*** SHARES IN GAZPROM (RTS: GAZP) AND MOBILE TELESYSTEMS (MTS) (RTS: MTSS) WILL BE INCLUDED IN THE RTS INDEX FROM MARCH 15, THE RTS SAID IN A PRESS RELEASE.

The exchange reached the decision on February 20.

*** THE BOARD OF DIRECTORS OF GAZPROM (RTS: GAZP) AT A SUNDAY MEETING APPROVED THE ACQUISITION OF 51% OF SHARES IN THE NORTH EUROPEAN GAS PIPELINE COMPANY SA (NEGPC) FROM ZGG GMBH, A GERMAN SUBSIDIARY OF OOO GAZEXPORT, GAZPROM SAID IN A PRESS RELEASE.

NEGPC was founded in Switzerland on November 30, 2005 in accordance with an agreement to build the North European Gas Pipeline signed by Gazprom, E.ON AG and BASF AG. The company was set up to build the undersea section of the pipeline.

COVER STORY

AGREEMENT ON RUSSIAN-IRANIAN URANIUM JOINT VENTURE REACHED IN PRINCIPLE - IRANIAN VICE PRESIDENT

BUSHEHR (Iran). Feb 26 (Interfax) - Russia and Iran have reached an agreement in principle on setting up a uranium enrichment joint venture, Iranian Vice President Golam Reza Agazade said at a press conference in Bushehr.

An agreement in principle on setting up a joint venture was reached, he said, adding that negotiations on the issue will resume soon.

We had detailed negotiations on Russian proposals, the Iranian vice president said, adding that these proposals are an element of a packet of proposals and a number of measures (on settling the Iranian nuclear problem). Moreover, the Iranian vice president said that he is satisfied with the negotiations.

"Implementation of the proposal (on creating a joint venture) will give time and will increase confidence," head of the Russian Federal Atomic Energy Agency (Rosatom) Sergei Kiriyenko said. Russia and Iran "have almost no organizational, technical or financial problems (in setting up a joint venture): however, the Russian proposal is just an element of a complex approach," Kiriyenko said. "More work is needed in the area," he said.

There is a solution that could reaffirm each country's right to acquire nuclear energy and would guarantee the non- proliferation regime. "Thus there is a possibility to resolve problems linked to the Iranian nuclear program within the framework of the International Atomic Energy Agency (IAEA)," the Rosatom head said.

IRAN JV TALKS POSSIBLE ONLY IN CONTEXT OF ENTIRE NUCLEAR PROBLEM - SOURCE

Russia will discuss the joint venture project with Iran only within the context of the entire Iranian nuclear problem, a source in the Russian delegation told the press.

This context includes Tehran's return to the uranium enrichment moratorium, he said.

Regarding the Iranian president's statement claiming that a basic agreement has been reached to form a uranium enrichment joint venture, the source said, "this proposal had been on the table until this moment. Now it is in Iran's hands."

RUSSIAN, IRANIAN TALKS TO RESUME SOON - KIRIYENKO

Russian-Iranian nuclear negotiations will soon resume in Moscow, head of the Russian Federal Atomic Energy Agency (Rosatom) Sergei Kiriyenko said at a press conference on Sunday in Bushehr.

"We have agreed that our negotiation will soon resume in Moscow," Kiriyenko said.

At the same time "the required actions by the parties was defined in order to finish construction of the nuclear power plant (in Bushehr) in a relatively short time," he said.

RUSSIAN FIRMS TO GET PRIORITY IN IRANIAN NUCLEAR PLANT PROJECTS

Russian companies will be given priority in building new nuclear power plants in Iran, Economy and Finance Minister Davud Danesh-Jafari announced following negotiations with Russian Federal Atomic Energy Agency chief Sergei Kiriyenko in Tehran on Saturday.

Iran has had good experience with Russian companies that are currently building the Bushehr nuclear power plant, he said.

"Except for a number of minor problems that have delayed commissioning of this facility, we assess all other issues positively" he said.

POLITICS. ECONOMY

ECONOMICS MINISTRY TO SUBMIT PROPOSAL TO ABOLISH EQUIPMENT DUTIES BY MAR 1

MOSCOW. Feb 26 (Interfax) - Russia's Economic Development and Trade Ministry will submit a proposal to the government by March 1 that would abolish import duties on more than 700 kinds of technical equipment, Galina Balandina, head of the ministry's department to regulate foreign trade and customs, told reporters on Sunday.

The Interagency Commission on Protective Measures in Foreign Trade approved abolishing the import duty on technical equipment last year. Economic Development and Trade Minister German Gref said agreement on this issue is dragging out because of the negotiation process for Russia's accession to the World Trade Organization.

"We will submit it by March 1. Most likely today or tomorrow," Balandina said.

The proposal to abolish import duties will affect more than 700 kinds of products, she said.

MINFIN PROMISES RECORD OIL EXPORT DUTY FROM APRIL 1

MOSCOW. Feb 26 (Interfax) - Russia will impose a record high oil duty of more than $186 per tonne on April 1, Alexander Sakovich, deputy head of customs payments at the Russian Finance Ministry, told Interfax.

"There'll be a new record. The only way to avoid this is for the price of Russian crude to fall below $28 a barrel," Sakovich said.

The previous record high duty was $179.6 a tonne, effective from December 1, 2005 until January 31, 2006. The duty was lowered to $160.8 a tonne from February 1.

Sakovich said Russian Urals crude had averaged at $58.23 a barrel in the observation period between January a and February 26. At that rate, the export duty would be $186.87 a tonne.

Sakovich said that the duty would be around $185 a tonne if oil fell to $50 a barrel and $187 a tonne if oil rose to $60 a barrel, but that neither was likely. "The duty is most likely to be $186.3-$186.5 a tonne," he said.

Sakovich also said that export duty on light oil products might be around $138 a tonne and duty on dark products $74 effective April 1.

The government sets the oil export duty every two months following a two-month observation period. It will publish the final duty by March 20.

COMPANIES & MARKETS

ENERGY & RESOURCES

GAZPROM BOARD APPROVES BUYING 51% OF NORTH EUROPEAN GAS PIPELINE CO. FROM AFFILIATED CO.

MOSCOW. Feb 26 (Interfax) - The board of directors of Gazprom approved at a Sunday meeting acquiring 51% of shares in the North European Gas Pipeline Company SA (NEGPC) from ZGG GmbH, a German subsidiary of OOO Gazexport, Gazprom said in a press release.

NEGPC was founded in Switzerland on November 30, 2005 in accordance with an agreement to build the North European Gas Pipeline signed by Gazprom, E.ON AG and BASF AG. The company was set up to build the undersea section of the pipeline.

Gazprom, E.ON Ruhrgas AG and Wintershall AG signed a preliminary shareholders' agreement in November 2005 that stipulates that ZGG will be a shareholder in NEGPC. The preliminary agreement stipulates that shares owned by ZGG GmbH will be handed over to Gazprom after the gas giant's board approves a corresponding decision.

GAZPROM MAY BUY GAZPROMBANK OUT OF ROSUKRENERGO FOR EUR2.3 MLN

MOSCOW. Feb 26 (Interfax) - Gazprom is offering Gazprombank 2.3 million euros for its stake in RosUkrEnergo, a source familiar with the agenda for Sunday's meeting of the Gazprom board of directors told Interfax.

"Gazprom is proposing to buy the stake in RosUkrEnergo for EUR2.3 million in cash," the source said.

BSPC APPOINTS NEW BOARD CO-CHAIRMAN

MOSCOW. Feb 26 (Interfax) - Gazprom Deputy Chairman and Gazexport General Director Alexander Medvedev has replaced the former Gazprom deputy board chief Yuri Komarov as co-chairman of the Blue Stream Pipeline Company B.V. (BSPC) supervisory board, a Gazprom report states.

Gazprom plans to boost Blue Stream pipeline capacity so it can increase gas exports to Europe via Turkey, bypassing Ukraine.

Medvedev, it was reported earlier, also replaced Komarov as Gaztransit board chairman. Gaztransit is a joint Ukrainian- Russian-Turkish company that is working to increase the capacity of the Ananiev-Tiraspol-Izmail pipeline.

Ukraine and Poland carried out board reshuffles in the fourth quarter of 2005 at Gaztransit, International Consortium for the Management and Development of the Ukrainian Gas Transport System, a Russian-Ukrainian company, and EuRoPol Gaz, a Russian- Polish company.

The report states that Russian-Italian company Volta S.p.A. (Milan) replaced Julio del Ninno with Marco Peruzzi as board chairman in the fourth quarter.

Gazprom also said its Tula subsidiary Gazstroidetal had replaced Alexander Fedorov with Eduard Dubovitskiy as board chairman.

ROSNEFT NETS APPROX $5.5 BLN IN 2005 - BOGDANCHIKOV

ASTANA. Feb 26 (Interfax) - Rosneft had estimated net profit of just over $5.5 billion in 2005, Sergei Bogdanchikov, the Russian oil company's CEO, said at a press conference in Astana, Kazakhstan.

"By preliminary counts the company's net profit was just over $5.5 billion last year, and we paid $10 billion in taxes," Bogdanchikov said.

Rosneft said in a press release distributed at the press conference that taxes paid into the federal budget soared 630% last year to 167.5 billion rubles, and taxes paid to local budgets rose 240% to 49.7 billion rubles.

Overall taxes, including customs duties, rose 560% to 396.6 billion rubles.

ROSNEFT AFTER ASSETS IN RUSSIA AND KAZAKHSTAN - HEAD

ASTANA. Feb 26 (Interfax-Kazakhstan) - Russian oil company Rosneft needs to acquire more assets, both in Russia and in Kazakhstan, Rosneft head Sergei Bogdanchikov said on Thursday.

"Despite the fact that to date our company ranks first in the world for oil reserves (according to the generally accepted international methods of assessment), a pace of development of no less than 7% a year is planned for our company. This calls for constant increases in our raw material base," Bogdanchikov told a news conference in Astana.

He said Rosneft sought to become "one of the leaders of the Russian oil and gas industry and join the leading oil companies of the world." "This is the goal we seek to achieve within the next 10 years," Bogdanchikov said.

ROSNEFT CHIEF HAPPY WITH KURMANGAZY PROJECT

ASTANA. Feb 26 (Interfax) - Rosneft chief Sergei Bogdanchikov is happy with progress being made with the joint project to develop the Kurmangazy field in Kazakhstan's sector of the Caspian Sea.

"Russia is pleasantly surprised by the urgency and the level of organization that we have achieved with our partner KazMunaiGaz in forming all governing bodies and preparing to drill exploration wells, the first of which will start to be drilled in April or May," Bogdanchikov told a press conference in Astana.

Some $66 million will be invested in the Kurmangazy project this year, he said.

The field will be developed in strict accordance with international standards and Kazakh law, Bogdanchikov said.

This also applies to training local specialists and placing orders with local enterprises, he said.

REPSOL PLANS TO HELP BUILD LNG PLANT IN PRIMORYE

MADRID/MOSCOW. Feb 26 (Interfax) - Spanish oil and gas company Repsol YPF, one of the biggest players on the liquefied natural gas (LNG) market, is planning to take part in a Gazprom (RTS: GAZP) project to build a liquefied natural gas (LNG) plant in Primorye, Repsol said in a report.

"In February, a memorandum of agreement was signed with the Russian state-owned company, Gazprom, to develop joint ventures in liquefied natural gas. Under this MOU, Repsol YPF will participate in the "Baltic LNG" project for the construction of an LNG plant in St. Petersburg, producing gas for the American and European markets. Apart from its experience in the LNG business, Repsol YPF contributes in this venture with its regasification capacity, excellent position on the Atlantic markets, and in particular its major role in the Spanish market," the report says.

Cooperation with Repsol in the LNG sector would be very beneficial for Gazprom from the point of view of logistical supplies of LNG, a source in a Russian company told Interfax. Repsol currently supplies LNG to Spain from Caribbean countries. If Gazprom could organize its own LNG deliveries to Spain, then favorable swap deals could be organized for Repsol gas on the North American markets from the Caribbean, the source said.

Interfax was not able to get any comments from Repsol because of the weekend.

RUSSIA ASKS LUXEMBOURG FOR ASSISTANCE IN YUKOS CASE

MOSCOW. Feb 26 (Interfax) - The Russian authorities have requested assistance from law enforcement bodies in Luxembourg in the Yukos (RTS: YUKO) investigation, a Yukos press release says.

"The request was filed at Luxembourg judicial institutions in accordance with the European convention on mutual support in the criminal sphere," the press release says.

"Under the law, a Yukos affiliate in Luxembourg, Yukos Capital S.a.r.l. is fully cooperating with the investigation. Nevertheless, Yukos objects to Russia's operating methods, and Yukos Capital S.a.r.l. has filed a plea in Luxembourg court to stop the investigation," the statement says.

Yukos Capital S.a.r.l. is a major creditor of Yukos - controlling over 12% of Yukos's debts in 2004 - as well as a Yuganskneftegaz creditor.

YUKOS TO HOLD AGM ON JUNE 21

MOSCOW. Feb 26 (Interfax) - Directors at Yukos (RTS: YUKO) have scheduled this year's AGM for June 21, a company representative told Interfax.

The board at a February 22 meeting discussed the oil company's 2005 results and plans for 2006, the source said.

The directors met in person in Moscow, the source said.

PETROBRAS, ROSUKREENRGO TO TAKE PART IN TENDER FOR PSA ON PRIKERCHENSKY SHELF

KYIV. Feb 26 (Interfax) - Brazil's Petroleo Brasileiro SA (Petrobras) and Switzerland's RosUkrEnergo A.G. will participate in a tender for a production sharing agreement (PSA) on a deposit at the Prikerchensky part of the Black Sea continental shelf.

"RosUkrEnergo was interested in the tender. Petrobras applied to participate in the tender (on February 23)," Chornomornaftogaz president Ihor Franchuk said on Friday.

About 15 foreign oil companies, including Exxon, Shell and Chevron, have submitted applications for the tender, he said. Ukrainian enterprises have not applied yet, he added.

Franchuk said that Chornomornaftogaz will participate in the tender along with the U.S. company Hunt Overseas Oil Company. "Our chances of winning the tender are very high," he said. The joint participation of a foreign company with vast experience of working at large depths and a Ukrainian enterprise would be expedient considering legislative requirements and the conditions of the tender, he said.

Chornomornaftogaz is currently developing a program aimed at bringing in the maximum number of Ukrainian enterprises, organizations and specialists to carry out the project of developing the Prikerchensky shelf, he said. "Today, any foreign company would be more interested in working for itself instead of developing the area for Ukraine. If a Western company ends up working here without the participation of a Ukrainian one, the personnel will naturally be comprised of foreign specialists," he said.

Franchuk also said that the project should be carried out in the shortest timeframe possible.

A Ukrainian interagency commission responsible for arranging the conclusion and implementation of production sharing agreements announced in December 2005 that a tender would be held to conclude a PSA on the hydrocarbons to be extracted at the Prikerchensky field on the Black Sea shelf.

Bids for the tender will be accepted until March 24, 2006 inclusive. The fee for participation in the tender is $10,000.

The terms and conditions of a tender on concluding a PSA on the Prikerchensky field were endorsed by Ukrainian Cabinet directive No. 1263 of December 22, 2005. The field is 12,960 square kilometers in size and the depth of the sea in the area ranges from 70 to 2,000 meters.

LITHUANIA MAY SELL MN TO AUSTRIAN CO - NEWSPAPER

VOLNIUS. Feb 26 (Interfax/BNS) - The Lithuanian government may sell shares in the Mazeikiu Nafta (MN) petroleum concern to Austria's Baltic Holding (BH), the Verslo zinios newspaper said, quoting its own sources.

The paper said that was why the government was taking so long to negotiate the sale with Yukos, which owns 53.7% of MN, and so reluctant to meet with companies like KazMunaiGaz and PKN Orlen, which have offered good prices. This also explains talk of nationalizing the MN shares.

The paper said the Austrian company might join forces with a Russian oil company to operate in Lithuania if it buys the MN shares.

Baltic Holding has expressed an interest in the MN shares, and has offered to invest around 4 billion litai (3.4528 litai/EUR1) in Lithuania's petrochemicals industry, but it did not bid when Yukos announced a tender.

The newspapers said that BH's core shareholder Petrochemical Holding has already invested several million litai in a plant to make raw material for the plastics industry near Klaipeda, and that the MN oil refinery could supply the petroleum products to the plant if the right equipment is installed.

RUSSIA, KAZAKHSTAN TO SIGN DEALS ON CASPIAN OIL FIELDS

ASTANA. Feb 26 (Interfax-Kazakhstan) - Russia and Kazakhstan will sign production sharing agreements developing the Khvalynskoye and Tsentralnoye offshore oil fields in the Russian sector of the Caspian Sea after the two countries ratify amendments to a protocol on Caspian floor division, a Kazakh minister said.

"(The amendments, agreed by the Russian and Kazakh governments in January 2006,) need ratification by the State Duma and the parliament of our country. After that we will have the opportunity to work under a production sharing agreement without additional permission prescribed by Russian legislation," Energy and Mineral Resources Minister Baktykozha Izmukhambetov told Interfax.

A 1998 agreement on the division of the northern Caspian floor and a 2002 protocol to it give Kazakhstan sovereignty over the Kurmangazy oil field and give Russia sovereignty over Tsentralnoye and Khvalynskoye. The two countries decided to develop these fields jointly.

There already exists a 55-year production sharing agreement on Kurmangazy.

"Naturally, as soon as we've gone through ratification, negotiations will start on production sharing agreements on (Khvalynskoye and Tsentralnoye)," Izmukhambetov said.

KAZAKHSTAN PLANS TO BOOST OIL OUTPUT 30% BY 2010 - MINISTER

ASTANA. Feb 26 (Interfax-Kazakhstan) - Kazakhstan hopes its oil production, buoyed by increases in oil output at the western Tengiz oil deposit, will grow 30% by 2010, as compared with 2005, the country's Energy and Mineral Resources Minister Baktykozha Izmukhambetov told Interfax-Kazakhstan.

"I can say that oil production is projected to increase by no less than 30% by 2010, as compared with today's levels. That will become possible thanks to the completion of the Tengiz project, after which annual output at the Tengiz field is expected to reach 24 million tonnes," he said.

Over 61.457 million tonnes of crude oil and gas condensate were extracted in Kazakhstan last year.

The Kazakh authorities are also considering "expanding two major oil pipelines: Atyrau-Samara and the Caspian Pipeline Consortium's oil pipeline linking the Tengiz deposit and the Black Sea's port of Novorossiisk," Izmukhambetov said.

"Further increases in oil output will largely depend on the development of Kazakh fields off the Caspian Sea coast," the minister said.

The Tengiz deposit is developed by TengizChevrOil, which extracted 13.6 million tonnes of oil and 3.4 billion cubic meters of associated gas in 2005.

Kazakhstan plans to boost gas output to more than 40 bcm and double exports to 15 bcm by 2010, Izmukhambetov said.

"By 2010 we expect gas output to grow to 40 bcm or more. In this regard, we are looking at how to use the extra volume. By then, we expect to be exporting nearly 15 bcm cubic meters. The remaining volume will be reinjected and used for domestic consumption, including power generation needs," he said.

Izmukhambetov said that Kazakhstan is determined to seek a significant rise in export gas price. Currently, he said, the average price for 1 cubic meter of gas exported from Kazakhstan stands at $31 per 1,000 cubic meters.

He said talks on this issue with Russia were on-going.

Regarding tariffs to transit Central Asian gas across Kazakhstan, Izmukhambetov said that starting January 1, the tariff has been raised by more than 50% from $0.7 to $1.1 per 1,000 cubic meters for 100 km.

KAZAKHSTAN TO UP OIL PRODUCTION 1.6%, GAS 5.3% IN 2006

ASTANA. Feb 26 (Interfax) - Kazakhstan plans to raise oil production 1.6% and natural gas production 5.3% in 2006.

The Kazakh Energy and Mineral Resources said in a press release that the country was aiming to produce 62.5 million tonnes of oil and gas condensate and 27.6 bcm of gas in 2006.

Oil production grew 4.1% to 61.5 million tonnes and gas production was up 27.7% to 26.2 bcm in 2005 compared with 2004, the ministry said.

Alexei Pirogov, head of the ministry's Gas Industry Department, said at a meeting hosted by the ministry on February 23 that liquefied gas production grew 2.3% in 2005 to 1.25 million tonnes. Pirogov said domestic supplies grew 5% to 430,000 tonnes and that 818,000 tonnes were exported.

He also said that Kazakhstan transited 115 billion cubic meters (bcm) of natural gas across its territory in 2005 - 11% more than in 2004.

Kazakhstan plans to produce 87.3 million tonnes of coal and 73 billion kilowatt-hours of electricity in 2005, the ministry's press release said.

Kazakhstan exported 54.6 million tonnes of oil and gas condensate in 2005 - 3.2% more than in 2005.

The country produced 86.385 million tonnes of coal in 2005. Power generation rose 1.3% to 67.819 billion kWh.

KAZAKHSTAN DRAFTS AGREEMENT ON JOINING BTC PROJECT IN DAYS

ASTANA. Feb 26 (Interfax) - Kazakhstan will finish drafting the text of an agreement on joining the Baku-Tbilisi-Ceyhan (BTC) oil pipeline project within days, Kazakh Energy and Mineral Resources Minister Baktykozha Izmukhambetov said at a meeting hosted by the ministry on February 23.

"The document should be ready early next week. Azerbaijan has been waiting for us a long time and we are, by and large, ready to sign," he said.

KAZAKH MINISTRY EXPECTS TO RESUME CPC EXPANSION TALKS IN MARCH OR APRIL

ASTANA. Feb 26 (Interfax-Kazakhstan) - Kazakh Energy and Mineral Resources Minister Baktykozha Izmukhambetov said he expected that shareholders of the Caspian Pipeline Consortium (CPC) will conduct the next round of negotiations on CPC expansion in March of April this year.

"We plan to resume the talks in March or April," Izmukhambetov told Interfax-Kazakhstan.

The minister praised significant developments in the negotiation process and said that the parties needed "to resolve fix two or three key positions," including the oil pumping tariffs via Tengiz-Novorossiisk oil pipeline.

KAZAKHSTAN TO BEGIN FULL-SCALE OIL EXPORTS TO CHINA IN MAY - MINISTRY

ASTANA. Feb 26 (Interfax) - The Atasu-Alashankou pipeline is due to begin pumping large amounts of Kazakh oil to China in May, the Kazakh Energy and Mineral Resources Ministry said in a press release.

"The completion of the construction of the Atasu-Alashankou oil pipeline on December 16 was one of last year's major events. We plan to begin full-scale oil exports via the pipeline in May 2006," the release reads.

The Atasu-Alashankou oil pipeline, which is part of the Kazakhstan-China oil transportation project, started operation in mid-December 2005. Its initial annual capacity of 10 million tonnes is expected to rise to 20 million tonnes in the future.

CNPC TO WAIVE PREEMPTION RIGHT TO 50% IN KAZGERMUNAY JV

ASTANA. Feb 26 (Interfax-Kazakhstan) - China National Petroleum Corporation (CNPC) has undertaken not to exercise its preemption right to acquire 50% in the KazGerMunay joint venture to be sold by the venture's shareholders, Kazakh Energy and Mineral Resources Minister Baktykozha Izmukhambetov told Interfax- Kazakhstan.

"We have reached preliminary agreement with the Chinese party that it will waive its preemption right to the 50% shareholding in KazGerMunay joint venture," Izmukhambetov said.

Kazakhstan's national oil and gas company KazMunaiGaz is negotiating the purchase of 50% of the joint venture from Germany's RWE and Erdgas and the International Finance Corporation (IFC), which own 25%, 17.5% and 7.5% of KazGerMunay, respectively. PetroKazakhstan owns the other 50% of the joint venture, which is capable of producing 3.3 million tonnes of oil per year.

ELECTRICITY PRODUCTION & DISTRIBUTION

UES BOARD APPROVES APPENDIX TO OGC 5+5 STRATEGY

MOSCOW. Feb 26 (Interfax) - The Unified Energy System (UES) board of directors approved an appendix at a Sunday meeting to its 5+5 strategy for 2003-2008, which envisions additional issues by the thermal Wholesale Generating Companies (OGC) to acquire investment, UES said in a press release.

The appendix partially envisions floating additional shares in thermal OGCs to raise investment as well as use debt-financing instruments, including Eurobonds and credit-linked notes, the release says.

The appendix stipulates that the OGCs plan to split shares proportionately among UES shareholders, and the government, which owns 52.7% of UES, will try to reduce its stake in thermal OGC capital in the future.

UES TO RAISE UP TO $3 BLN WITH GENCO IPOS - CHUBAIS

KAZAN. Feb 26 (Interfax) - Unified Energy System (UES) plans in the next 18 months to two years to raise $2.5 billion-$3 billion in investment via initial public offerings (IPO) by at least two or three generating companies, Anatoly Chubais, the national power utility's CEO, said in Kazan.

Chubais told reporters following a meeting Mintimer Shaimyev, the president of Tatarstan, that UES would "finish selecting the generating companies which will carry the IPOs out in two or three weeks" and formally submit them to the government.

"We're talking about at least two or three new generating companies, which have emerged as the result of the (power sector) reforms and splitting up generating capacity from the grids," Chubais said.

"Analysts estimate that these companies could raise $2.5 billion-$3 billion on the market within a year to 18 months, not more," Chubais said.

There is "huge interest in the gencos on the market," he said. "This is clear if only because UES's share price has doubled on the Russian stock market in the last four months. I don't think there's been anything like that recently. It's a terrific result, one which is connected to the reform - investors believe it will be carried out entirely," Chubais said.

"And we want to float the gencos not just to sell them but also to obtain an investment resource from the market - that's our primary goal," he said.

"The time has come to stop discussing (power industry reforms) and carrying out preparations. It's now time to start raising substantial investment which the Russian power industry needs so badly," he said.

UES plans to increase investment in its development to $15 billion from $5 billion in the next three years, Chubais said speaking at the Kazan State Energy University on Saturday.

"In the next three years, investments in UES should at least triple. Today's figure is about $5 billion. We believe that we should triple the amount in three years, to $15 billion," he said.

The bulk of this should be private investment, which should finance chiefly the development of generating facilities, while the government should invest in the development of distribution companies, he said.

"It is obvious that the volume of private investment should be several times larger than government investment, and this should lead to a full replacement of all fixed assets," Chubais said.

UES PLANS TO TRIPLE INVESTMENT IN NEXT THREE YEARS - CHUBAIS

KAZAN. Feb 25 (Interfax) - Russia's electricity monopoly Unified Energy System (UES) plans to increase investment in its development to $15 billion from $5 billion in the next three years, UES Chairman Anatoly Chubais said speaking at the Kazan State Energy University on Saturday.

"In the next three years, investments in UES should at least triple. Today's figure is about $5 billion. We believe that we should triple the amount in three years, to $15 billion," he said.

The bulk of this should be private investment, which should finance chiefly the development of generating facilities, while the government should invest in the development of distribution companies, he said.

"It is obvious that the volume of private investment should be several times larger than government investment, and this should lead to a full replacement of all fixed assets," Chubais said.

METALS & MINERALS

NORILSK NICKEL MAY UNVEIL LONG-TERM STRATEGY IN MARCH

MOSCOW. Feb 26 (Interfax) - MMC Norilsk Nickel may unveil its long-term production strategy in March, press reports in the city of Norilsk said, quoting Mikhail Prokhorov, the mining and smelting giant's general director.The company said in the middle of last year that it was drafting the long-term strategy. We're looking at plans to increase production, but also at the costs and the consequences that this may have," Denis Morozov, the company's deputy general director, said at the time.

Norilsk Nickel said in 2004 that it did not have the capacity to increase nickel production substantially. Morozov said the company would produce more in the way of other metals, in particular palladium, if it did raise nickel output.

Targeted nickel output by the world's biggest producer of the metal is 243,000-248,000 tonnes in 2006. Norilsk also aims to produce 422,000-427,000 tonnes of copper, 90-92 tonnes of palladium and 21-22 tonnes of platinum this year.

KAPITAL BUYS 66% OF SEVERSTAL

MOSCOW. Feb 26 (Interfax) - OOO Kapital has acquired 66% of Severstal (RTS: CHMF), the Russian steel giant said in a statement.

The company increased its stake in Severstal charter capital to 66.12% from 0%.

ALROSA ANNOUNCES TENDER TO SELECT VALUATOR

MOSCOW. Feb 26 (Interfax) - Russian diamond-mining monopoly Alrosa is announcing a tender to select a company to determine the market value of its shares, Alrosa said.

Bids will be accepted until March 13 and the tender will be held on March 15.

Alrosa's supervisory board made a decision earlier to organize a tender to select a company to determine the value of Yakutalmaz. The Republic of Yakutia will conduct its own parallel valuation.

The company said that MAK-Bank, in which it owns shares, started to buy the shares back on Alrosa's behalf on February 22. The process will take until April 28.

Maxim Kasatkin, the bank's first deputy chairman, told Interfax that the bank would offer 338,000 rubles per share, that it planned to buy back 10% of Alrosa's shares and that it would spend $240 million of its own money and borrowed money on the buy- back. He did not say where the bank intended to borrow the money.

The buy-back price works out at $12,000 a share, which is less than half of the $30,000 valuation put on the shares by Professional Valuation Center, hired by Alrosa and the Russian Property Fund (Rosimushestvo), last year. Professional Valuation Center has valued 100% of Alrosa at around $6 billion.

The federal government is seeking to increase its stake in Alrosa to 50% plus one share, from 37% at present. It has been reported that the federal government plans to achieve this by buying some of Alrosa's shares from employees, who own 23% of Alrosa.

Additional shares will be issued after the valuation of Yakutalmaz is completed. A source at Alrosa said the indications were that the new share issue would be equivalent to at least 50%- 70% of Alrosa's existing shares.

FAS REQUESTS MORE INFO ON NOVOLIPETSK'S PROPOSED VIZ-STAL ACQUISITION

MOSCOW. Feb 26 (Interfax) - The Federal Antimonopoly Service (FAS) has requested further information to support a request by Novolipetsk Steel for clearance to buy Yekaterinburg-based silicon sheet steel producer VIZ-Stal, FAS Deputy Director Andrei Tsyganov told Interfax.

"We haven't reached a decision yet, and we have asked Novolipetsk Steel for more information," Tsyganov said, when asked when the FAS might give its reply to the steel major's request.

FAS Director Igor Artemyev visited Novolipetsk Steel on February 22 in the hope of "deciding on location how the acquisition would affect the market," the FAS has said.

The FAS branch in the Sverdlovsk region has said it would not back the acquisition, claiming that Novolipetsk Steel would monopolize the transformer steel market and control 100% of the Russian market for this type of product if it buys VIZ-Stal.

VIZ-Stal planned to increase steel output 6.5% to 196,500 tonnes in 2005. Italy's Duferco is currently the limited liability company's core owner.

Magnitogorsk Iron & Steel Works (MMK) (RTS: MAGN), a long- standing metal supplier to VIZ-Stal, is also interested in the plant.

MAGNITOGORSK CALIBRATING PLANT RECOMMENDS DIVIDEND WAIVER

MOSCOW. Feb 26 (Interfax) - Directors at Magnitogorsk Calibrating Plant (MKZ) are recommending a dividend waiver at this year's AGM on April 13, the company said.

The agenda will contain standard items, plus the approval of a number of transactions.

Registration to take part in the meeting closed on February 26.

Magnitogorsk Iron & Steel Works (MMK) (RTS: MAGN) is the biggest shareholder in MKZ with 45.52%.

MKZ is part of MMK's metalware division, MMK-Metiz. It is due to complete a merger with MMK-Metiz this quarter.

MINISTRY TO DECIDE ON LARGE-DIAMETER PIPE IMPORTS IN 2 WKS

MOSCOW. Feb 26 (Interfax) - The Russian Economic Development and Trade Ministry intends to reach a decision on imports of large-diameter pipes within two weeks, Galina Balandina, the ministry's head of Foreign Trade and Customs Regulation, told reporters.

"We'll reach a decision in the very near future, perhaps in the next week or two," Balandina said. "The matter has dragged on too long," she said.

Balandina attributed the delay with a decision to cap a special safeguard investigation into large-diameter pipe imports from Ukraine and elsewhere to the fact that the issue affects some of Russia's biggest steel producers.

A "thorough analysis is being rounded off" and there will be no more extensions to the special probe, she said.

Balandina said she could not say what action if any might be taken with respect to the imports.

The economy ministry extended its special probe into large- diameter pipe imports by three months in November last year.

UKRAINIAN PIPE MILLS IMPROVE FINANCIAL RESULTS

KYIV. Feb 26 (Interfax) - Most Ukrainian pipe mills improved their financial results in 2005, an official at the Ukrainian Industrial Policy Ministry told Interfax.

The source said the pipe mills had better transparency and favorable domestic and external market trends to thank for their improved performance.

But the source said higher gas prices could dent finances in the industry in 2006.

UKRAINIAN PIPE INDUSTRY PERFORMANCE 2005:

BOT

Company Sales in Sales, % of Profitability in 2005, %

Profitability in 2004, %

Pretax Pretax

2005, '000 2004 profit in profit in

UAH 2005, '000 2004, '000

UAH UAH

Dnipropetrovsk 736660 163,1 2,6

-2,2

5701 1916

Pipe Plant(DTZ)

Novomoskovsk 607845,6 99,1 - - - -

Pipe Plant (NTZ)

Nizhnedniprovsky 3191,614 121,3 40,9

19,7

729138 161217

Pipe Plant(NDTZ)

NZNT (stainless 413153,8 199,6 4,2

2,9

13798,5 2147,3

tubes)

Niko Tube 874980 134,7 24,5

12,9

84117,4 17052

UtiST 330091 119,0 11,4

8,8

6494,6 3785,4

Kominmet 393996,3 112,1 2,4

-2,2

20003 -22213

* SOURCE: INTERFAX-UKRAINE

EOT

KAZZINC TO BUILD COPPER SMELTING, ELECTROLYSIS PLANTS IN E. KAZAKHSTAN

UST-KAMENOGORSK. Feb 26 (Interfax) - Kazzinc plans to build a copper smelter and electrolysis plant in Ust-Kamenogorsk, East Kazakhstan.

The zinc producer's management presented the project to the regional and local authorities on February 22.

Kazzinc president Nikolai Popovich said construction of the plants would be completed in 2009. The future copper smelter will produce 70,000 tonnes of cathode copper per year.

"The imbalance in mining and beneficiation capacities forces us to sell about 30,000 tonnes of copper concentrate on the side per year and at the same time buy lead concentrate abroad in order to supply the lead plant," Popovich said.

This project will make it possible to balance the company's mining and concentrating potential with its metallurgy capacity, he said. "The project is being carried out as part of a state resource conservation policy, as new technology will make it possible to recover additional amounts of metal," he said.

The project will use the latest, environmentally friendly technology from Australia's Isasmelt, the principal advantage of which is its combination of several technological operations in one unit, Popovich said. "Thanks to this technology, we will be able to very quickly completely resolve the problem of sulfur dioxide air pollution in Ust-Kamenogorsk," he said.

Construction of the copper smelter and electrolysis plant next to the lead and zinc facilities will create a metallurgical complex that will maximize recovery of useful elements, Popovich said.

Kazzinc is a major integrated producer of zinc and associated copper, precious metals and lead based in East Kazakhstan.

Switzerland's Glencore International AG controls 99% of Kazzinc through subsidiaries.

Glencore increased its stake in the zinc producer to 71% after Filippino company Pasar Holding Inc., which is 69%-owned by Glencore, bought the state-owned 22.65% of Kazzinc for 14.74 billion tenge at a December 9 tender.

The tender winner pledged to build a copper smelter in the East Kazakhstan region with capacity of 70,000 tonnes of refined cooper per year to refine concentrates produced by Kazzinc's Ust Kamenogorsk Metallurgy Combine.

Pasar Holding must launch the smelter by December 31, 2010, with the transfer of right to manage the state stake in Kazzinc to the buyer.

BELARUS REDUCES ROUGH DIAMOND IMPORTS 41% IN 2005

MINSK. Feb 26 (Interfax) - Belarus reduced rough diamond imports 41% to 50,800 carats in 2005, the Belarussian Finance Ministry told Interfax.

The imports in value rose, by 34.2% to $21.573 million, the ministry said.

The ministry said imports fell in carats because prices for rough diamonds grew much faster than prices for cut and polished diamonds. Rough diamonds rose 20% in price last year, while cut diamonds grew just 6%-8% in price.

Belarus imported 13,300 carats of rough valued at $16.25 million in the fourth quarter of 2005. The country exported 531.95 carats for $6,610 in 2005 as a whole.

The Kristall diamond cutting plant in Belarus has ordered around 80,000 carats of rough from Russia's Alrosa mining company in 2006 and it is anticipated that a similar order will be placed with Russia's Gokhran or State Repository.

BELARUS BOOSTS FERROUS OUTPUT 18.3% IN JAN

MINSK. Feb 26 (Interfax) - Belarus increased ferrous metals output 18.3% year-on-year in constant prices in January to 252.5 billion Belarussian rubles (2,151 Bel. rubles/$1 on Feb 26), the Statistics and Analysis Ministry told Interfax.

Production grew 7% to 198,100 tonnes of crude steel, 22.3% to 234,200 tonnes of finished roll, 32.7% to 12,300 tonnes of ordinary-grade wire, 20.8% to 6,800 tonnes of steel wire, 6% to 8,200 tonnes of steel cord and 16.3% to 9,300 tonnes of steel pipes.

COMPUTING & INFORMATION TECHNOLOGY

GOVT APPROVES RULES FOR COMMUNICATIONS SERVICES

MOSCOW. Feb 26 (Interfax) - The Russian government has approved regulations for providing communications services which opens way to privatizing Svyazinvest, the national telecom holding.

The government's press office said that Russian Prime Minister Mikhail Fradkov on February 22 signed a resolution (No. 103) on approving the regulations for using the unified fixed line network in Russia in order to preserve the interests and functioning of special purpose networks.

A law which protects the rights of special operators needs to be passed before the Russian president can sign a decree authorizing the Svyazinvest sale.

The Russian Security Council made this a condition for the Svyazinvest sale at the end of last year when the draft decree was submitted to the president's staff.

SISTEMA OPEN TO ALLIANCE WITH ANY BIDDER FOR SVYAZINVEST

MOSCOW. Feb 26 (Interfax) - The Sistema holding company is open to an alliance with any main Russian bidder for shares in Svyazinvest, Alexei Kurach, Sistema's investor relations manager, told Interfax.

"We know perfectly well that a consortium of several players that everybody recognizes ought to be formed. Sistema is not concerned who it teams up with," Kurach said.

Bloomberg reported that the Alfa-Group's chief, Mikhail Fridman, would consider an alliance with Sistema if the government goes ahead with the Svyazinvest sale this year.

Kurach said Alfa was a potential partner for Sistema, just like any other potential bidder.

"We have nothing against joining up with Alfa, just as we have nothing against joining up with Telecominvest or Access," he said.

The government still owns 75% minus two shares in Svyazinvest, which is the national telecom holding.

Alfa, Sistema and Telecominvest have all said they would be interested in buying into Svyazinvest.

SISTEMA BUYS 7.3% OF COMSTAR-UTS FROM DEUTSCHE BANK IN REPO DEAL

MOSCOW. Feb 26 (Interfax) - AFK Sistema (RTS: AFKS) has bought 7.3% of Comstar-United TeleSystems (Comstar-UTS) from Deutsche Bank in a repo deal, Comstar-UTS said.

Sistema has thus increased its stake in Comstar-UTS to 36.42% from 29.12%. Companies that are part of the Sistema Group increased their stakes to 72.25% from 64.95%.

This transaction was carried out in order to meet conditions to enter the London Stock Exchange, a Sistema spokesman told Interfax.

Deutsche Bank bought 10.945% of Constar-UTS from Sistema in December of last year for $132 million. Its stake in Comstar-UTS charter capital fell to 7.3% after additional shares were floated in the framework of an initial public offering.

At the start of February Comstar-UTS received $1.54 billion from an IPO. Sistema placed 139 million shares in a new Comstar- UTS issue in the form of GDR on the LSE at $7.25 and 7.5 million shares were placed by ECU GEST Holding S.A., which is 99% owned by Sistema and 1% - by the company's founder and main co-owner Vladimir Yevtushenkov, on the Moscow Stock Exchange.

MCT CORP. SELLS SHARES OF 3 MOBILE OPERATORS IN VOLGA REGION

MOSCOW. Feb 26 (Interfax) - The U.S. telecommunications company MCT Corp., which works in Russia and Central Asia under the Indigo trademark, has sold a financial investor 100% of Vostok Mobile Volga B.V., which owns part of three mobile operators in the Volga region, the company said in a press release.

The company has not disclosed the cost or details of the deal.

Vostok Mobile Volga B.V. owns a 50% stake in Saratov Mobile, a 70% stake in Chuvashia Mobile and a 60% stake in Penza Mobile. VolgaTelecom (RTS: NNSI) owns the rest of the shares in these operators.

All three operators have licenses for GSM-1800 standards, which gives them the right to provide cell phone services in the Saratov region, the Republic of Chuvashia and the Penza region, respectively, the release says.

"MCT is satisfied with the successful development of its Volga companies, which currently serve more than 130,000 subscribers, and is anxiously waiting to expand and develop other companies in the holding, which are mainly concentrated in Northwest Russia and Central Asia," Garth C. Self, president and CEO of MCT Corp. in Russia, is quoted as saying in the release.

MCT Corp. currently owns assets in four mobile operators in Central Asia: it has a 77.5% stake in Uzbekistan's Coscom, a 60% share each in Tajikistan's Indigo-Tajikistan and Somoncom, and a 12.5% stake in Afghanistan's Roshan. In Russia, MCT Corp. owns 75% of Arkhangelsk Mobile Networks, 75% of Murmansk Mobile Networks, 100% of Nizhny Novgorod Telecommunications and 75% of Parma Mobile.

All other operators owned by MCT Corp. have licenses to provide GSM services to a total of 60.4 million people.

TELE2 UPS STAKE IN OBLCOM TO 100%

ST. PETERSBURG. Feb 26 (Interfax) - Swedish telecoms firm Tele2 has increased its stake in St. Petersburg cellular operator Oblcom to 100% from 97.24%, Tele2 said in a press release posted on its website.

Oblcom received a license in April 2002 to provide GSM-1800 standard mobile services in Leningrad region and outside of St. Petersburg. It launched a GSM-1800 network in Leningrad region in December 2003.

Tele2 has controlling stakes and is the owner of 13 Russian mobile companies: in St. Petersburg and the surrounding Leningrad region, and in Irkutsk, Rostov-on-Don, Kemerovo, Izhevsk, Chelyabinsk, Belgorod, Nizhny Novgorod, Omsk, Smolensk, Voronezh and Kursk.

Tele2 works in 25 countries. In Russia, the company provides GSM-standard mobile services in 12 regions: St. Petersburg and the surrounding Leningrad region, the Irkutsk, Kemerovo, Rostov, Omsk, Nizhny Novgorod, Smolensk, Kursk, Belgorod, Chelyabinsk and Voronezh regions.

METAL GOODS & ENGINEERING

SEVERSTAL-AUTO'S CORE OWNER SELLS 5% OF SHARES

MOSCOW. Feb 26 (Interfax) - Severstal-Auto's (RTS: SVAV) core shareholder, the Cyprus-registered Newdeal Investments Limited, has sold 4.99% of the company to portfolio investors acting on behalf of international investment banks, Severstal- Auto told Interfax.

Newdeal Investments Limited owned 62.58% of Severstal-Auto prior to the sale.

"The shares were well-subscribed," the company said.

The company sold the shares in order to increase liquidity and free float, to 37% from 32%.

The company did not say how much it sold the 4.99% for.

ROSTVERTOL TO DELIVER 12 MI-2 HELICOPTERS TO INDONESIA

SINGAPORE. Feb 26 (Interfax) - The Rostvertol helicopter plant will supply Indonesia with 12 light multi-purpose Mi-2 helicopters, Rostvertol general director Boris Slyusar said.

"We signed a contract on delivering 12 Mi-2 helicopters to Indonesia in January 2006," Slyusar told Interfax at an aviation exhibition in Singapore on Friday.

Rostovmil, a Rostvertol subsidiary, earlier supplied Indonesia with two Mi-2 helicopters, which led to the recommendation of the next batch of Mi-2 helicopters, he said.

"The Mi-2 is rather widespread throughout the world, it is one of the largest helicopters. Up to 1,500 Mi-2 helicopters are currently in use in various parts of the world. About 700 of them are at Russian aviation companies alone," he said.

A contract was recently signed with Myanmar on carrying out repair work on six Mi-2 helicopters, which should be delivered to the plant in the next few days for repairs, he said.

FOOD & AGRICULTURE. PROCESS INDUSTRIES

BIRD FLU DISCOVERED IN SIX RUSSIAN REGIONS

MOSCOW. Feb 26 (Interfax) - Bird flu had been registered in six Russian regions as of February 26, the Agriculture Ministry's press service said citing the Federal Veterinary and Phytosanitary Control Service (Rosselkhoznadzor).

Migrating birds have brought avian flu to the republics of Kabardino-Balkariya, Dagestan, Chechnya and Kalmykia in addition to the Krasnodar and Stavropol territories, the press service said.

Bird flu was discovered among domesticated birds in Dagestan, Kalmykia and the Krasnodar and Stavropol territories.

A total of 17 infected areas have been registered in Dagestan. In the Krasnodar territory, the Tbilisskaya poultry plant in the north of Sochi and communities in the Labinsky and Kazkazsky districts are suspected of having the disease.

CONSTRUCTION & PROPERTY

FUND FOR DIRECT INVESTMENT IN RUSSIAN REAL ESTATE TO BE LAUNCHED

MOSCOW. Feb 24 (Interfax) - A fund for direct investment in Russian real estate is being launched.

Sistema, the largest corporation working on the services market in the CIS, the asset management company group Renova and the Whitehall Street Real Estate Funds investment group, financed and managed by The Goldman Sachs Group Inc and its affiliates have signed an agreement to set up the fund, says a Sistema press release issued on Friday.

The fund will initially total $300 million and be managed by the partners on a parity basis. The main investment areas are commercial, office and elite housing real estate, and the development of other projects in Moscow.

Sistema is the largest consumer services private sector company in Russia and the CIS, managing market-leading businesses in fast-growing service-based industries, including telecommunications (MTS, MGTS, Comstar United Telesystems), technology (NIIME and MIKRON, STROM telecom, Sitronics, Quasar Micro), insurance (ROSNO), banking (MBRD), real estate (Sistema- Hals), retail (Detsky Mir Group) and media (Mass Media Systems). In February 2005, Sistema raised $1.3 billion in a share placement on the London stock exchange.

Sistema-Hals manages operations at over 50 companies, whose specialties enable a comprehensive approach to implementing all project phases, from development to construction and subsequent operation of a property.

The Renova group owns shares and invests strategically into Russian companies and holdings working in the metallurgy, oil, machine building, mining, chemical, construction, energy, utilities and financial spheres. Renova is a shareholder in major extraction and industrial structures, such as TNK-BP, the Sual holding, the Complex Energy Systems, the Russian Communal Systems, the Koltsovo airport in Yekaterinburg and the non-state Bolshoi Pension fund. The group also includes investment companies working in real estate (Renova Development, Renova Stroi Group), portfolio investment (Direct Investments Fund) and intangible asset management (Corporate Development Institute)."

Goldman Sachs is a leading international investment company, managing finances, securities and investment projects.

MEDIA

STS MEDIA CONFIRMS IPO PLANS

MOSCOW. Feb 26 (Interfax) - STS Media is planning an IPO, Alexander Rodnyansky, the TV holding company's chief, told Interfax on Sunday.

"We are indeed planning an offering. We've already said in a press release distributed in the West that we intend to register with the Securities and Exchange Commission," Rodnyansky said.

"But the regulations state that we can't make further comment," he said.

Sources in banking circles told Interfax that STS Media, which is thought to be worth $2 billion, was planning to float on the Nasdaq in the first half of 2006, and that the company had appointed Deutsche Bank, UFG and Morgan Stanley to advise it on the IPO.

FINANCIAL & BUSINESS SERVICES

MDM-BANK UPS SHARE IN LATVIJAS TIRDZNIECIBAS BANKA TO 100%

MOSCOW. Feb 26 (Interfax) - MDM-Bank increased its share in the charter capital of Latvijas tirdzniecibas banka from 63.3% to 100% starting from February 20, MDM-Bank said in a release.

Latvijas tirdzniecibas banka is part of the MDM financial group, which also comprises three Russian banks - MDM-Bank, MDM- Bank St. Petersburg and MDM-Bank Ural.

The MDM financial group's unaudited net assets dropped 24.8% year-on-year to 135.21 billion rubles in January-September 2005.

The group's net profit fell 39.6% to 2.702 billion rubles over the nine-month period from 4.476 billion rubles in the same period of 2004.

Operational profit dropped 19.7% year-on-year to 7.478 billion rubles in the reporting period.

MDM-Bank was Russia's 11th largest bank by assets at the end of the third quarter of 2005, according to the Interfax-100 ranking of the country's biggest lending institutions, compiled by the Interfax Center for Economic Analysis.

TATFONDBANK PLACES DEBUT CLN ISSUE FOR $90 MLN

MOSCOW. Feb 26 (Interfax) - Tatfondbank has placed a debut issue of two-year credit-linked notes for $90 million at an annual yield of 9.5%, Trust Bank (RTS: HBTT), the organizer of the issue, said in a press release.

The CLN envision a put option that can be used one year after the bonds are placed.

Demand was significantly higher than the offer at more than $110 million. After consultations with the issuer it was decided to increase the CLN issue to $90 million from the originally planned $50 million-$70 million, the release says.

Investors from Sweden, Britain, Singapore, Germany, Luxemburg, the Netherlands, Hungary, Chili, Italy, Russia, the Baltics and other countries took part in the placement. More than 75% of the issue was placed on the Western market. More than 40 investors took part in the placement.

Tatfondbank was Russia's 57th biggest bank by assets at the end of the third quarter of 2005, according the Interfax-100 ranking of the country's biggest lending institutions, compiled by the Interfax Center for Economic Analysis.

SEB BUYING PETROENERGOBANK TO SUPPORT EXISTING CLIENTS - SPOKESMAN

MOSCOW. Feb 26 (Interfax) - SEB Group is buying Petroenergobank in order to provide support to its existing clients in Scandinavia, Germany and the Baltic countries and for their operations in Russia, Per Anders Fasth, head of investor relations at SEB, told Interfax.

The details of the bank's development strategy will be announced once the Central Bank of Russia approves the transaction between SEB and Petroenergobank, Anders said. Changing the trademark under which Petroenergobank works will be brought up later, he said.

The purchase of Petroenergobank is actually a purchase of a banking license and the possibility to enter the market, Anders said.

A representative of the SEB banking group, the third largest in Scandinavia, said in January 2005 that the group plans to expand its business in Russia using its own banks in the Baltics as its base.

Petroenergobank was set up in 1995 with charter capital of 130 million rubles. Lenenergo (RTS: LSNG) was the main shareholder until the middle of 2002, with 89.111%, however after the company floated additional shares, its stake in the bank fell to 21.59%.

Petroenergobank is a member of the deposit insurance system.

Petroenergobank was Russia's 348th biggest bank by assets at the end of the third quarter of 2005, according the Interfax-100 ranking of the country's biggest lending institutions, compiled by the Interfax Center for Economic Analysis.

JP MORGAN SELLS $100 MLN IN BONDS IN KAZAKHSTAN

ASTANA. Feb 26 (Interfax) - JP Morgan Chase Bank has sold ten-year bonds worth 13.2 billion tenge (around $100 million) in Kazakhstan.

"This was the first international tenge-denominated issue on the local market," reads a press release from Kazkommerts Invest, which arranged the issue.

According to the statement, the coupon rate is pegged to inflation.

The entire issue was successfully placed among local investors, mainly pension funds.

S&P assigned an '-' rating to this issue. The bonds are listed at Luxembourg Stock Exchange and the company expects them to be listed on the Kazakhstan Stock Exchange soon.

FINANCIAL MARKETS

DOLLAR, EURO BOTH LOSE 11 KOPECKS ON SUNDAY

MOSCOW. Feb 26 (Interfax) - The Russian ruble strengthened by roughly 11 kopecks against both the U.S. dollar and the euro in trading on the Moscow Interbank Currency Exchange (MICEX) on Sunday due to banks making speculative sales and the lack of trading on the international Forex market.

Metallinvestbank dealer Alexander Panasenko said Sunday trading in theory should not have changed the exchange rates significantly from Wednesday's level since there was no Forex trading on Sunday and the level at which the Forex closed on Friday was fairly close to that of Wednesday evening. However, he said dollar and euro quotations changed as a result of banks playing speculative games.

"Banks were selling currency rather aggressively today and likely took on a speculative position in their calculations that the dollar may fall. It appears that the ruble will become slightly stronger in the near future, or at least such feelings are present," he said.

Elaborating on his belief that the speculative games played by banks led to the strengthening of the ruble on Sunday, Panasenko said: "This is exclusively the mood of the banks. It appears that the banks that were selling currency did not find support from the Central Bank at a certain level that corresponded to previous trading and the market dropped," he said. As before, banks are now inclined to sell currency, he said.

The last transaction carried out with Tomorrow dollars on the MICEX on Sunday totaled 28.1125 rubles/$1, which is 10.75 kopecks less than the closing price on Wednesday, February 22. The dollar's official exchange rate was set at 28.155 rubles/$1, which is 2.77 kopecks lower than the previous level.

The average weighted exchange rate of the dollar dropped 5.6 kopecks to 28.1446 rubles/$1 from February 22. Combined dollar trading on the MICEX on Sunday amounted to $798 million with a total of 545 deals being made.

The euro's exchange rate in Tomorrow deals on Sunday fell 11 kopecks to 33.435 rubles/EUR1. The average weighted cost of the euro totaled 33.4797 rubles/EUR1, compared to 33.5802 rubles/EUR1 on Wednesday. Trading amounted to EUR 4.9 million.

There was no trading with Today deals on the Russian currency market on Sunday since U.S. and European currency markets do not operate on Sundays.

CENTRAL BANK OF RUSSIA RUBLE EXCHANGE RATES FROM 27.02.2006

BOT

Currency Per

Australia ($) 1 20.8516

Canada ($) 1 24.5082

Switzerland (Fr) 1 21.3733

Denmark (Krone) 10 44.8221

U.K. (Pound STG) 1 49.2009

Iceland (Krona) 100 42.3638

Belarus (Rubel) 1000 13.0847

Japan (Yen) 100 24.0847

Kazakhstan (Tenge) 100 21.6131

Norway (Krone) 10 41.5419

Sweden (Krona) 10 35.4905

Singapore (Dollar) 1 17.3358

Ukraine (Hryvna) 10 55.0903

United States ($) 1 28.1550

EURO 1 33.4397

Turkish (Lira) 1 21.2973

SDR* 1 40.4190

* SDR - SPECIAL DRAWING RIGHTS.

IT IS THE UNIT OF ACCOUNT FOR THE INTERNATIONAL MONETARY FUND

RESULTS OF FOREX TRADING ON MICEX ON 26.02.2006

Instrument Min. Max. Closing Average "Volume," Quan-

price price price price $ tity

USDTOM--UTS 28.1101 28.2 28.1125 28.1446 797900000 545

EURTOM--UTS 33.43 33.5199 33.435 33.4797 4912000 67

MOSCOW INTERBANK BID, OFFERED & ACTUAL RATE

26.02.2006

Rate/term overnight 1 week 1 month 3 months 6 months 1 year

MIBID 2.35 2.78 3.43 4.37 5.09 6.15

- (0.34) (0.17) (0.26) (0.05) (0.05) (0.14)

MIBOR 3.73 4.34 4.89 6.38 7.32 8.19

- (0.32) (0.12) (0.03) (0.02) (0.05) (0.08)

MIACR 3.76 3.03 3.60 - - 6.00

- (0.78) (-0.77) (-0.27) - - -

MIBID - MOSCOW INTERBANK BID

MIBOR - MOSCOW INTERBANK OFFERED RATE

MIACR - MOSCOW INTERBANK ACTUAL CREDIT RATE FOR PREVIOUS DAY

EOT

SECURITIES

GAZPROM, MTS TO BE INCLUDED IN RTS INDEX MARCH 15

MOSCOW. Feb 26 (Interfax) - Shares in Gazprom (RTS: GAZP) and Mobile TeleSystems (MTS) (RTS: MTSS) will be included in the RTS index from March 15, the RTS said in a press release.

The exchange reached the decision on February 20.

It set free-float ratios of 0.4 for Gazprom and 0.45 for MTS. The free float ratios are being introduced for Gazprom, Lukoil (RTS: LKOH) and Surgutneftegas in keeping with the exchange's regulation that no single issuer can take up more than 15% of the index.

Common shares in Ufimskoye MPO (RTS: UFMO) are being removed from the index to make room for the new shares.

Common shares in Moscow City Telephone Network (RTS: MGTS), OGK3 generating company (RTS: OGKC) and OGK5 generating company (RTS: OGKE) are on the waiting list for inclusion in the index. Common shares in Avtovaz (RTS: AVAZ) are waiting to be removed from the index.

STOCKS. CORPORATE BONDS

STOCK MARKET HITS NEW HIGH ON HEAVY RUSSIAN DEMAND

MOSCOW. Feb 26 (Interfax) - The Russian stock market hit a record high on Sunday in the absence of foreign investors.

Benchmark stocks grew 1%-8% on the Russian Trading System (RTS) and the Moscow Interbank Currency Exchange (MICEX). The RTS index grew 3.47% to 1516.46, past the psychologically important level of 1,500, and the MICEX grew 3.74% to 1399.08.

First one stock took the lead, then another took over on the market on Sunday, Renaissance Capital's Alexei Bachurin said. "There's a lot of money on the market. The rally is continuing and there is still more money than shares," he said.

Specialists said there was demand for almost all stocks that have some sort of growth idea. "If a stock is doing badly, if there is something bad about it or if there are no ideas for it, it isn't growing. Stocks are being bought where there is at least some sort of idea," Bachurin said.

Many experts said the main driver of the market was a sharp jump in oil prices on the world market after an attempted terrorist act on an oil refinery in Saudi Arabia, which pushed oil prices up by more than $2 per barrel. "The growth in world oil prices amid the explosions in Saudi Arabia made blue chip oil companies attractive again even they looked overbought last week," said Yevgeny Shago, senior analyst at Region.

Tatneft (RTS: TATN) common shares grew 5.83% on the MICEX, Surgutneftegas (RTS: SNGS) rose 5.35%, Lukoil (RTS: LKOH) was up 3.13% and Sibneft (RTS: SIBN) was up 2.73%.

Unified Energy System (UES) (RTS: EESR) soared 7.38% on the MICEX and 7.86% on the RTS after the board of directors approved an appendix at a Sunday meeting to its 5+5 strategy for 2003- 2008, which envisions additional issues by the thermal Wholesale Generating Companies (OGC) to acquire investment.Telecoms also performed well on Sunday. Rostelecom (RTS: RTKM) common shares, which had been lagging behind the market, grew 4.77%, Uralsvyazinform (RTS: URSI) soared 7.17% and Northwest Telecom (RTS: SPTL) rose 2.84%.

Telecoms grew after Prime Minister Mikhail Fradkov signed a resolution on approving the regulations for using the unified fixed line network in Russia in order to preserve the interests and functioning of special purpose networks. This is a necessary requirement for the signing of the decree on Svyazinvest privatization. "The closer it gets to Svyazinvest's privatization, the more demand there is for the holding's subsidiaries. Investors think the appearance of a private owner will stimulate growth in the capitalization of regional telecoms by improving transparency and increasing the effectiveness of the business," Olma's Vladimir Detinich said.

Norilsk Nickel (RTS: GMKN) posted gains of 1.17% and Sberbank (RTS: SBER) grew 2.53%. Gazprom (RTS: GAZP) grew 0.93% on the St. Petersburg Stock Exchange and 0.89% on the MICEX.

RTS classic market trading was $65.9 million, and trading volume on the MICEX stock section was 36.7 billion rubles.

The growth could continue for some time, Bachurin said. "It could continue for a long time and fundamental factors don't mean anything here," he said. Falling oil prices could be the level for a change in the market if the situation surrounding Iran is regulated. "But the correction will start without any reasons as usual, and then people will start searching for reasons," Bachurin said.

MAIN INDEXES OF THE RUSSIA STOCK MARKET FOR FEBRUARY 26

BOT

Index Value % Change Net

Change

RTS Index

Dollar 1516.46 3.47 50.84

Ruble 9610.51 3.44 319.53

MICEX Index

Ruble 1399.08 3.74 50.41

MICEX-10 Index

Ruble 2299.56 3.95 87.42

S&P/RUIX Index

Dollar 1083.80 5.61 57.62

S&P/RUX Composite Index

Dollar 413.68 2.78 11.19

Ruble 1956.16 2.75 52.36

S&P/RUX-Oil&Gas Index

Dollar 484.56 2.49 11.77

Ruble 2291.32 2.46 55.05

S&P/RUX-Power Index

Dollar 183.22 6.25 10.78

Ruble 866.39 6.22 50.74

S&P/RUX-Telecoms Index

Dollar 98.39 3.11 2.97

Ruble 465.26 3.09 13.93

S&P/RUX-Engineering Index

Dollar 250.79 0.69 1.71

Ruble 1185.90 0.66 7.74

RESULTS FOR TRADING OF SHARES IN RUSSIAN TRADING SYSTEM

26.02.2006

Company Average "Volume," "Volume," Min Max

"price,$" $ shares "Price,$" "Price,$"

Arkhenergo 0.0448 18682 417030 0.042 0.049

AVTOVAZ Pref 46.9 46900 1000 46.9 46.9

ANK Bashneft 17.1 34200 2000 17.1 17.1

ANK Bashneft Pref 13.3 133000 10000 13.3 13.3

Chelyabinsk Pipe Works 1.64 9840 6000 1.64 1.64

GAZ Auto Plant 85.8333 128750 1500 85.5 86.0

Gazprom 8.0975 5208292 643200 8.035 8.15

Kashirskaya GRES-4 0.0147 51450 3500000 0.0147 0.0147

Magnitogorsk Metall. 0.715 107250 150000 0.71 0.725

Comb.

Slavneft-Megionneftegaz 37.0 37000 1000 37.0 37.0

Pref

Moscow City Telephon 17.5 21875 1250 17.5 17.5

Pref

Mobile TeleSystems Open 7.315 36575 5000 7.315 7.315

Joint Stock Company

Nizhnekamskneftekhim 1.16 23200 20000 1.16 1.16

Nizhnekamskshina 3.4 68000 20000 3.4 3.4

OGK-3 0.0691 138200 2000000 0.0691 0.0691

Sakhalinmorneftegaz 19.0 19000 1000 19.0 19.0

Sakhalinmorneftegaz Pref 13.37 33425 2500 13.37 13.37

Stavropol Power Station 375.0 39375 105 375.0 375.0

Transneft Pref 2599.7619 2729750 1050 2595.0 2600.0

Uralkaliy 1.5345 23631 15400 1.515 1.545

Volzhsk Hydro.St. 0.293 58600 200000 0.293 0.293

YUKOS 1.91 95500 50000 1.91 1.91

Zagorskaya PSPP 0.0175 52500 3000000 0.0175 0.0175

Aeroflot 1.946 97300 50000 1.94 1.95

Severstal 12.6977 811393 63901 12.6 12.75

United Energy System 0.7214 17385575 24100000 0.699 0.741

United Energy System 0.61 152500 250000 0.61 0.61

Pref

Sibirtelecom 0.0924 551885 5970805 0.09 0.0935

Sibirtelekom Pref 0.0819 81900 1000000 0.0818 0.082

Centertelecom 0.7041 373115 529952 0.7 0.7075

Centertelecom Pref 0.5925 34869 58850 0.5925 0.5925

Dalsvyaz 3.58 89500 25000 3.55 3.6

GMK Norilskiy nikel 95.1622 3521000 37000 94.0 95.5

ILETSKSOL 0.172 24080 140000 0.172 0.172

Irkutskenergo 0.595 119000 200000 0.595 0.595

Irkut 1.045 104500 100000 1.04 1.05

Kalina 47.5 475000 10000 47.5 47.5

KamAZ 2.0 60000 30000 2.0 2.0

Lukoil Holding 86.1121 16249355 188700 84.4 86.7

Mosenergo 0.195 68250 350000 0.195 0.195

Mechel Steel Group 9.95 99500 10000 9.95 9.95

VolgaTelecom 4.5147 185781 41150 4.5 4.54

VolgaTelecom Pref 3.84 84480 22000 3.84 3.84

NOVATEK 3150.0 315000 100 3150.0 3150.0

RBK informational 8.6 86000 10000 8.6 8.6

systems

RITEK 9.8 147000 15000 9.8 9.8

Rostelecom 3.2446 2595650 800000 3.12 3.35

Rostelecom Pref 2.2698 476650 210000 2.265 2.27

Sberbank RF 1619.8214 3628400 2240 1590.0 1640.0

SIBNEFT 4.8 240000 50000 4.8 4.8

Surgutneftegaz 1.5916 1750750 1100000 1.55 1.615

Surgutneftegaz Pref 1.2415 3351995 2700000 1.2 1.25

Northwest telecom Pref 1.03 6538 6348 1.03 1.03

Tatneft 5.3 53000 10000 5.3 5.3

Tatneft Pref 3.4703 1110500 320000 3.35 3.51

Uralsvyazinform 0.042 1848400 44000000 0.04 0.043

Uralsvayzinform Pref 0.0363 468050 12900000 0.035 0.0366

Verkhnaya Salda 224.0 44800 200 224.0 224.0

Metallurg.

Zeisky Hydro. Station 0.2554 108640 425400 0.255 0.2575

RUSSIAN CORPORATE BOND INDEX FOR 02.22.2006

Index Value Changes Changes Changes Changes

against for the for the for the

02.21.2006, % week,% month, % year, %

RUXCbonds 189.8142 -0.01 -0.01 0.39 9.98

RUXCbonds-P 113.4806 -0.04 -0.18 -0.37 0.02

EOT

GOVERNMENT SECURITIES

ISOLATED DEALS MADE ON OFZ MARKET ON SUNDAY

MOSCOW. Feb 26 (Interfax) - Negligible amounts of transactions were carried out on the federal loan bonds (OFZ) market on Sunday as negative trends with quotations prevailed and traders were not very spirited.

MDM-Bank trader Yevgeny Lysenko said the low level of trade activity was caused by the fact that no trading occurred on Sunday in the U.S. or Europe since the Russian market uses these financial markets as its reference points.

"Virtually nothing occurred on the market as almost half of the players weren't on the market and the spreads were so wide that it wasn't clear where the market prices were. That is, the market didn't even start operating in full since everyone decided to wait for the European and U.S. financial markets to open so as not to put the cart in front of the horse," he said.

The negative trends on the market are attributable to the high cost of ruble loans, he said. "The end of the month and tax payments are approaching, thus the overnight rates are high right now, which negatively reflects on the dynamics of the market," he said.

The rates of ruble loans at large banks on February 26 remained at an annual 4%-4.5% almost all day, while those of medium-sized banks were an annual 4.7%-5.75%. Rates are likely to remain high on Monday due to tax payments and the end of the month, analysts said.

Of the most liquid ruble OFZ issues, quotations on three issues dropped, one grew negligibly and only the OFZ 25057 significantly increased.

Quotations on the OFZ 46003 (maturing in 2010) fell 0.12 percentage points, the OFZ 46017 (maturing in 2016) dropped 0.14 percentage points and the OFZ 46014 (maturing in 2018) fell 0.53 percentage points.

The OFZ 25058 (maturing in 2008) rose 0.05 percentage points and the OFZ 25057 (maturing in 2010) grew 0.32 percentage points.

Total trading on the OFZ secondary market on February 26 amounted to 878.883 million rubles. The average weighted yield on the OFZ-AD and OFZ-PD markets grew 0.01 percentage points to an annual 6.56%.

One deal worth 9.865 million rubles was made with third- series Bank of Russia (OBR-3) issues on Sunday. As a result, the average weighted yield of the OBR-3 rose to an annual 4.6%.

RESULTS OF INTERREGIONAL TRADING FOR GKO & OFZ

26.02.2006

BOT

Mat. Issue Days "Trade "Close, %" Chg. YTM Quantity

vol,"

to mat Mln.Rbs

02.11.12 26198 2441 27.687 96.110 -0.03 6.73 3

18.07.07 27019 507 0.000 0.000 - 5.38 0

08.08.07 27020 528 0.000 0.000 - 5.35 0

19.04.06 27024 52 0.000 0.000 - 2.59 0

13.06.07 27025 472 0.000 0.000 - 5.79 0

11.03.09 27026 1109 6.765 102.500 - 6.06 1

15.11.06 45001 262 0.000 0.000 - 4.80 0

02.08.06 45002 157 0.000 0.000 - 4.98 0

10.09.08 46001 927 0.000 0.000 - 6.04 0

08.08.12 46002 2355 72.254 111.160 0.00 6.48 1

14.07.10 46003 1599 0.025 112.670 -0.08 6.37 3

17.05.28 46010 8116 0.000 0.000 - 7.50 0

20.08.25 46011 7115 0.000 0.000 - 6.95 0

05.09.29 46012 8592 0.000 0.000 - 7.37 0

29.08.18 46014 4567 3.281 109.350 0.06 6.78 1

15.03.06 04002 17 0.000 0.000 - 3.50 0

15.06.06 04003 109 9.865 98.645 0.05 4.60 1

20.01.10 25057 1424 455.973 104.120 0.67 6.45 6

30.04.08 25058 794 10.339 100.620 0.02 6.13 4

19.01.11 25059 1788 0.000 0.000 - 6.41 0

29.04.09 25060 1158 0.000 0.000 - 6.30 0

09.01.19 46005 4700 0.000 0.000 - 6.87 0

03.08.16 46017 3811 301.696 106.600 -0.30 6.72 6

24.11.21 46018 5750 0.000 0.000 - 6.74 0

20.03.19 46019 4770 0.000 0.000 - 6.82 0

06.02.36 46020 -25588 0.000 0.000 - 7.00 0

31.10.18 48001 4630 0.000 0.000 - 7.04 0

EOT

NO EUROBOND COMMENTARY, TABLES ON SUNDAY

MOSCOW. Feb 26 (Interfax) - There will be no Eurobond commentary or quotation tables published on Sunday because of low trading on the Russian Eurobond market due to the weekend in the U.S. The next commentary will be published on February 27.

JAKARTA - Forty one countries will be represented at a seminar entitled "International Cooperation Against Terrorism". Dozens of experts from Indonesia and from overseas will attend the two-day seminar, which has been convened by the LCKI (Indonesian Crime Prevention Foundation) and is to be held in the Hotel Mulia Jakarta from 27 to 28 February.

Former National Police Chief General Da'i Bachtiar, in his capacity as LCKI Presidium Chairman, told Suara Pembaruan this on Saturday (25 Feb).

The seminar will thoroughly dissect how terrorists move, how their networks are formed and their targets chosen. They will examine these issues with a particular focus on Indonesia and the other South East Asian countries. The event will be opened by President Susilo Bambang Yudhoyono and the ambassadors from 14 countries will attend.

Indonesian speakers will include legal and political experts, states-people, psychologists and social observers. Three of the speakers on the program are Professor Romly, Professor Azzumardi Azzra and Sarlito Wirawan.

Several speakers are coming from Australia, including Foreign Minister Alexander Downer and Australian Federal Police Chief Mick Keelty. Minoru Shikita (Chairperson of the Asia Crime Prevention Foundation) will also speak.

According to Da'i Bachtiar, the seminar will allocate time for discussions on the acts of terrorism already solved by police. It will also examine ways to fight crime into the future, especially with the involvement of the community.

"In all seriousness, terrorist movements don't just threaten the safety and security of the Indonesian people, but these terrible acts generate alarm across the whole world. In fighting terrorism or anticipating a terrorist threat, in any situation, everyone needs to work together. This means at the community level and at the international level," said Da'i. (passage omitted - repetitive)

(Description of Source: Jakarta Suara Pembaruan in Indonesian -- Protestant daily newspaper)

SYDNEY, Feb 24, 2006 (AFP) - Australian Foreign Minister Alexander Downer said Friday he will travel to Jakarta next week to meet his Indonesian counterpart Hassan Wirajuda and attend a conference on suicide bombings.Downer said he would also raise the issue of Indonesian boats illegally fishing in Australian waters with Wirajuda."Relations with Indonesia are in excellent shape and I look forward to this timely opportunity to meet Dr Wirajuda to pursue key bilateral interests, including counter-terrorism cooperation and efforts to combat the shared problem of illegal fishing," Downer said in a statement.Downer said the counter-terrorism conference hosted by the Indonesian Crime Prevention Foundation in Jakarta would bring together officials from more than 30 countries, including Australian Federal Police Commissioner Mick Keelty.The 2002 Bali attacks highlighted the threat that suicide bombings pose to our region," Downer said."The critical importance of addressing this threat was again reinforced by the 2004 Australian Embassy bombing and the October 2005 Bali attacks."Downer will fly to Jakarta on Monday, February 27.

(Description of Source: Hong Kong AFP in English -- Hong Kong service of the independent French press agency Agence France-Presse)

Jakarta - PT Freeport has been temporarily shut down as a result of a blockade along the road leading to the mine. The central government has handed full responsibility for the problem to the province of Papua. The reason for doing so: regional autonomy.

"If a region is capable, then it should be the region that handles it. The central government can't do everything. We have regional autonomy now, don't we?" said National Police Chief General Sutanto at the Department of Home Affairs, on Jalan Medan Merdeka Utara, Central Jakarta, on Thursday (23 Feb).

Several ministers, the National Police Chief and TNI Commander met to discuss the closure of PT Freeport among other issues. Co-ordinating Minister for Political, Legal and Security Affairs Widodo AS, National Police Chief General Sutanto, TNI Commander Djoko Suyanto, Co-ordinating Minister for Economic Affairs Budiono, Religious Affairs Minister Muftuh Basyuni and Minister for Home Affairs Moh Ma'ruf were all present.

Sutanto explained that local officials wanted to organise a dialogue with community leaders and local residents to find a solution to the problem. "PT Freeport management, community leaders, provincial police chief and military area commander have already met. We want the problem to be resolved properly," he explained.

When asked what he though was the best solution to the problem, Sutanto said he believed that handing it to the provincial government was. "We will have to ask Papua about the outcome and any agreement later," he said.

In regards to the attack on the Plaza Building 89 in Kuningan, Sutanto emphasised that offenders would be brought before a court of law. The attack on the building which housed the PT Freeport office was in protest against the shooting of three civilians between the 72 and 74 mile pegs at Tembagapura, Papua.

Meanwhile, Co-ordinating Minister for Political, Legal and Security Affairs Widodo AS stressed the importance of PT Freeport's operations. For this reason, the area needs to be secured quickly and negotiations with those blocking the road carried out soon.

"Officials in the region will do this. Why should PT Freeport's operations come to a halt because of a road block?" he said firmly.

As has been reported, PT Freeport Indonesia decided to stop work at the mine following a conflict which flared up yesterday. Illegal miners who refused to leave the waste disposal channel became involved in a clash with police and Freeport employees.

Local residents have panned for gold in the area since 1993. However, Freeport recently banned such activities causing outcry, the culmination of which was the conflict yesterday which resulted in three employees and one police officer being injured.

(Description of Source: Jakarta detikcom in Indonesian -- Internet website updated regularly to cover fast-breaking national news. Widely read by urban, educated, middle-class readership)

The following is a selection of highlights from the northern Central American press on 23 February:

-- San Salvador reports that President Antonio Saca will hold a meeting with US President George W. Bush tomorrow, 24 February, in which they will discuss the implementation of the US-Central America Free Trade Agreement, CAFTA, as of 1 March. In addition, Saca believes the Temporary Protected Status for Salvadorans living abroad will be extended for one more year in order to benefit some 250,000 Salvadorans living in US cities. Saca said he would discuss this issue with US authorities in order to "show them that we are partners, not adversaries; that our fellow countrymen are workers, honest and hard-working people, who pay their taxes and, thus, they should be given an opportunity." In addition, he said he would not criticize the US border wall, but rather explain the status of the people behind the wall. For this purpose, Saca will meet today with Senator John McCain, congressmen Lincoln Diaz-Balart and Mario Diaz-Balart, and Congresswoman Ileana Ros-Lehtinen in Miami. It was reported that Ros-Lehtinen has said the extension has been approved, although this has not yet been made official. Saca said he will also seek support from the US Government in order to receive some $400 million from the Millennium Challenge Account for development projects. (San Salvador El Diario de Hoy (Internet Version-WWW) in Spanish -- Independent, ultra-conservative daily. URL: http://www.elsalvador.com)

-- San Salvador reports that according to a survey by LPG Data, 70 percent of Salvadorans over 18 years old are satisfied with the work being carried out by President Antonio Saca. Respondents were asked to grade Saca's work and the average grade was 6.7, one tenth below the grade obtained in the past two quarters. (San Salvador La Prensa Grafica (Internet Version-WWW) in Spanish -- Independent, conservative, largest-circulation daily. URL:

http://www.laprensa.com.sv/ http://www.laprensa.com.sv/ )

-- reports that the Spanish Government announced it will donate a total of $25 million to El Salvador in order to be invested in Hurricane Stan reconstruction efforts, as well as to palliate the crisis caused by the eruption of Ilamatepec volcano. This amount is part of the $65 million that said government offered to El Salvador and Guatemala in October 2005, when Hurricane Stan hit the area. Foreign Deputy Minister Eduardo Calix is scheduled to travel to Madrid on 25 February in order to receive the donation. Calix will met with Madrid Immigration Officer Lucia Figar de Lacalle in order to sign a cooperation agreement in areas such as agriculture, gender, institutional strengthening, and education.

-- reports that the textile sector will invest some $125 million from 2005 to 2007 for the expansion of companies already working in the country and the opening of companies that have recently signed agreements. The National Agency for Investment Promotion is seeking to develop the sector and attract new investment in order to generate some 5,293 direct jobs.

-- reports that President Saca will meet US Secretary of Defense Donald Rumsfeld during his visit to Washington, D.C., in order to discuss the country's problem with gangs. Saca believes gangs are already involved in organized crime and could be involved in acts of terrorism in the future. Saca further reported he will discuss the work being carried out by Salvadoran troops in Iraq. (OSC plans to text this item)

-- reports that during the meeting to be held by Saca and US President George W. Bush, Saca intends to negotiate an agreement so that deported immigrants will be able to serve sentence in El Salvador. Government Minister Rene Figueroa reported that through this measure, El Salvador could have better control over deported immigrants with a criminal record. Figueroa is also expected to hold a meeting with US Secretary of Homeland Security Michael Chertoff. In addition, Rene Leon, Salvadoran ambassador to the White House, reported they intend to sign a "comprehensive security agreement," which would include cooperation agreements for the reinsertion of deported immigrants to the job market, the sharing of information on Salvadorans with criminal records, and a future extradition agreement. A related report discusses that Saca could also mention aspects such as relations with Venezuela and Cuba during his meeting with Bush.

-- Guatemala City reports that President Oscar Berger and the Council of Ministers rejected the vote of lack of confidence issued against Education Minister Maria del Carmen Acena by Congress. Berger and the cabinet did not accept Acena's resignation. Berger announced his office will promote the education reform through three bills to be presented to Congress on 27 February. The reform seeks to decentralize funds, increase salaries, and build infrastructure. Berger urged teachers to stop demonstrations and hold a dialogue with government, parents, and civil society. (Guatemala City Prensa Libre (Internet Version-WWW) in Spanish -- Independent daily. URL: http://www.prensalibre.com)

-- reports that Government Minister Carlos Vielmann said before Congress that his office will request an arrest warrant against 18 members of a parallel group allegedly involved in the recent wave of killings. Vielmann believes that current and former police officers could be involved in said killings, but denied any involvement of his office in these activities.

-- reports that the US Government is offering a $200,000 reward for information on the whereabouts of drug lord Byron Gilberto Linares Cordon, who has been charged with drug trafficking and is currently at large. US Embassy spokesman Ryan Rowlands reported that two arrest warrants have been issued against Linares, one in Guatemala and one in the United States. Linares is considered by the Public Prosecutor's Office as the administrator of all assets belonging to drug lord Otto Herrera Garcia. It was further reported that a $5-million reward has been offered for information on Herrera.

-- reports that the Public Prosecutor's Office has appointed Elmer Herrarte as the head of the Drug Prosecutor's Office to be opened in El Peten Department. Public Prosecutor Juan Luis Florido explained said office will be located in one of the areas guarded by the Army, possibly in Sayaxche Municipality. Florido believes the opening of said office is necessary in order to fight drug trafficking and organized crime in such a large area as El Peten.

-- Guatemala City reports that according to Fitch Ratings, the country risk currently stands at BB+, which was labeled by Finance Minister Maria Antonieta de Bonilla as "a vote of confidence to the policies being implemented." The rating implies that the country is stable for investment due to continued GDP growth, low foreign debt, fiscal discipline, and moderate inflation rates. (Guatemala City Siglo Veintiuno (Internet Version-WWW) in Spanish -- Business-oriented daily. URL:

http://www.sigloxxi.com/ http://www.sigloxxi.com )

-- reports that the United States has increased its sugar import quotas for Guatemala to 62,428 tons. The country is now the fourth most important sugar supplier after Brazil, Philippines, and Australia.

-- San Pedro Sula reports that Presidency Minister Yani Rosenthal said Vice President Elvin Santos is working on the new international bid process for the purchase of fuels, which is intended to provide continuous supply to the country. Rosenthal said that several government officials traveled to Costa Rica in order to study their bid process and determine what is best for the country. (San Pedro Sula Tiempo (Internet Version-WWW) in Spanish -- Left-of-center daily. URL: http://www.tiempo.hn)

-- reports that Industry and Commerce Minister Elizabeth Azcona said the government is planning to implement the US-Central America Free Trade Agreement on 1 April, after the modification of several laws by Congress. Azcona said her office will provide technical support to the micro, small, and medium enterprise so that they can better face the commercial opening.

-- reports that Foreign Minister Milton Jimenez Puerto appointed new ambassadors to Canada, United States, Spain, the United Nations, and the Organization of American States. Jimenez reported that Roberto Flores Bermudez, former foreign minister during the administration of President Carlos Flores, has been appointed as new Honduran ambassador in Washington, D.C. Ivan Romero has been appointed as head of the Honduran mission at the UN and Carlos Sosa Coello, as ambassador to the OAS.

-- Tegucigalpa La Tribuna reports that President Jose Manuel Zelaya visited several communities in Gracias a Dios Department in order to distribute humanitarian aid to those adversely affected by weather conditions. A total of 10,500 food rations were distributed as part of the "Food for Work Program." It was further reported that works will start for the building of a school, a shelter, and the reconstruction of the land strip in Puerto Lempira. (Tegucigalpa La Tribuna (Internet Version-WWW) in Spanish -- Independent daily; owned by family of former President Carlos Flores. URL: http://www.latribuna.hn)

On 23 Feb 06, Detikcom carried an article on alleged corruption by the Cabinet Secretary. The following is a brief report.

Cabinet Secretary Sudi Silalahi assisted police investigations into a falsified document on the construction of the Indonesian embassy in South Korea, sent by his office to the Department of Foreign Affairs. According to the National Police Chief, General Sutanto, detectives from the Criminal Investigation Branch called on Sudi's office in the Presidential Palace complex, rather than summon him to police headquarters, due to the busy nature of his duties. Staff from the Cabinet Secretariat and Department of Foreign Affairs tipped-off police on Sudi's involvement in the approval process when there was no requirement for him to do so.

(Description of Source: Jakarta detikcom in Indonesian -- Internet website updated regularly to cover fast-breaking national news. Widely read by urban, educated, middle-class readership)

WEEKLY OUTLOOK

UKRAINE GETS MARKET ECONOMY STATUS FROM U.S.

The U.S. Senate has given market economy status to Ukraine, according to U.S. Deputy Commerce Secretary David Sampson, who was on a visit to Kyiv on February 17-18 and met with the Ukrainian government to discuss U.S.-Ukraine bilateral trade and investment relations.

"I congratulate all Ukrainians for making positive changes and achieving market economy status. This determination reflects the impressive economic developments that have occurred in Ukraine over the past several years," said Sampson.

"Today's announcement underscores our commitment to expanding our bilateral economic relationship that will lead our two countries to peace, prosperity and stronger commercial ties." The United States views Ukraine as having had market economy status since February 1, Sampson said.

The new status will be taken into account in all anti-dumping processes as of February 1, he told the press in Kyiv on February 17 after his meeting with Ukrainian Foreign Minister Borys Tarasiuk.

The status reflects the changes Ukraine has made in the past few years, he said. He said the decision was endorsed in an "honest, transparent way" in keeping with the laws of the United States.

While analyzing the situation in Ukraine, the United States found that the leadership of Ukraine had given up centralized planning and that the market economy is rooted in the country.

To make its assessment, the U.S. Department of Commerce gathered information from various independent sources, such as the World Bank, the IMF, and the EBRD, he said.

Ukrainian President Viktor Yuschenko believes that the United States' decision to grant Ukraine market economy status reflects the high level of strategic partnership between the two countries and provides evidence of U.S. support for the reforms launched by the government, said.

Ukrainian Premier Yuriy Yekhanurov said that Ukraine would improve its position at the talks with the United States on mutual access to markets after receiving the market economy status from the United States.

"Now we have better grounds for talks with the United States," he told the press in Prague on February 17.

Economy Minister Arseniy Yatseniuk in turn said he plans to visit the United States in March to continue talks on the protocol.

Ukrainian Foreign Minister Borys Tarasiuk said that Ukraine's receiving market economy status would entail a higher credit rating for the country and higher investor trust. He made this statement to the press after his meeting with Sampson in Kyiv on February 17.

On behalf of the Ukrainian president Tarasiuk thanked the United States for the decision. He said the decision was a result of deep political and economic reforms.

The market economy status granted by the United States to Ukraine will consolidate the position of the Ukrainian companies in that country, the Ukrainian economy ministry said.

"The status provides Ukraine's companies with an opportunity to compete with foreign companies on the US market on an equal basis," a statement by the ministry reads. The U.S. official also raised various trade issues, including Ukraine's accession to the WTO, steps to improve the business climate and prospects for expanding U.S.-Ukraine business opportunities.

"We are committed to working together to achieve Ukraine's accession to the World Trade Organization," Sampson said. "As a member of the WTO, Ukraine would become partners in an ever- expanding group of nations that favor democratic and free-market economic values. This would open up potentially vast opportunities for local businesses, and would attract major industrial players." "We are making steady progress on our commercial agenda - to improve the business climate, expand market access, and strengthen the protection of intellectual property rights," he concluded.

The United States supports Ukraine's economic reform and NATO membership aspirations, U.S. Sampson said at his meeting with Ukrainian Premier Yuriy Yekhanurov in Kyiv on February 18. The United States resolutely supports all the measures taken by Ukraine to reform the Ukrainian economy and its movement towards a market economy, and also supports Ukraine's NATO membership aspirations.

Sampson stressed that the United States wants to take all the necessary measures to support Ukraine's economic reforms and war on corruption.

He said that he was satisfied with the progress the two sides made last year.

He also said that the United States approves of all the actions Ukraine's has made in the sphere of protecting intellectual rights and the implementation of a system of general preferences. The progress Ukraine has made in safeguarding intellectual property rights, as well as winning market economy status from the United States are "a very serious step" in the process of repealing the Jackson-Vanik amendment vis-a-vis Ukraine, Sampson also said.

Speaking in an interview with reporters in Kyiv on February 18, following his meeting with Ukrainian Premier Yuriy Yekhanurov, Sampson said that the U.S. Administration is very closely working with Congress to set a date for the cancellation of the Jackson- Vanik amendment vis-a-vis Ukraine.

The Master & Company law firm, which initiated in 2001 the process of Ukraine gaining recognition as a market economy by the United States, told Interfax-Ukraine that Ukraine is to be regarded in the United States as market as of February 1.

The decision was expected to be endorsed on January 23, however, as a new undersecretary of the U.S. Department of Commerce was appointed, endorsement of the decision was delayed.

The company said the status was granted thanks to consolidated actions by the government, Ukraine's leading steel mills, and law firms. According to the company, the status will make it harder to apply anti-dumping measures against commodities originating in Ukraine.

The status will also make the process of anti-dumping investigation much more transparent. Moreover, Ukraine's companies will have opportunities to demand that the U.S. revise existing anti-dumping measures. Other countries that have not recognized Ukraine market economy, such as Mexico, are likely to change their stance on the issue, the company said.

As reported, the EU granted Ukraine market economy status on December 1, 2005. Ukraine's current bid for market economy status began in 2002, in connection with an antidumping investigation on steel wire rod under U.S. Trade law. The U.S. Department of Commerce considered six criteria in determining the market or non-market status of the Ukraine economy. Those criteria included the extent of currency convertibility, free bargaining for wage rates, foreign investment, government ownership or control of production, government control over the allocation of resources, and other relevant factors.

ECONOMIC POLICY

US, UKRAINE TO SIGN WTO PROTOCOL IN COMING WEEKS, US OFFICIAL SAYS The United States and Ukraine will sign a protocol on mutual access to their markets in the coming weeks, Deputy Secretary of the U.S. Department of Commerce David Sampson has said.

He told Ukraine's First Deputy Premier Stanislav Stashevsky in Kyiv on Friday that the U.S. decision providing Ukraine with market economy status was to be announced on that day, the press service of the Ukrainian official reported. The U.S. official pointed out that the two events might be weighty argument for the U.S. Congress to cease applying the Jackson-Vanik amendment to Ukraine.

FOREIGN MINISTER PREDICTS SIGNING OF WTO PROTOCOL BETWEEN UKRAINE AND US SOON Ukraine hopes to sign a protocol with the United States on mutual access to markets soon, Ukrainian Foreign Minister Borys Tarasiuk has said. He was commenting on his meeting with Deputy Secretary of the U.S. Department of Commerce David Sampson in Kyiv on Friday.

Sampson in turn said that the United States was striving to sign the protocol as soon as possible. The sides have achieved significant progress, he said. He said he was scheduled to meet with Ukrainian officials representing various ministries and agencies to tackle several outstanding issues.

UKRAINE SURE TO JOIN WTO IN 2006, GOVERNMENT OFFICIAL SAYS Ukraine will join the World Trade Organization in 2006, First Deputy Economy Minister Andriy Berezin has said. "I think we are sure to become a member of the WTO in 2006," he said at a press conference in Kyiv on Friday.

The government's main task is to settle all issues with the United States, paving Ukraine's road to the WTO, he said. He said the government understands the problems and knows how to settle them. "I hope we will settle the issue in the coming months," he said.

He described the U.S. decision to give Ukraine market economy status as an important act from that country, which would facilitate the development of relations with the United States. The decision will increase the opportunities of Ukrainian company and entails "trust from U.S. companies and significant growth in investment in Ukraine."

RUSSIA WILL HELP UKRAINE, KAZAKHSTAN JOIN WTO - GREF Russia will do everything it can to help Ukraine and Kazakhstan join the World Trade Organization, Economic Development and Trade Minister German Gref told reporters.

"This is not a football field where we need to compete,' he said. Gref said he was surprised where such fears come from that Russia would hinder Ukraine's accession to the WTO. This is not true, he said. If Russia joins the WTO first and if Russia's "phase of joining the WTO is much more advanced than Ukraine's, then after Russia's accession its first job will be to offer all the help it can for Ukraine and Kazakhstan to join the WTO," Gref said.

WORLD BANK PRESIDENT SAYS RUSSIA SHOULD BE INTERESTED IN UKRAINE'S DEVELOPMENT World Bank President Paul Wolfowitz said that Russia should be interested in Ukraine's development.

Commenting on the recent natural gas price dispute between Russia and Ukraine, Wolfowitz said that the world needs an efficient and smoothly operating energy resources market, which is particularly important for relationships between Russia and Europe. The period when significant subsidies for energy existed in relations between certain countries are gradually becoming a thing of the past should facilitate development in these countries, he said. He suggested that successful development of the countries neighboring Russia meets with Russia's own interests. Wolfowitz also urged the leading industrial nations to realize that their prosperity might be endangered if many countries remain poor.

Should Russia understand this, it should be interested in Ukraine's development just as the U.S. and the European Union are interested in the development of other countries, he said. Wolfowitz praised Russia's decision to write off $688 million of debt owed to it by the 16 poorest African nations. Rich nations should view helping poorer nations as their moral obligation rather than as charity and, by doing this, they act in their own interests, he said.

UKRAINE SHOULD DEFEND NATIONAL INTERESTS IN FLEET TALKS, YUSCHENKO SAYS

Ukraine should have a clear strategy aimed at defending its national interests at talks on the deployment of the Russian Black Sea Fleet on its territory, Ukrainian President Viktor Yuschenko said.

Yuschenko met with Prime Minister Yuriy Yekhanurov, other ministers and senior presidential secretariat officials on February 13, the presidential press service told Interfax. "Ukraine should enter negotiations on the terms for the provisional presence of the Black Sea Fleet of the Russian Federation on the territory of Ukraine with a clearly formulated strategy. Such a strategy should help the states fulfill their previously signed bilateral agreements and focus on defending the national interests of Ukraine and those of the Crimean region, which houses the Russian fleet," the president said. "All rent terms should be guided by appropriate international agreements and take account of international experience and today's trends on the real estate market," he said.

Kyiv is hosting the first session of the Yuschenko-Putin commission's sub-commission for the Russian fleet on Tuesday. Ukraine favors a switch to market standards in settlements for the Russian fleet's deployment on Ukrainian soil, Ukrainian First Deputy Foreign Minister Volodymyr Ohryzko told the session. "Today we are speaking about a switch to market principles in our relations," he said. "We have come here with an absolutely clear mandate to confirm the inviolability of the underlying agreements dated 1997 and find a solution to certain issues in our relations with Ukraine," Russian Deputy Foreign Minister Grigory Karasin said.

RUSSIAN FLEET RENT SHOULD BE RAISED TO $200M - UKRAINIAN OFFICIAL Russia should pay at least $200 million in rent annually for its Black Sea Fleet's base in Sevastopol, city administration deputy chief Hryhory Lutsai said in an interview with Ukraine's Delo newspaper published on Tuesday.

"The Black Sea Fleet of the Russian Federation occupies more than 3,000 hectares in Sevastopol. As for land ownership, the price may range from $3,000 to $20,000 for one hundred square meters. Everything depends on where the plot of land in question is located," he said. "By the way, the Black Sea Fleet has quite attractive land plots. Let us calculate. If the rent contract is valid for 15 years and the average land price amounts to $10,000 per hundred square meters, the rent should stand at $200 million a year," he said. "But it is not only the issue of land. The fleet also uses immovable property and radio frequencies. Moreover, radioactive emissions cause damage to the environment," Lutsai said. Russia's rent for the base of its Black Sea Fleet in Ukraine currently stands at $97.75 million a year.

Sevastopol is home to several commercial ports, he said, adding that new ports can be built, independent of the presence of the Russian Black Sea Fleet.

UKRAINE TO NEGOTIATE SWITCH TO MARKET PRINCIPLES FOR RUSSIAN PAYMENT FOR BSF DEPLOYMENT IN CRIMEA Ukraine plans to raise the issue of a transition to market principles of payment for the Russian Black Sea Fleet's deployment in Ukraine, Ukrainian Deputy Foreign Minister Volodymyr Ohryzko said. "Now, we are switching to market principles of payment. That is why we will talk about the respective calculations in the view of the Black Sea Fleet's temporary stay in Ukraine," Ohryzko said during a break in a meeting of a subcommittee on the Russian Black Sea Fleet deployment in Ukraine under the Yuschenko-Putin commission, which was held in Kyiv on Tuesday.

The deputy foreign minister said this was not an unusual position for Ukraine to take. "I believe this is clear for both the general public and Russia," he added.

RUSSIA TO FULFILL ALL GAS DELIVERY CONTRACTS WITH EUROPE - KUDRIN Russia will fulfill all of its contractual obligations related to natural gas shipments to Europe, even if it has to increase volume should Ukraine continue to take Russian gas without permission, Russian Finance Minister Alexei Kudrin told a news conference in Moscow on February 11. "We will do our best to provide Europe with gas in full even if we have to increase our deliveries," he said. Disruptions plagued gas shipments to a number of European countries in January and February, "which highlights the need for additional supply guarantees," the minister said.

The Shtokman gas condensate field, which has nearly 3.2 trillion cubic meters of gas reserves, may become an additional source for Europe and North America, Kudrin said. "We expect to begin developing the deposit in 2010. Its annual gas output will be brought to 70-90 billion cubic meters over several years," he said. Gazprom plans to invite the world's major oil and gas companies to join the project, he added. The North European Gas Pipeline will offer additional guarantees of gas supplies, Kudrin said. Gas delivery and distribution joint ventures may also help ensure stable gas shipments, he said.

CHERNOMYRDIN SLAMS WEST FOR SUPPORTING KYIV IN GAS CONFLICT WITH MOSCOW Russian Ambassador to Ukraine Viktor Chernomyrdin says Western countries have no grounds to criticize Russia for what he calls its "geopolitical expansion." He was addressing students of St. Petersburg Polytechnic University, the Russian Embassy in Ukraine told Interfax-Ukraine on Friday.

Today the world political scene sees new phenomena, such as "the geopolitical expansion" of countries rich in mineral resources on the one hand, and irritation with this expansion from rival countries, he said. The recent gas conflict between Ukraine and Russia was an example of the process, "when the United States and its allies were rushing to condemn Russia for its reasonable desire to build its trade and economic relations with Ukraine on market principles," he said.

His lecture concerned energy security in the modern world.

UKRAINE TO ASK RUSSIA FOR ADDITIONAL 500 MILLION CUBIC METERS OF GAS FOR FEBRUARY, PREMIER SAYS Ukraine is to seek an agreement with Russia on supplies of an additional 500 million cubic meters of gas in February, Ukrainian Premier Yuriy Yekhanurov announced in Alchevsk on Wednesday.

He said a Ukrainian delegation was working in Moscow on signing with Russia five annexes to the Ukrainian-Russian gas agreements. "Among them there are annexes on the volume of gas supplies for February. We want to reach an agreement so that at least 500 million cubic meters are added, because we are (using) an excessive volume of gas again," he said.

PM SAYS UKRAINE HAS INFORMATION THAT TURKMENISTAN OFFERED RUSSIA TO RAISE GAS PRICE TO $100 Ukrainian Premier Yuriy Yekhanurov said Ukraine possessed information that Turkmenistan offered Russia to raise the price of its gas to $100 per a thousand cubic meters. "We have fresh information that Turkmenistan decided to offer the Russian Federation a price of about $100 per a thousand cubic meters. Unfortunately, this is unofficial information, but such information exists," the premier said at a press conference in Ivano-Frankivsk.

The premier stressed that this decision would not affect the gas price for Ukraine. As reported, Turkmen President Saparmurat Niyazov said on national television that Turkmenistan plans to raise the price for exported gas 1.5 times to $100 per 1,000 cubic meters in 2006. "Europe is experiencing (energy supply) problems and prices for energy are rising. We have been increasing prices, too. Previously, we sold gas at $44 (per 1,000 cubic meters) and now at $65. However, we will most probably raise the price even higher, to $100 in September-October, 2006," the Turkmen president said. Earlier reports said that Ukraine's national company Naftogaz Ukrainy is to import 35-37 billion cubic meters of Turkmen gas under a contract with the Turkmengaz national gas company.

TURKMENISTAN'S ACTIONS MAY CHANGE GAS PRICE FORMULA FOR UKRAINE - KHRISTENKO Turkmenistan's intention to raise gas prices to $100 per 1,000 cubic meters this fall will alter the gas price formula for Ukraine, Russian Industry and Energy Minister Viktor Khristenko said.

It is premature to say how much gas prices for Ukraine may change, he said. "Everything is changing, and even the fixed price formula for RosUkrEnergo may fluctuate depending on the situation on the market," he said. "The position of (Turkmen President Saparmurat) Niyazov is predictable," Khristenko said. If Turkmenistan raises the gas price, the gas price formula for Ukraine will change as well, he said. There is still much work to be done on the long-term gas contract between Russia and Turkmenistan, Khristenko said. The contract may be ready by the end of this year. "We will work out a price formula for the Turkmen gas to be delivered up to 2025," he said.

YEKHANUROV DENIES CORRELATIONS BETWEEN TURKMEN GAS PRICES FOR UKRAINE AND FOR RUSSIA

Ukrainian Premier Yuriy Yekhanurov has denied that Ukraine will pay more for Turkmen gas than stipulated in gas agreements because Turkmenistan plans to increase its gas price for Russia.

He was commenting to Interfax-Ukraine on a recent statement by Russian Industry and Energy Minister Viktor Khristenko that Turkmenistan's increasing gas price for Russia to $100 per 1,000 cubic meters means changes in the formula of gas price to Ukraine. "I don't understand this correlation (with the price for Russia)," he said. "We care more about the Ukrainian price - the price we signed with Turkmenistan for the first half-year is $50 and for the second half-year is $60 per 1,000 cubic meters," he said. He said a Ukrainian delegation will go to Turkmenistan on Saturday to hold negotiations with the government and the Turkmengas company.

UKRAINE TO OFFER INVESTORS CHANCE TO BUILD GAS PIPELINES Ukraine plans to propose to the European Union and other foreign investors to take part in the construction of new gas pipelines though its territory, with the possibility of subsequently privatizing these pipelines, Ukrainian Prime Minister Yuriy Yekhanurov said. Speaking on February 11 at a meeting with administrative-economic officials in Ivano-Frankivsk region, the prime minister said that the government would take all the necessary steps to attract foreign capital into an international consortium that is currently building the Bohorodchany-Uzhgorod gas pipeline.

"We will propose to the European Union and to all foreign investors to take part in the construction of additional capacities, as these capacities could in the future be the property of a private structure," the prime minister said. The 240-km Bohorodchany-Uzhgorod gas pipeline is part of the Novopskov (Russia) - Uzhgorod gas pipeline. It has a project capacity of 19 billion cubic meters of gas per year and will cost about $560 million. The pipeline passes through the Ivano-Frankivsk and Transcarpathia regions of Ukraine.

UKRAINE NEEDS MORE GAS TO GUARANTEE SUPPLIES TO EUROPE - PM Ukraine needs to pump an additional 20 billion cubic meters of gas into underground storage facilities to guarantee gas deliveries to Europe, Prime Minister Yuriy Yekhanurov said. "We need 20 billion cubic meters of gas to guarantee a reliable system of supplies to Europe," the prime minister told a meeting of Ivano-Frankivsk regional officials at the weekend. Ukraine's gas pipeline system needs to be upgraded, a process which will take five years, Yekhanurov said. The capacities of underground gas storage facilities must also be increased, he said.

"Underground gas storage facilities could be run by one company, which could earn serious money in the future. However, they must be restructured," Yekhanurov said at a news conference after the meeting. This project will require about $100 million investment, the prime minister said.

$110 IS MAXIMUM ACCEPTABLE GAS PRICE FOR UKRAINE - MINISTER The maximum acceptable price for gas in Ukraine is $110 for 1,000 cubic meters, Ukrainian Economics Minister Arseniy Yatseniuk told the parliament on Tuesday. "Speculation about other prices is absolutely unacceptable. Any higher prices will spark an economic crisis," he said, noting that this is clear from consultations with Ukraine's industrial associations. Yatseniuk said that the government had set the maximum price for gas for all categories of consumers at $110 per 1,000 cubic meters for the next five years "This decision was intended to limit sales of natural gas on the domestic market and prevent the sale of gas at unregulated prices," the minister said. Moreover, this decision is not a recommendation but a must for state agencies and private companies, he said. The National Commission for Regulating the Electricity Sector, in line wit this decision, is expected to confirm differentiated prices for various consumer categories, but, anyway, prices must not exceed $110, although they may be lower, Yatseniuk said. The minister announced that the state price inspectorate has been ordered to check whether all organizations selling gas keep to this requirement.

ECONOMY MINISTRY INSISTS ON PEGGING TRANSIT TARIFF TO IMPORTED GAS PRICE Ukraine's Economy Ministry insists on pegging the gas transit tariff to the price of Russian gas imported to Ukraine, Economy Minister Arseniy Yatseniuk says. "Russia as the basic supplier of gas - we don't care whether it is Gazprom or entities affiliated with it in RosUkrEnergo - has received absolutely clear guarantees regarding transit tariffs and the tariff for storing gas in our underground gas storage facilities. If it runs that the transit and gas storage tariffs are unchangeable, it is objective that Ukraine should demands the same rules of the game (for the price of imported gas)," Yatseniuk said in the parliament on Tuesday.

He said the price of $95 per 1,000 cubic meters should be the same for five years. Also, Yatseniuk said that with the growth in gas price for Ukraine, the transit tariffs would be revised also. "If we're talking about a theoretical growth in the gas price for Ukrainian consumers, it will definitely mean an increase in the price for all of other services, I stress, all of the other services provided by Ukraine," Yatseniuk said.

UKRAINE, BELARUS AIM AT $2 BILLION TRADE IN 2006 - BELARUSIAN PM Trade between Ukraine and Belarus reached a record $1.8 billion in 2005, and this year's target is $2 billion, Belarusian Prime Minister Sergey Sidorsky told Ukrainian First Deputy Prime Minister Stanislav Stashevsky in Minsk on Thursday.

"Trade stood at 1.3 billion before 2005 and the default in Russia. This year our target is $2 billion, including $1 billion in Belarusian exports," he said. "We will encourage the access of Belarusian plants to the Ukrainian market and welcome Ukrainian business in Belarus," Sidorsky said. Stashevsky confirmed the wish to increase trade to $2 billion this year. "We have new areas for cooperation, including energy and joint projects," he said. Ukraine is interested in Belarusian agricultural machinery, Stashevsky said. Bilateral trade amounted to $1.802 billion in 2005, which was a 66.1% year-to-year increase. Belarusian exports reached $907.8 million (68.2% increase), and imports amounted to $893.9 million (64%). Last year Ukraine ranked fourth among the trade partners of Belarus, after Russia, the Netherlands and Germany.

YUSCHENKO PRAISES DEVELOPMENT OF RELATIONS WITH LATVIA Ukrainian President Viktor Yuschenko is satisfied with the progress in Ukraine's relations with Latvia. He was speaking at a meeting with Latvian Parliament Speaker Ingrida Udre in Kyiv on Tuesday, the presidential press service reported. "We feel deep mutual understanding and support that Ukraine needs, including in the issue of European and EuroAtlantic integration," he said.

Yuschenko and Udre also discussed how to step up trade and economic cooperation.

PM, LATVIAN SPEAKER DISCUSS BILATERAL ENERGY COOPERATION Ukraine's Premier Yuriy Yekhanurov and Latvian parliamentary speaker Ingrida Udre discussed the issues of bilateral cooperation in energy sector and tourism during their meeting in Kyiv on Tuesday. The meeting also addressed the political and economic situation in Ukraine and Latvia, the press service of the Ukrainian Cabinet of Ministers reported on Tuesday. Yekhanurov briefed Udre on the ongoing preparations to the Rada elections to take place in Ukraine on March 26.

He said the elections are very important for Ukraine, as the country can realize its economic reforms only if a constructive parliament-government coalition is formed after the elections. He said Ukraine was seeking to increase electricity exports, including to the Baltic countries. He also said Ukraine was taking interest in Latvia's experience in the development of the rural (green) tourism. Udre in turn said Latvia was interested in diversification of energy supplies, including electricity supplies. She said her country was prepared to share its experience with Ukraine on obtaining membership in the EU and NATO.

POLISH PRESIDENT, UKRAINIAN PREMIER DISCUSS REALIZATION OF JOINT ENERGY PROJECTS Polish President Lech Kaczynski and Ukrainian Premier Yuriy Yekhanurov discussed joint energy projects in Warsaw on Thursday.

"We hope to find many joint projects in Energy sector," he said to the press in Warsaw on Thursday commenting on the results of the meeting with the Polish president. He said the meeting addressed the extension of the Odesa-Brody pipeline to Gdansk and the development of trade and economic cooperation. The issues of gas cooperation were discussed also. The agenda of the Polish president's visit to Ukraine was also a subject of the discussions, Yekhanurov said.

UKRAINE, POLAND TO IMPLEMENT ODESA-BRODY OIL PIPELINE CONSTRUCTION PROJECT IN 2006 Ukraine and Poland are to implement a project on the Odesa-Brody oil pipeline this year and to use it to transport oil to Europe, Polish Premier Kazimierz Marcinkiewicz has said. "In 2006 it will become possible to implement this project," he said at a joint press conference with Ukrainian Premier Yuriy Yekhanurov after talks in Warsaw last week. Yekhanurov said the agreement on using the Odesa-Brody pipeline includes the possibility of stopping the pumping of oil supplies through the pipeline in the reverse direction within 90 days. "There are legal possibilities to cancel the reverse, and there are mechanisms for how to do that," Ukrainian premier said. According to Marcinkiewicz, concrete measures that will make the project economically feasible will be performed in the near two months. He stressed that one of his government's priorities is Polish energy security and diversification of energy sources.

"The Odesa-Brody project fits the bill," he said.

UKRAINIAN, POLISH PREMIERS SIGN ODESA-BRODY-PLOCK DECLARATION Ukrainian Prime Minister Yuriy Yekhanurov and Polish Prime Minister Kazimierz Marcinkiewicz have signed a joint declaration on government support for the Odesa-Brody-Plock pipeline project. An Interfax correspondent reports that the signing ceremony took place in Warsaw on Thursday after talks between government delegations for both countries, ahead of private talks between the two prime ministers. The Ukrainian Fuel and Energy Ministry has directed its departments and Naftogaz Ukrainy to prepare a feasibility study by April 1, 2006 for extending the Odesa-Brody pipeline to Plock. The ministry also ordered the preparation by April 1 of a draft protocol on amendments to an agreement between the Ukrainian Cabinet of Ministers and the Russian government on the transit of oil through Ukrainian territory, and also a draft protocol on amendments to an agreement between the governments of Ukraine and Kazakhstan on cooperation to supply Kazakh oil to Ukraine and transit it through the country. Ukrtransnafta CEO Oleksandr Todiichuk told journalists that the project may be implemented within three years. Ukraine and Poland have plans to realize the Odesa-Brody pipeline project to transport oil to Europe in 2006, Marcinkiewicz said. "In 2006 there will be an opportunity to realize the project," he said. Yekhanurov in turn said that the agreement on the use of the pipeline contains the possibility of stopping oil transportation through the pipeline toward Odesa within 90 days. The Polish prime minister said certain measures would be taken within two months to make the project profitable. "There are legal opportunities to cancel the reverse, and there is a mechanism how to do this," the Ukrainian prime minister said.

"Concrete action will be taken over the next two months, which will make it possible to make this project self-financing," Marcinkiewicz said. He said the project realization would be a part in the Polish energy security strategy. He said that one of the priorities of his government is Poland's energy security and diversifying sources of energy supplies. He said that the Odesa-Brody project fits into this strategy. The Odesa-Brody pipeline was built in 2001 to transport Caspian oil. It was not used for several years. At the end of June 2004 the Ukrainian government permitted the use of the pipeline to transport Russian oil in reverse. A contract to pump oil through the Odesa-Brody pipeline to the port of Yuzhny was signed on June 8, 2004. This contract covers the transportation of up to 9 million tonnes of Russian oil per year to Yuzhny.UKRAINE TO INVEST TRANSIT TARIFF INCREASE IN MODERNIZATION - PM Ukraine plans to invest all the funds it receives from an increase in the gas transit tariff in modernizing the gas transport system, Ukrainian Prime Minister Yuriy Yekhanurov said. "We will do everything to ensure that all the funds from the increase in the transit price, which we made from January 1, goes only towards the modernization of the system," the prime minister said in Warsaw on Friday. He also said that Ukraine plans to fully certify all of its gas transport system. "We should change in Ukraine to the principle 'transit or pay,'" Yekhanurov said. The prime minister also said that Ukraine plans to double - to 34 billion - 36 billion cubic meters - the volume of its underground gas reservoirs in the west of the country.

UKRAINE TO START EXPORTING ELECTRICITY TO BALTIC COUNTRIES WITHIN TWO YEARS, YEKHANUROV SAYS Ukraine plans to double electricity exports to the West within by supplying power to the Baltic countries, Ukrainian Premier Yuriy Yekhanurov said on Friday.

"I'm confident that we will come to the energy markets of the Baltic countries within two years, and we will double or triple energy supplies to the West," Yekhanurov said during his visit to Warsaw. He said the project could be interesting to Polish business. Ukraine will be increasing electricity exports monthly. He invited businessmen from Poland and other countries to invest in the development of the energy infrastructure in the west of Ukraine.

UKRAINIAN DELEGATION SIGNS DOCUMENTS ON BILATERAL COOPERATION WITH CZECH REPUBLIC A Ukrainian delegation led by Premier Yuriy Yekhanurov has signed a number of documents with the Czech Republic on bilateral cooperation.

Ukrainian Industrial Policy Minister Volodymyr Shandra and Czech Defense Minister Karel Kuhnl signed an agreement on cooperation in defense establishment. Ukrainian Culture and Tourism Minister Ihor Likhovy and Czech Minister for Regional Development Radko Martinek signed an agreement on cooperation in tourism.

INDIA INTERESTED IN INVESTING IN UKRAINIAN COALMINES Indian business is interested in coal extraction in Ukraine, Indian ambassador to Ukraine Debabrata Saha said during a meeting with Ukrainian Coal Industry Minister Voktir Topolov in Kyiv on Tuesday.

As the Coal Ministry's press service reported, the minister assured the ambassador that the privatization of Ukraine's coalmining companies would be transparent and would be conducted only through open tenders. He also said Ukrainian entrepreneurs were interested in investing in the reconstruction of steel mills and opening new mines in India. The sides agreed to more closely cooperate in this and other areas of mutual interest.

UN FORECASTS UKRAINE'S ECONOMY TO GROW 5% IN 2006 The United Nation forecasts Ukraine's economy will grow 5% this year, Jos Antonio Ocampo, Under-Secretary-General of the UN Department of Economic and Social Affairs (UNDESA), has said. He was speaking in his annual address to the Economic and Social Council's (ECOSOC). Ocampo noted that this year, economic growth in transit economy countries is projected at 5.9% on average.

PINZENYK ON LEAVE FOR TIME OF ELECTION CAMPAIGN, YEKHANUROV SAYS Finance Minister Viktor Pinzenyk has taken a leave so as to take part in the election campaign, Ukrainian Premier Yuriy Yekhanurov has said. He was commenting on media reports that the Ukrainian finance minister has submitted his resignation. "Viktor Pinzenyk has taken a vacation for the time of the elections - this is the truth, all the rest is not the truth so far," he told the press in Warsaw on Thursday. Later on the day, the Finance Ministry's press service reported that Pinzenyk had taken an official leave until the end of the election campaign. The Ministry did not provide any other details. A number of Ukrainian media reported on Thursday that the finance minister had submitted his resignation. The media alleged that his move was motivated by his disapproval of the recent Ukrainian- Russian gas agreements. According to a source close to financial circles, Pinzenyk has submitted his resignation. Another source told the agency that Pinzenyk is likely to take a vacation before the elections.

Pinzenyk is the leader of the Reforms and Order Party and is number two in the Pora-ROP bloc. Politicians were discussing the possible resignation of Pinzenyk on Thursday. MP Andriy Kliuyev, the head of the parliamentary energy committee, said Pinzenyk was right in his decision to resign, as the situation with revenues to the budget was not easy and the national budget for 2006 needed revision.

KALNYK TO ACT AS FINANCE MINISTER DURING PINZENYK'S LEAVE First Deputy Finance Minister Viktor Kalnyk will be acting finance minister while Finance Minister Viktor Pinzenyk is on leave, Interfax-Ukraine learned at the Finance Ministry on Friday. As reported, Finance Minister Viktor Pinzenyk has requested leave so as to take part in the election campaign. Pinzenyk is number two in the election list of the Bloc of the Reforms and Order Party and the Pora Party.

ACCESS TO FINANCIAL SERVICES PROJECT TO START IN Q3, 2006, SAYS UKRAINIAN FINANCE MINISTRY The beginning of the mutual Ukrainian government and World Bank Access to Financial Services Project is planned for the third quarter of 2006. "According to the agreed plan, the next stage of talks between the World Bank and the Ukrainian side is planned for March 16-17 2006. A meeting of the World Bank's board may take place in May. The ratification of the agreement ids planned for June-September, and the start of the project is set for Q3, 2006," a Finance Ministry's press release reads. As earlier reported, Dnipropetrovsk-based CJSC PrivatBank, Kyiv- based OJSC Nadra, and Kyiv-based OJSC Kreditprombank will obtain funds under the World Bank's Access to Financial Services Project. According to the finance ministry, the intermediary banks were selected at a tender held in several phases since October 2005, the Ukrainian Finance Ministry reported on its official Web site on Thursday.

As was reported earlier, 19 banks submitted bids for the tender. The project's development objectives are to expand access to financial resources and services for rural small- and medium- sized enterprises (SMEs), and to enhance the legal, regulatory and institutional framework for the credit market in Ukraine so as to increase the accessibility and availability of financial resources for under-serviced groups of enterprises and the population.

The project will finance the first phase of the Adaptable Program Loan (a lending instrument) aimed at increasing access to finance for rural SMEs and private entrepreneurs. The project will provide a credit line to eligible rural SMEs and agricultural enterprises. In addition, the project will finance institutional building for eligible financial intermediaries (banks) and technical assistance for selected government agencies involved in developing appropriate credit market legislation, as well as a new regulatory framework, infrastructure and new financial services. As was reported, in November 2005, the World Bank announced that it would lend about $150 million under the implementation of this project January through March 2006. The funds will be lent for 20 years, including a five-year grace period.

MOST LOCAL BUDGETS ADOPTED, SAYS UKRAINIAN FINANCE MINISTER Most local budgets in Ukraine have already been adopted, Ukrainian Finance Minister Viktor Pinzenyk told journalists last week. "The overwhelming majority of local budgets have been adopted," Pinzenyk said. According to the Ukrainian State Treasury, in 2006 money for the state budget was transferred from 41 local budgets, while in 2005 money came from 55 local budgets. At the same time, allocations from the national budget in 2006 were transferred to 649 local budgets, while in 2005 allocations were made to 635 local budgets. The Ukrainian state budget for 2006 was adopted revenues of UAH 124.945 billion, expenditure of UAH 137.081 billion, and a maximum deficit of UAH 12.909 billion.

BUDGET OVER-FULFILLED BY 8.9% IN REVENUES, SPENDING 95.6% OF PLANNED IN JANUARY The national budget of Ukraine to in 8.9% more in revenues than planned in January, while in the same month spending was 95.6% of the plan. According to the country's Treasury, the budget received a total of UAH 5.703 billion, which is by UAH 1.571 billion more than in January 2005. The report also reads that by February 1 the budget received revenues of UAH 6.6 billion, which accounts for 5.3% of the annual target and a UAH 1.48 billion increase year-over-year. The report also reads that in January, spending worth UAH 4.705 billion was allotted and put onto the accounts of the main budget fund managers. The sum was 95.6% of that planned and UAH 561.6 million up year-over-year. Spending on state debt servicing was UAH 206.5 million (on domestic debt servicing spending was UAH 132 million, and on foreign debt it was UAH 74.5 million). These expenses rose by UAH 81.9 million year-over-year.

In January, UAH 366.2 million was used to pay off the state debt (on domestic debt UAH 170 million; foreign UAH 196.3 million). Spending on this rose by UAH 65.2 million year-over-year. The 2006 national budget was endorsed with revenues of UAH 124.95 billion and expenses of UAH 137.1 billion, with a deficit limit of UAH 13 billion. The revenues to the state budget are planned to total UAH 96.6 billion; and expenses UAH 108.25 billion, with the deficit limit at UAH 11.4 billion. The 2006 national budget is planned to be increased by 17.7%, including a rise in revenues of 15.6%, and 16.8% in expenditure.

INDIVIDUALS' DEPOSIT GUARANTEE FUND UPS REPAYMENT SUM FROM UAH 5,000 TO UAH 8,000 The individuals' deposit guarantee fund has increased the sum of maximum repayments from UAH 5,000 to UAH 8,000, Interfax-Ukraine learned from the fund last week. The fund decided to increase the maximum repayment sum on January 31 in a decision taken by the fund's administrative council, and registered by Ukrainian Justice Ministry on February 7. Fund representatives said the decision comes into force on February 18.

As earlier reported, with reference to the National Bank of Ukraine, the general amount of deposits dropped in January by UAH 1.8 billion, to UAH 131.1 billion, while total deposits of individuals grew by 1.1%, to UAH 74.1 billion.

YUSCHENKO VOWS TO SET UP ENERGY SAVING AGENCY, PROPOSES PROGRAM TO BOOST ECONOMY'S ENERGY EFFICIENCY Ukrainian President Viktor Yuschenko has promised to set up an energy saving agency and has outlined the major points of a program to improve the energy efficiency of the national economy. "An energy saving agency will be set up at the national level. The formation of a new energy efficiency program is a task of national scale," Yuschenko said in his weekly radio address on February 11. The president stressed that business should take part in the modernization of economy, whereas the state should support businesses. "I will meet with representative of domestic big business soon. We should jointly find the way to work efficiently under new conditions," the president said. The head of state promised to encourage industries and local governments to save energy via the granting of tax and tariff relief. "I am sure it's time to introduce new energy technologies and replace outdated equipment. The government will support entrepreneurs' intentions to invest in energy efficiency by cutting taxes and tariffs. This practice is widespread in Europe," he said. According to Yuschenko, the national program for raising the energy efficiency of the Ukrainian economy should include cutting energy consumption by half, diversifying energy supplies, and using local energy resources.

UKRAINIAN PRESIDENT TO CALL ROUNDTABLES ON GAS ISSUES, SECRETARIAT SAYS Ukrainian President Viktor Yuschenko will call together roundtables on gas with Ukraine's industrialists, Ivan Vasiunik, the first deputy head of the presidential secretariat, has said. The president's agenda for the next week includes a gas issues roundtable, he said at a press conference in Kyiv on Friday. "There are preliminary grounds for a specific business talk with industrialists," he said.

"A preliminary (gas) price has been set up, there is a format for cooperation, :and there is a draft memo for the roundtable to approve," he said.

KYIV TO INTRODUCE LICENSING FOR GAS EXPORTS Licensing for the export of gas will be introduced in Ukraine, Ukrainian Economics Minister Arseniy Yatseniuk told the Ukrainian parliament on Tuesday. "We're introducing licensing for the export of natural gas, not only imported gas but for Ukrainian-produced gas as well, to ensure a balance of gas in Ukraine," he said. Yatseniuk also said the government has decided to prepare a bill on introducing limits for gas consumption taking into account energy resource saving technology. "Schematics are being drawn up, which are similar to electricity, where excessive use (of gas) will be finable," he said.

UKRAINE'S KINAKH URGES SUPPORT FOR GOVERNMENT ENERGY POLICY Ukraine's security chief said the nation's vital strategic interests should not be used as a bargaining chip by rival political forces. National Security and Defense Council Secretary Anatoliy Kinakh was commenting on a parliamentary session which examined the government's performance in meeting Ukraine's demand for natural gas and energy conservation, the council's press service said. All branches of power and political forces should concentrate on more important tasks, and not a review of gas agreements, Kinakh said. Ukraine should use maximum effort in order to step up work in all aspects forming the energy security of the country, he said. The most important tasks are introduction of energy conservation technologies, more active use of non-traditional and alternative power sources, research and development of domestic energy resources at offshore fields in the Black Sea, he said. Gas agreements with Russia should not be assessed as a success for one side, but as a possible balance of compromises at this particular stage, he said. Gas agreements between Ukraine and Russia are the first step toward transitioning to equal and mutually beneficial cooperation based on market principles.

GOVERNMENT ADOPTS RESOLUTION ON LIMITING NATURAL GAS PRICE FOR ALL TYPES OF CONSUMERS IN UKRAINE The Ukrainian cabinet has adopted a resolution limiting the price of natural gas for all types of consumers, including households, at the level of $110 per thousand cubic meters (transportation, supply and VAT not included) until December 31 2010. This was fixed in the governmental resolution No.128 of February 9 2006, posted on the cabinet's official Web site. The maximum price of natural gas sold by monopolist enterprises to various types of Ukrainian consumers are set by National Electricity Regulatory Commission (NERC), which regulates the activity of the natural monopolies electricity and oil and gas spheres and conducts price and tariff policy in this sphere.

Earlier, the price of natural gas sold in small amounts by non- state gas traders was not limited.

GAS TO COST INDUSTRIAL CONSUMERS $110 PER 1,000 CU M The cost of natural gas for industrial consumers in Ukraine will amount to about $110 per 1,000 cubic meters, Ukrainian Prime Minister Yuriy Yekhanurov said on Ukrainian television. In connection with this, Yekhanurov said that it is important to increase domestic gas production in Ukraine. "This could only happen in Ukraine. We have gas, and we are not extracting it. Incidentally, Ukrainian gas costs $38-$39. That is its cost price," the prime minister said. The Ukrainian government issued a resolution capping natural gas prices for all categories of consumers at $110 per 1,000 cubic meters for five years.

LIMIT ON GAS PRICE FOR INDUSTRIAL CONSUMERS TO INCREASE 30% The limit on gas prices for industrial consumers in Ukraine, not including tariffs for Transportation, delivery and VAT, will amount to UAH 548.0 per 1,000 meters from February 20, which is 29.8% or UAH 125.9 more than at the moment. An Interfax correspondent reports that this was decided by the National Commission for Electricity Regulation at a meeting on Thursday. The commission, subject to approval by the Economics Ministry, sets limits on prices for natural gas sold to monopolies, including subsidiaries of the national joint stock company Naftogaz Ukrainy.

UKRAINIAN MPS HOPING CURRENT PARLIAMENT PASSES ENERGY SECURITY PLAN The head of the Verkhovna Rada's committee for construction, transport, housing utilities and communications, Valeriy Pustovoitenko, hopes the current parliament will manage to approve an energy security plan for the country. Pustovoitenko said this at the Interfax-Ukraine press center on Thursday. The plan has already been submitted to the parliament as a draft law, the MP said. The chairman of the Verkhovna Rada's committee for the fuel and energy complex, nuclear policy and nuclear security, Andriy Kliuyev, said the bill's authors based the plan on Ukraine's energy strategy, which was designed for the period up to 2030, and which encompasses all energy sectors.

UKRAINIAN PARLIAMENT ADOPTS BILL ON STATE REGISTRATION OF ENTERPRISES Ukrainian Verkhovna Rada has adopted a bill on changes to some Ukrainian laws, connected with the sate registration of the enterprises.

The bill was backed by 240 out of 396 MPs. The bill is directed at implementation of the Ukraine - EU action plan, its part of creation a common state register of legal entities and individuals - entrepreneurs.

STATE STRUCTURE SHOULD CONTROL MARKET FOR NEW HOUSING, SAYS CONSTRUCTION MINISTER A state structure should oversee the activities of participants in the market for new housing, Minister of Construction, Architecture and Housing Municipal Economy of Ukraine, Pavlo Kachur said at a press conference on February 13. He said that currently the ministry has no means to influence the market. The minister also said that local authorities responsible for allotting land for the construction sites have to be responsible for the interests of housing market participants.

ABOUT 730,000 HECTARES OF WINTER CROPS DAMAGED BY FROST IN UKRAINE January's severe frosts have damaged about 730,000 hectares or 12% of Ukrainian winter crops, Agriculture Minister Oleksandr Baranivsky said on Tuesday. "About 730,000 hectares or 12% of the winter crops have been destroyed," the minister said in the Verkhovna Rada, Ukraine's parliament. Quoting data from the regions, he also reported that as of February 10, about 4 million hectares or 65% of Ukraine's winter crops were in good or satisfactory condition, and 1.6 million hectares or 26% were in a weak condition. He said the considerable snow layer of about 4-20 centimeters now protected the crops from the frost. According to the minister, it is planned to revise the structure of the sown areas of spring crops and to increase it to 20.2 million hectares, in particular, to increase grain corn, barley and wheat sowing. According to the State Statistics Committee, 6.194 million hectares were sown with winter crops to be harvested in 2006, which is 18.8% less year-over-year. A total of 6.059 million hectares were sown with grain crops, which is 18.8% down year- over-year.

AGRARIAN FUND TO PURCHASE GRAIN AND SUGAR AT AGRARIAN STOCK MARKET ON FEB 21 Ukraine's Agrarian Fund plans to start purchasing grain and sugar for the state food reserve at the Agrarian stock market on February 21, Agrarian Fund Director General Volodymyr Ovchar has said. He said that stock market sales would be held daily (except for Monday, Saturday and Sunday). He said that according to a government resolution of February 15, the Agrarian Fund will purchase wheat of the third and fourth grades at UAH 690 per tonne and UAH 540 per tonne; and sugar at the minimum price of UAH 2,850 per tonne.

He said it is problematic to purchase sugar at its minimum price, as currently sale quotes are higher. He said it is planned to use UAH 100 million from the state budget to make the purchases He said applications for selling grain have already been submitted to the Agrarian Fund. He also said the fund has resumed giving loans to farmers for grain collateral. He said that loans are given for 8.95% per annum. In 2005, the Agrarian Fund gave loans under the collateral of 645,000 tonnes of grain. Of those, 217,000 were purchased for UAH 91 million. The fund purchased over 95,000 tonnes of grain and 25,000 tonnes of sugar for the state food reserve last year.

AMC PROPOSES TO ISSUE LICENSES TO CONDUCT WHOLESALE TRADE IN SUGAR The Antimonopoly Committee of Ukraine (AMC) has proposed to issue licenses for conducting the wholesale trade in sugar in so as to monitor the situation on the sugar market and prevent anti- competitive violations, according to the AMC's press service. As the AMC's press service reported on February 13, the committee has initiated the introduction of mechanisms to regulate sales of these products, so as to stably satisfy demand in domestic market and prevent seasonal surges in the price of sugar. According to the AMC, a procedure for predicting the quarterly and monthly volumes of trade should be worked out, taking into account the season of the year. The AMC said a state sugar reserve should be formed to allow the state to conduct interventions in the event of sugar shortages. At present, the committee is examining the situation on the domestic sugar market. "If we find violations - price collusion and groundless rises in the price of sugar - very tough sanctions will be (applied)," the press service reported. Earlier, the government ordered the AMC to study the reason behind a recent rise in the price of sugar on the domestic market. Experts said the growth in prices for sugar was caused by several factors, including a rise in the price of sugar on foreign markets, price speculation and the absence of a transparent scheme for transporting sugar. The Ukrtsukor national association of sugar producers of Ukraine said that the growth in prices for sugar is economically groundless, as sugar reserves (which as of February 1, 2006 were 1.7 million tonnes) could guarantee that demand on the domestic market can be satisfied as least until December 1, 2006. According to the association, as of February 10, 2006, wholesale prices fell from UAH 4.10-4.20 to UAH 3.60-3.90 per kilogram. However, experts found it difficult to forecast the further development of the price situation. Specialists put the capacity of the domestic sugar market at 1.8- 2 million tonnes per year.

UKRAINIAN GOVERNMENT INTRODUCES LICENSING OF SUGAR EXPORTS The Cabinet of Ukraine has introduced licensing of sugar exports, the head of the Agriculture Ministry's press service Oleksandr Horobets said on Wednesday, referring to Agriculture Minister Oleksandr Baranivsky.

The decision was made at a meeting of the government on Wednesday, Horobets said. As reported, Baranivsky insisted on the urgent introduction of licensing for the export of sugar as active sugar exports may trigger price hikes on the domestic market. Baranivsky also said that a rise in prices for sugar seen recently in Ukraine was artificially induced. According to him, 1.7 million tonnes of sugar accumulated in unsold stocks by February 1, 2007, making it possible to meet domestic demand until December 1, 2006. He also said that from February 7 through February 14 a fall in prices for sugar by 15-20 kopeks per kilogram was seen on the domestic market. The Agriculture Ministry has already raised the issue of licensing the export of sugar in parliament, but the issue was not supported by MPs. According to price monitoring data from the state agency for control over prices, as of February 10, 2006, the average level of prices for sugar in Ukraine grew by 17.9%, from UAH 3.68 to 4.34 per kilogram compared to January 30, 2006. Ukraine boosted sugar production from sugar beets harvested in 2005 by 5.7% from 2004, to 1.89 million tonnes. In addition, Ukraine has imported around 80,000 tonnes of sugar and 110,000 tonnes of cane sugar since the beginning of last season of sugar beet processing. Demand on the domestic sugar market is estimated at 1.8-2 million tonnes per year.

UKRAINIAN ECONOMY MINISTRY FORECASTS STABLE DOMESTIC SUGAR PRICE Ukraine's Economy Ministry forecasts a stable sugar price on the domestic market, Economy Minister Arseniy Yatseniuk told MPs on Tuesday. "Today it is possible to guarantee that the sugar price will not rise," the minister said in parliament. According to him, the government may cancel the withdrawal of sugar from the free trade regime with Russia, Belarus and Georgia or introduce quotas on raw cane sugar imports in order to lower the sugar price, should it exceed the UAH 3.8 per kilo threshold. "If sugar traders raise the price over UAH 3.8 per kilo, the government will immediately open the bilateral agreements with Belarus, Russia and Georgia, in order to keep the sugar price down," the minister said. He also reported that sugar stocks in Ukraine are estimated at 1.2-1.5 million tonnes.

SPEAKER CALLS FOR URGENT RISE IN CUSTOMS RATES TO PROTECT DOMESTIC PRODUCERS AND CONSUMERS

Ukraine needs urgently to raise its customs rates to protect domestic producers and customers from cheap and low quality products, Verkhovna Rada Chairman Volodymyr Lytvyn says. He made the call at a press conference in Berdychiv in Zhytomyr region. Laws endorsed by the parliament to pave Ukraine's way to join the WTO have significantly reduced the customs duty on a number of goods, making some Ukrainian commodities uncompetitive, Lytvyn said. Ukraine needs to support its producers on the Ukrainian market and to protect national consumers from low quality goods, he said.

"We need to make the rate civilized, at least at the average European level. I think this should be done urgently," he said. Commenting on the economic situation in Ukraine, Lytvyn described it as stagnation. "This is not a crisis yet but not prosperous. We have no crisis today so far, but there is stagnation in the economy," he said.

AGRICULTURE MINISTRY INSTRUCTS ARTEMSIL SALT COMPANY TO DOUBLE EXPORTS TO RUSSIA Ukraine's Agriculture Minister Oleksandr Baranivsky has instructed the Artemsil enterprise to double salt exports to Russia to meet a rush of demand for salt in some regions of the country. "The minister has issued instructions to double salt supplies to Russia - to 35 railcars a day," Oleksandr Horobets, the top spokesman for the ministry, told Interfax-Ukraine on Friday.

The state company has concluded contracts to supply almost 1.1 million tonnes of salt to Russia in 2006, which is the same volume as in 2005. Last year the company increased salt supplies to Russia by 30% over 2004. In the first 16 days of February Ukraine supplied Russia with 27,700 tonnes of salt, which is 7,000 tonnes more compared with the same period of 2005. Ukraine exported 3.131 million tonnes of salt to 22 countries in 2005. The facilities of the enterprise are designed to produce 7 million tonnes of salt a year.

Russia is seeing a rush of demand for salt. Experts say that the rush has been provoked by media reports that Ukraine suspended salt exports to Russia.

UKRAINIAN AGRICULTURE MINISTER FORECASTS SPEEDY LIFTING OF RUSSIA'S MILK AND MEAT BAN Russia's ban on Ukrainian meat and dairy exports may be lifted within the next few days, Agriculture Minister Oleksandr Baranivsky said on Wednesday. "According to the information I have received from our delegation, there is every chance that this (ban) will be lifted within the next few days," he said at a meeting of the Cabinet of Ministers. Concerning Ukrainian-Russian relations over the meat and dairy export ban, the two countries' presidents were negotiating on this issue by phone, and Russian President Vladimir Putin instructed the respective Russian ministries to solve the problem soon, the minister said. As for situation on Ukraine's domestic milk market, Baranivsky noted that although the purchase price for milk has started gradually growing, a minimum milk purchase price should be introduced in any case.

GORDEYEV PROMISES TO RESOLVE PROBLEMS WITH UKRAINIAN MEAT IMPORTS Russian Agriculture Minister Alexei Gordeyev has promised to quickly resolve the problems concerning meat imports to Russia from Ukraine. "The Agriculture Ministry, at the request of the United Russia party, received a delegation from the Ukrainian parliament made up of representatives from the Ukrainian Party of Regions. We discussed problems with meat imports from Ukraine. I as a minister reacted to the request and promised to step up discussion of this issue so that meat imports can resume to Russia from Ukraine," Gordeyev told reporters after the meeting.

RUSSIA, UKRAINE AGREE FIRST STEPS TO SETTLE MEAT ROW Russia and Ukraine have negotiated their first steps to settle the row over Russia's ban on Ukrainian meat and milk imports from January 20 over violations of veterinary requirements. A plan of joint steps to settle the conflict was worked out during talks with a Ukrainian delegation in Moscow on Wednesday, Russian Veterinary and Phytosanitary Control Service chief Sergei Dankvert told Interfax. The Ukrainian delegation was led by Deputy Agrarian Policies Minister Viktor Pabat and head of the State Veterinary Department Ivan Bisyuk. Russian experts will travel to Ukraine next week to audit the work of the Ukrainian veterinary service, Dankvert said. The talks were constructive and produced a plan for settling the conflict. A protocol of the talks is being detailed and will be signed soon, he said.

UKRAINE, RUSSIA TO FIGHT BIRD FLU JOINTLY Ukraine and Russia are expected to set up an agency to coordinate the fight against and prevention of bird flu, Ukrainian President Viktor Yuschenko said. "A bilateral commission or some other agency will be set up shortly to coordinate research, preventative programs and other aspects of this problem," Yuschenko told David Nabarro, the World Health Organization's coordinator for bird flu, in Kyiv on Tuesday. Ukraine is aware of the complexity of the situation amid the spread of the disease in Ukraine, he said. "In our opinion, we have taken exhaustive measures to contain the disease and we have been pursuing a sufficiently active national policy to check the spread of bird flu," he said. "It is a challenge not only to the nation, but to the rest of Europe and the world as a whole," he added. Yuschenko said Ukraine wants to discuss this issue with UN officials and find areas for cooperation. Nabarro said that Ukraine has offered a worthy rebuff to the disease. He said Ukraine could serve as an example for other countries. Fast measures and effective control have prevented the spread of the bird flu to other territories of Ukraine, the UN official said.

BIRD FLU REMAINS PRESSING PROBLEM FOR UKRAINE - UN OFFICIAL Bird flu remains a pressing problem for Ukraine, Senior UN System Coordinator for Avian and Human Influenza David Nabarro told a Wednesday news conference in Kyiv. He said the threat of bird flu in Ukraine persists. At the same time he praised Ukraine's efforts to stop the spread of the disease. The government promptly responded to the appearance of bird flu in Ukrainian territory, Nabarro said. The Emergencies, Agrarian Policy and Health Ministries reacted swiftly and assumed control over the situation and all seats of bird flu were promptly localized, he said. The coordinator added that the authorities and health system of Ukraine should prepare to resist bird flu and be ready for the virus mutating and spreading from one human to another. Navarro said there is no exact forecast when the H5N1 virus will mutate making it contagious for humans and it is not clear whether such a mutation will take place at all. However, it is a matter for which the world should be ready and appropriate work is being done, he added.COMPANY NEWS

BANKING&INSURANCE

UAH 0.566M TRANSFERRED TO ACCOUNT OF UKRAINA BANK'S LIQUIDATOR IN JANUARY A total of UAH 0.566 million was transferred to the accumulation account of Ukraina Bank's receiver in bankruptcy in February 2006, compared to UAH 4.789 million in December (UAH 0.476 million in November, the receiver reported on February 13.

UAH 0.379 million was obtained from repayments of the loans provided by the bank, UAH 0.175 million from sold real estate, and UAH 0.003 million from the leasing of property. By February 1, 2006, the liquidator had paid UAH 795.927 million to the first, second and third groups of Ukraina Bank's creditors. Of that sum, UAH 200.419 million was paid to individuals, and UAH 595.508 million to legal entities.

Ukraina Bank, which was among Ukraine's largest banks, started to collapse in 1998. On July 16, 2001, the National Bank of Ukraine withdrew its banking license and launched the liquidation procedure.

TWO NEW BANKS REGISTERED IN UKRAINE IN JANUARY Two new banks were registered in Ukraine in January 2006 - CJSC Sigmabank (Dnipropetrovsk) and Prestige Bank in Kyiv, the National Bank of Ukraine reported on its official Web site on February 13. As of February 1, the Ukrainian state bank register listed 188 banks, 164 of which have licenses for banking operations from the NBU. Among the banks, 132 are joint stock companies (91 are open JSCs, 41 are closed JSCs), and 32 are limited liability companies. As of early February, 20 banks were undergoing the process of liquidation. Of these, 14 are being liquidated according to an NBU' decision, five in keeping with an arbitration court ruling, and one according to the bank owners' decision.

CENTRAL BANK GIVES THUMBS-UP TO TURKISH FINANSBANK TO CREATE SUBSIDIARY IN UKRAINE The National Bank of Ukraine has granted permission to Finansbank of Turkey to create a subsidiary bank in Ukraine. The permit was provided in January 2006, the NBU told Interfax- Ukraine on February 13. As was previously reported, privately-owned Finansbank, Turkey's fifth largest bank in terms of assets, planned to complete registration of its Ukrainian-based subsidiary bank by the beginning of 2006. The share of foreign capital in Ukraine's banking system has grown from 19.5% to 23% since the beginning of 2006. The growth was due to the sale of Kharkiv-based UkrSibbank's stocks and Kyiv- based Mriya Bank's stocks, according to NBU's First Vice-Governor Anatoliy Shapovalov. According to Shapovalov, early in 2006, there were 23 operating banks with foreign capital, including nine banks with 100% foreign capital.

NBU SUGGESTS AGIO BANK UP ITS REGULATORY CAPITAL LEVEL The National Bank of Ukraine (NBU) has suspended the right of Kyiv-based AGIO Bank to provide a number of operations with securities on the international markets. The NBU said the permit could be reinstated after the bank increases its regulatory capital in accordance with special license requests (it should be no less than UAH 72.18 million).

AGIO Bank told Interfax-Ukraine on Tuesday that the temporary reduction of in regulatory capital, which was necessary in order to carry out operations on the international forex markets, is linked to the fulfillment of the demands of the central bank. The bank also says that due to the introduction of requirements for international standards of business accounting in 2005, it got a deferred tax demand according to the estimation of its assets. The bank also says that basic indicators of its activity exceed planned by the central bank standards: its standard of adequacy was 12.8% by January 1, 2006. "The current level of the regulatory capital of the bank is much higher than the minimum level that allows it to conduct operations on the national scale," the banks report reads.

As reported, in 2005 AGIO Bank increased its assets by 74.4%, to UAH 613.72 million, its net profit fell 3.4 times, to UAH 1.77 million, its own capital was 22% up and amounted to UAH 109.8 million within an unchanged statutory capital level of UAH 12.6 million.

As of January 2005, AGIO Bank entered the SEB international banking group.

UKRAINIAN BANKS DOUBLE PROFITS IN JANUARY The total profit of Ukrainian banks in January was UAH 435.6 million, more than double the UAH 215.1 million seen in the same period last year, according to the National Bank of Ukraine (NBU). As the NBU reported on its official Web site on February 13, the revenues of the banks grew by UAH 764.5 million, or 40.1% compared to January 2005, and were estimated at UAH 2.670 billion. The expenditures of the banks grew by UAH 490.2 million or 28.1%, to UAH 2.234 billion. According to the NBU, the banks' balance capital grew by 2.6%, to UAH 26.102 million, and the share of the banks' statutory capital was 62.6%. "The banks should take measures to increase the level of capital concentration in order to provide stable functioning and a developing banking system," the NBU's report reads. According to the NBU, as of February 1, 2006, the liabilities of Ukrainian banks were UAH 185.872 billion. In the structure of liabilities, individuals' deposits make up 39.5%, market participants' assets are 31.7%, and other banks' deposits and credits represent 14.1%. According to the NBU, in the structure of deposits, fixed deposits are estimated at UAH 57.222 billion, or 78.0% of total sum of deposits, non-fixed deposits amount to UAH 16.112 billion. The general public prefers to make deposits in the national currency (55.6% of total sum of individuals' deposits). As of February 1, 2006, the banks' assets were UAH 211.975 billion, and the total assets were UAH 221.219 billion. In the structure of assets, the share of highly liquid assets was 15.4%, issued credits represented 70.8%, and securities were 6.3%. According to the NBU, in the structure of credit portfolio of the banks the share of credits issued to market participants was 69.4%, credits issued to other banks were 9.0%, and credits issued to individuals were 21.5%. "In January the tendency for growth in long-term credits and investments continued. Long-term credits grew by 0.7% and were UAH 86.856 billion, or 55.4% of issued credits," the report reads. Credits for investment operations grew by 3.7% and were UAH 13.987 billion (12.9% of credits issued to market participants). As of early February, a total of 164 registered banks operate in Ukraine. As reported, the profit of Ukrainian banks in 2005 was estimated at UAH 2.408 billion, which is 1.9 times more than UAH 1.263 billion seen in 2004. The balance capital of the banks grew by 39.5%, to UAH 25.690 billion, and total assets grew by 57.6%, to UAH 222.951 billion, while in 2004 they grew by 34.1%.

ITALIAN BANCA INTESA SPA STRIKES DEAL TO BUY CONTROLLING SHARE IN UKRSOTSBANK Italian bank Banca Intesa SpA and Ukrsotsbank have signed an agreement on the purchase of an 85.42% stake in the Ukrainian bank, Banca Intesa has reported on its official Web site. As the press release reads, following the completion of a pending share capital increase for the equivalent of approximately $60 million, Banca Intesa shall acquire additional shares of the bank, bringing its total ownership to around 88.1% of the share capital of Ukrsotsbank. As reported, the transaction will be completed in two stages, due to the need to complete the pending capital increase. The first closing is expected to be completed in May following the receipt of all regulatory approvals, while the second closing is expected to be completed no later than September once the capital increase formalities will have been completed.

Banca Intesa's cumulative investment at the first and second closings is estimated to amount to approximately $1.161 billion (i.e. approximately EUR 975 million), including the share capital increase of $60 million, the press release reads. The bank says that with this acquisition, Banca Intesa is pursuing its planned strategy of selective strengthening in Central and Southern-Eastern Europe, where it is now serving a population of over 80 million people in six countries, in addition to its operations in the Russian Federation. All in all, three foreign banks bid for Ukrsotsbank - Banca Intesa (Italy), Societe Generale (France) and OTP Bank (Hungary). Banka Intesa is Italian second largest bank. It entered the exclusive negotiations on Ukrsotsbank's acquisition on February 9 2006. Ukrsotsbank was the fourth largest bank in Ukraine by assets at the end of the third quarter of 2005, with a 5.2% market share. The bank is indirectly 93%-owned by one individual, who also owns Interpipe Corporation, one of the largest companies in Ukraine. Ukrsotsbank was founded in September 1990. It is one of the largest banks in Ukraine. In 2005, the bank's net profit grew by 37%, to UAH 117.334 million, its capital grew by 14%, to UAH 1.027 billion, and its net assets grew by 52.4%, to UAH 10.77 billion.

UKRSOTSBANK 'B-' L-T RATING ON WATCH POS; BANCA INTESA 'A+/A-1' RATINGS AFFIRMED Standard & Poor's Ratings Services on February 15 placed its 'B-' long-term counterparty credit and certificate of deposit ratings on Ukraine-based Ukrsotsbank OJSC (USB) on CreditWatch with positive implications. At the same time, the 'C' short-term ratings on USB were affirmed, reads an S&P press release. In addition, Standard & Poor's affirmed its 'A+/A-1' counterparty credit and certificate of deposit ratings on Italy-based Banca Intesa SpA (Intesa). The outlook on Intesa remains stable.

The rating actions follow the announcement that Intesa has signed a share purchase agreement with the majority shareholder of USB on the acquisition of 88.1% of the share capital of USB. "The CreditWatch placement reflects the strong upside potential for USB, resulting from the change of control. This upward potential is constrained, however, by high economic and operational risks in Ukraine," said Standard & Poor's credit analyst Irina Penkina. Standard & Poor's expects that USB will benefit from operational and financial support from Intesa, which would boost its market franchise and financial strength in the highly competitive and fast-growing Ukrainian banking market. Namely, USB is completing a capital increase of about $60 million, thereby boosting its currently weak capitalization--which is the most important constraining factor for the ratings on USB. "The affirmation of the ratings on Intesa reflects the overall moderate impact of this potential acquisition on its business and financial profile. Although Intesa's exposure to volatile economies will increase, it will remain low compared with the group's earnings and capital base," said Standard & Poor's credit analyst Alberto Buffa di Perrero.

ITALIAN BANCA INTESA WILL NOT CHANGE UKRSOTSBANK BRAND Banca Intesa, which has recently bought 85.42% of stocks in Kyiv- based Ukrsotsbank, will not change the Ukrainian bank's brand, Chairman of Ukrsotsbank's supervisory board Ihor Yushko said at a press conference at Interfax-Ukraine on Friday. "There was no time for a final decision, however, Ukrsotsbank is a well recognizable brand, in my opinion, (it is) loyal towards the market and clients. People trust it," he said. "The brand was bought, it's part of the contract," Ukrsotsbank Governor Borys Timonkin, who was also present at the press conference, said. Banca Intesa will not dismiss Ukrsotsbank's current top management, Yushko added. According to Timonkin, involving the strategic investor, Ukrsotsbank counts on the possibility of raising longer and cheaper resources and introducing advanced banking technologies. Moreover, Yushko said that after the announcement of the deal with Banca Intesa, a yield on Ukrsotsbank's eurobonds had decreased from 9% to 7%.

Timonkin also said that Ukrsotsbank would remain a full-service bank. The strategic investor liked the strategy developed by the bank's top management, although it will undergo some changes since it was developed without the strategic investments, he added. On February 15, Banca Intesa signed an agreement on the purchase of 85.42% of stocks in Ukrsotsbank for $1.16 billion.

UKRSOTSBANK'S SALE TO UP FOREIGN CAPITAL SHARE IN BANKING SYSTEM OF UKRAINE TO 24%, SAYS NBU The purchase of a controlling stake of Kyiv-based Ukrsotsbank by Italian bank Banca Intesa SpA will increase the share of foreign capital in the banking system of Ukraine to 24%, according to the First Deputy Chairman of the National Bank of Ukraine Anatoliy Shapovalov. "The share of foreign capital will be 24%. (It) will grow only by 1%, as Ukrsotsbank's statutory capital is UAH 70 million," Shapovalov told Interfax-Ukraine on Thursday. As of early 2006, the share of foreign capital in the banking system of Ukraine grew from 19.5% to 23% through the sale of the stakes in Kharkiv-based UkrSibbank and Kyiv-based Mriya bank. In early 2006, a total of 23 banks with foreign capital were operating in Ukraine, nine of which had 100% foreign capital. A total of 164 banks are registered in Ukraine.

LEADING HUNGARIAN BANK OTP LOOKING AT ACQUISITION OPPORTUNITIES IN UKRAINE OTP Bank, Hungary's biggest financial institution, is looking at new acquisition targets in Ukraine after its planned purchase of Ukrsotsbank looks to be slipping out of reach, the bank's Deputy CEO Zoltan Speder told Interfax on Tuesday. "There are still several small- and mid-sized banks up for sale, although we would have preferred setting foot in the country with the acquisition of a larger bank. We already have specific targets in mind, but I cannot elaborate on their identity at present," Speder told Interfax. He reiterated that OTP's expansion strategy envisions a presence in Ukraine, as well as further acquisitions in Romania, Serbia and Croatia. OTP submitted a binding bid for Ukrsotsbank, Ukraine's fourth- largest bank, last week, but a few days later the Kyiv-based bank's controlling shareholders entered into exclusive talks on the sale with Italy's Banca Intesa instead. OTP said that it offered an attractive price for Ukrsotsbank, going as far as it deemed rational in the bidding. "We offered five times the book value - it was like they were pulling my teeth when I signed the bid papers," OTP Chairman and CEO Sandor Csanyi told a press conference. "I don't view Ukrsotsbank as a failure, because if we would have offered more maybe we would have won, but the acquisition would likely have turned into a failure in the longer term," he said. While not abandoning plans to acquire Romanian bank CEC, OTP has decided not to wait for the much-delayed privatization process and launch dynamic organic expansion instead. "We now have 30 branches in Romania (through subsidiary OTP Bank Romania), and plan to boost this to 70 by the end of the year. Our long-term target is to have a network of 200 units even without the possible acquisition of CEC, but this doesn't mean we've given up on CEC. At this time, we just don't know when the privatization will take place," Csanyi said. The Romanian government has decided to delay the sale of CEC after fielding offers from bidders that the government said were disappointing in terms of price. OTP is also in the bidding for HVB Splitska Banka in Croatia, with a decision on the sale expected in April or May, Speder told Interfax. Csanyi said the transformation of the banks earlier acquired by OTP has been successful, with the process completed at the Slovakian and Bulgarian units, and progressing at a fast pace in Romania. The contribution of OTP's foreign subsidiaries (in Slovakia, Croatia, Romania and Bulgaria) to the group's profits increased to 10.5% last year, while these units account for around one- fourth of the group's outstanding loans. "The large gap between volumes and profit could be a basis for future profit growth at the group level," Speder said. The group's biggest and most successful subsidiary is DSK Bank in Bulgaria, which increased its profits by 38.7% last year to HUF 16.6 billion. DSK is the largest retail bank in Bulgaria and also the largest in terms of total assets.

"At this rate of growth, it seems that we will be able to recoup our initial investment of EUR 311 million in the bank (purchased in 2003) within four years after the acquisition," according to Csanyi. OTP Banka Slovensko is also turning into an unexpected surprise for OTP, as the unit reached HUF 1.4 billion in profit last year, as opposed to the expected breakeven. "We were originally expecting profits only for 2006," said Csanyi. Even though OTP will continue to seek out new acquisitions in the region and remains committed to expanding, Csanyi believes that double-digit growth in 2006 can be achieved even without any new purchases. "I believe that double-digit growth in profits is realistic in 2006 even without any new acquisitions. Of course, if we do make any purchases, growth will even be higher then," the Chairman said.

MINORITY STOCKHOLDERS OF UKRSOTSBANK TO PROTEST ADDITIONAL SHARES ISSUE IN COURT Minority stockholders in Kyiv-based Ukrsotsbank intend to apply to the court to protect their rights, which they say were violated during the holding of the second stage of an additional issue of stocks in the bank, the representative of Tempsford Investments Ltd. Larisa Borysenko told Interfax-Ukraine.

Tempsford Investments Ltd. owns a 7.62% stake in Ukrsotsbank. She said that the second stage of the subscription for the stocks of the additional issue in Ukrsotsbank should be conducted from February 7 through February 10, 2006. On February 7, the stockholders that came to the bank to subscribe for the stocks, waited in line and they were not allowed into the building, and the guard said that the bank was closed. The stockholders were not informed of the number of the stocks left after the first stage of subscription. The information was given only after the stockholders reported on the issue. According to Borysenko, on February 7, the representatives of the bank announced that the subscription for all stocks of the additional issue in Ukrsotsbank had already been conducted. She said that the stockholders had decided to fight to protect their interests in court.

FITCH RATES UKREXIMBANK'S SUB DEBT 'B'

Fitch Ratings on February 10 assigned Credit Suisse International's ("CSI") $95 million 8.4% issue of limited recourse loan participation notes, which are to be used solely for financing a subordinated loan to the State Export-Import Bank of Ukraine, reads a Fitch press release. The notes are due February 2016 with interest rate step up in February 2011 a Long-term 'B' rating. CSI will only pay noteholders amounts (principal and interest), if any, received from Ukreximbank under the loan agreement. "The difference between the rating of the notes and Ukreximbank's Long-term rating reflects Fitch's notching policy for senior and more junior obligations, indicating the higher expected loss for more junior debt instruments," reads the press release. It also takes into account provisions in the subordinated loan agreement, which, in accordance with the requirements of the National Bank of Ukraine (NBU), allow the borrower to suspend interest payments in certain circumstances. Although the lender's claims in relation to repayment of the subordinated loan will be junior to those of all unsubordinated claims and will rank at least pari passu with all other unsecured and subordinated obligations, claims in respect to interest payments will rank at least pari passu with the claims of other unsubordinated borrowers, save those preferred by relevant (bankruptcy, liquidation etc.) laws. The interest rate will be fixed, with a step-up five years before maturity date. Covenants limit mergers and disposals by Ukreximbank and its subsidiaries, as well as transactions between the bank and its affiliates.

Ukreximbank will have the right to prepay the subordinated loan five years before maturity, or at any time if the subordinated loan does not qualify as Tier II capital. Noteholders will benefit from a put option in the event of a change in control of Ukreximbank, which is 100%-owned by the Ukrainian state (represented by the Cabinet of Ministers of Ukraine), provided Ukreximbank is compliant with NBU requirements. Ukreximbank's Long-term and Short-term ratings are driven by the moderate potential for support from the Ukrainian state (given the sovereign's rating of Long-term 'BB-' (BB minus)/Stable). Ukreximbank was founded in 1992 and was the sixth largest Ukrainian bank by assets at end-Q305, with a network of over 90 branches and outlets across Ukraine. In addition to its commercial banking activities, Ukreximbank is the only Ukrainian bank that acts as a financial agent of the Ukrainian government in attracting and servicing international loans to Ukrainian corporates, which are extended under state guarantee.

MOODY'S ASSIGNS BA2 RATING TO NOTES TO BE ISSUED BY CREDIT SWISS INTERNATIONAL FOR FINANCING UKREXIMBANK'S SUBORDINATED LOAN Moody's Investors Service on February 13 assigned a rating of Ba2 to the Loan Participation Notes ("LPNs") to be issued in a private placement on a limited-recourse basis by Credit Swiss International for the sole purpose of financing a subordinated foreign currency loan to Ukreximbank, reads a Moody's press release. The issuer will be accountable to the noteholders only for the amounts actually received from the bank under the subordinated loan agreement. The volume of the issue will be US$95 million, with the maturity of ten years. The interest rate is 8.4% per annum, with a step-up in five years from the date of the issue. The outlook for the rating is stable.

Moody's notes that Ukreximbank already has subordinated LPNs outstanding, which are also rated at the Ba2 level, have similar characteristics and which are now going to be prepaid by the bank and replaced with the current issue, due to the improved terms of borrowing. Moody's points out that the rating for Ukreximbank's subordinated debt has pierced Ukraine's B1 sovereign ceiling for bonds, reflecting the bank's government ownership, important role in the country's economy and at the same time the likelihood that this instrument may be caught up in a moratorium. Moody's views the likelihood of the bank receiving support from the Ukrainian financial authorities in a case of distress as very high and as the primary driver of the rating.

CREDIT SUISSE PLACES $95M IN CLN FOR UKREXIMBANK Credit Suisse Securities (Europe) Limited has placed $95 million in 10-year credit-linked notes for Kyiv-based Ukreximbank. The bank used the raised resources to pay off a five-year subordinated loan early from Dresdner Bank for $40 million raised in February 2005, Ukreximbank said. "The Dresdner Bank loan was paid off and a new and larger one was raised. Credit Suisse Securities (Europe) Limited was the main creditor and UBS Limited was the co-lead manager," a source in the press service said. The new loan could be paid off early in five years. International ratings agency Moody's assigned the notes a 'Ba2' rating and Fitch assigned a 'B' rating. Ukreximbank was Ukraine's sixth largest bank in asset volume as of early 2006, according to the National Bank of Ukraine. The government owns 100% of the bank. Ukreximbank was the CIS's 41st biggest bank by assets at the end of the first half of 2005, according the Interfax-1000 ranking of the CIS's biggest lending institutions, compiled by the Interfax Center for Economic Analysis.

UKREXIMBANK MULLS OPENING OFFICE IN LONDON IN Q1, 2006 The Kyiv-based State Export-Import Bank of Ukraine, also known as Ukreximbank, is planning to open a representative office in London in Q1, 2006, bank Governor Viktor Kapustin said at a press conference last week. According to him, the opening of the representative office is prompted by the need to maintain contacts with financial institutions in the world's largest financial center. "The decision to open a representative office has been taken and it will be opened in Q1 2006," Kapustin said. He also said there was a possibility that the bank might open offices in Hong Kong and Singapore, as investors from these international financial centers are greatly interested in possible investments in Ukraine. He said the bank has no specific plans regarding the opening of representative offices in Asia. He also said that the bank is considering opening a representative office in Moscow in connection with the possible increase of payments in the energy sphere. As earlier reported, Ukreximbank has opened a representative office in New York. Ukreximbank, which is wholly state-owned, was founded in 1992 and is among Ukraine's largest banks.

UKREXIMBANK TO LEND $31.5 M TO IDS GROUP Kyiv-based OJSC State Export-Import Bank of Ukraine, also known as Ukreximbank, will lend $31.5 million to Ukraine's largest spa water bottling company, Kyiv-based IDS Group. Ukreximbank and IDS Group signed a general agreement on cooperation on February 13, 2006, the group has reported in a press release. The loan financing is provided under a program for the group's development, which foresees the development and improvement in the production base and distribution system. The IDS Group is a spa water-bottling holding. It was founded late in 1994 through the merger of four companies - CJSC Industrial and Distribution Systems, OJSC Nova, the Myrhorod- based mineral water bottling plant, and the Morshyn-based Oskar mineral water bottling plant.

As was reported, the IDS Group plans to expand its production capacity in 2006 through the launch of bottling lines at its Myrhorod and Morshyn plants, which have a capacity of 24,000 and 18,000 bottles per hour respectively. The overall amount of investment in the two lines is expected to be $30 million.

MRIYA BANK, VTB-UKRAINE TO UNITE Stockholders in Kyiv-based Mriya bank are to vote on a merger with VTB-Ukraine (Kyiv), a subsidiary of Russian Vneshtorgbank at a stockholder meeting on April 2. Interfax-Ukraine learned about the plans for the meeting from Mriya's first deputy Governor Iryna Zavodovska. She also said that the procedure of the merger is still being discussed. As the bank reported in press, at the April 2 meeting, shareholders will also elect a new supervisory board and revision commission. As earlier reported, Russia's Vneshtorgbank (VTB) bought 98% of Ukraine's Mriya Bank on January 31 for $70 million. By the end of 2006, Vneshtorgbank plans to merge its subsidiary - VTB-Ukraine - with Mriya Bank. According to the bank, early in October 2005, among stockholders with stakes higher than 10% were Igor Kononenko (direct ownership), Oleh Zimin (direct ownership), Petro Poroshenko (indirect ownership), Oleksiy Poroshenko (indirect ownership) and Oleg Svynarchuk.

NBU PERMITS TBIF FINANCIAL SERVICES BV TO INCREASE ITS SHARE IN VABANK'S STATUTORY CAPITAL FROM 9.55% TO 27% The National Bank of Ukraine has permitted TBIF Financial Services BV (Amsterdam, Netherlands) to boost its share in VABank's statutory capital from 9.55% to 27%, the bank's governor Andriy Snehiriov reported last week. According to him, in the near future, a stockholders' meeting will take a decision on subscription for the additional issue of shares, after which TBIF's share in the bank's capital will increase. He also stressed that TBIF would not be the bank's strategic investor. "TBIF is not a strategic but a financial investor. I believe this situation is ideal for us, as it permits us to increase the capital and attract new banking technologies, while preserving control over the bank," he said. VABank has been on Ukrainian market since 1992 and is among Ukraine's large banks. Its regional network includes 12 offices and 53 subsidiaries, as well as a representative office in Budapest (Hungary).

UKRAINE'S VABANK RAISES $15-MLN SYNDICATED LOAN Kyiv-based All-Ukrainian Shareholder Bank, also known as VABank, has raised a $15 million syndicated loan, an Interfax correspondent reported from the signing ceremony on Friday in Kyiv. Raiffeisen Zentralbank (Austria) organized the loan. The loan is for 210 days and can be extended for the same timeframe. The interest rate is LIBOR + 3.95%. Eight banks took part in the syndicate, including National City Bank, Banco Internacional do Funchal, Garanti Bank International N.V. and Finansbank N.V., said Sergei Maximov, VABank president. There was a high level of investor interest to participate in the syndicate, thus the loan was increased to $15 million from $10 million, he said. "This is proof of the growth in trust from foreign investors both for VABank as well as for the Ukrainian banking system on the whole," Maximov said. VABank was the CIS's 150th biggest bank by assets at the end of the first half of 2005, according the Interfax-1000 ranking of the CIS's biggest lending institutions, compiled by the Interfax Center for Economic Analysis.

ABN AMRO BANK LENDS DZERZHYNSKY METALLURGICAL MILL $75M ABN AMRO Bank N.V. (Netherlands) has given OJSC Dniprovsky Dzerzhynsky Metallurgical Mill (Dniprodzerzhynsk, Dnipropetrovsk region) a credit worth $75 million, the bank has announced. As an official release from the bank reads, the credit was issued for three years with an interest rate of Libor+3.65% annually. The credit agreement was signed on August 17 last year. As earlier reported, the Industrial Union of Donbas Corporation (IUD, Donetsk) attracted a syndicated loan from a syndicate of international banks headed by ABN AMRO Bank N.V. (Netherlands) and SG Corporate and Investment Banking (France). The loan, worth $350 million, was taken for OJSC Alchevsk Metallurgical Mill and Dzerzhynsky Metallurgical Mill - two major Industrial Union of Donbas producers. $75 million of this credit was supposed to go to the Dzerzhynsky Metallurgical Mill. The syndicate also includes such banks as BNR Paribas (Switzerland), Commerzbank Aktiengesellschaft (Germany), Natexis Banques Populaires (France), Raiffeisen Zentralbank Osterreich AG (Austria) and West LB AG (Germany). The credit will be used to implement the enterprise's investment programs. Established in 1995, the IUD is an integrated holding company owning or managing mining and metallurgical stocks. Its assets are located in Ukraine (Donetsk, Luhansk and Dnipropetrovsk regions), and in Hungary and Poland.

Today the IUD brand unites Alchevsk metallurgical mill, Dniprovsky Dzerzhynsky metallurgical mill, Dunaferr, DAM Steel (both of Hungary), Kramatorsk Kuybyshev metallurgical mill, Dnipropetrovsk pipe plant, Alchevsk coking and chemical plant, and the Panteleymonivsky refractory plant. In early July, the IUD signed an agreement to buy the Huta Czestochowa steel mill in Poland. The corporation controls more than 120 enterprises and had turnover of $3 billion in 2005. Planned investment in 2005-2008 is $3.5 billion.

DEPFA INVESTMENT BANK GIVES NAFTOGAZ UKRAINY $200 MILLION CREDIT IN 2005, GOVERNMENT SOURCE SAYS DEPFA Investment Bank Limited (Cyprus) gave Naftogaz Ukrainy a blank loan worth $220 million in December 2005. A government source told Interfax-Ukraine that the five-year loan was given at Libor+1.75%.

According to the source, in 2005, Deutsche Bank transferred the right to service a multi-currency credit line worth EUR 2 billion opened for Naftogaz Ukrainy to two structures: DEPFA Investment Bank and Gazprombank (Russia). Official representatives of Naftogaz Ukrainy confirmed receiving the credit from DEPFA Investment Bank but refused to comment on the terms of the credit. As earlier reported, in 2005, Deutsche Bank gave two blank loans worth $300 million each. In addition, Naftogaz Ukrainy raised an unsecured loan worth $200 million from Standard Bank London. DEPFA Investment Bank is 100% subsidiary of DEPFA Bank Pls. (Ireland).

NRB BANK PLANS TO ATTRACT SYNDICATED LOAN WORTH $10M BY END OF H1 2006 Kyiv-based CJSC Bank NRB is planning to attract a syndicated loan worth $10 million from foreign banks by the end of H1 2006, Interfax-Ukraine learned from bank's Governor Vladyslav Kravets on Wednesday. The bank plans to attract the credit for one year with the possibility of prolonging it for another year. "The attracted assets will be directed to extension of active operations," Kravets said. As earlier reported, Moody's international rating agency affirmed Kyiv-based Bank NRB's B2/NP foreign currency and E+ financial strength ratings following the announcement of its potential acquisition by Russia's Sberbank. CJSC NRB was registered on June 15, 2001. Among its present stockholders are the Project-Invest company, the Ukrainian-Swiss JV RiS-Ukraine, and the Ukrainian-Swiss JV Zumservice-Ukraine.PRIVATBANK-OWNED BANK IN LATVIA MULLS OPENING OFFICE IN PORTUGAL IN 2006 Latvia's Paritate Bank, a daughter bank of the Dnipropetrovsk- based PrivatBank, may open a branch in Portugal in 2006, the Chairman of PrivatBank's Board of Directors Oleksandr Dubilet told the press last week. "We have a branch that is engaged in the project: This (opening) might happen this year. The representative office and a branch (of the bank) will be opened (in Portugal)," Dubilet told the press at the second International investor's conference 'The Roadmap for Prosperity' in Ukraine, which was organized by Renaissance Capital Ukraine. "There is a large Ukrainian diaspora in Portugal, which lives and works (there), while their families are left here. It would be right to make a bridge for transfers and financial services for this diaspora," Dubilet said, commenting on the reasons behind the project. He said that at present, a considerable share of money transfers from Portugal is being conducted illegally. The banker also again said that the stockholders of the bank are not planning to sell it. PrivatBank owns a stake in Moscomprivatbank in Moscow and a branch in Cyprus along with Paritate Bank. The bank was planning to purchase a 100% stake in Polish Budbank. However, as the General Deputy Chairman of the PrivatBank's Board of Directors Yuriy Pikush told Interfax-Ukraine in December last year that plans for the operation were scrapped as the business plan called for a large amount of investment with a long pay-back period. CJSC PrivatBank was created in 1992. According to the National Bank of Ukraine, as of October 1, PrivatBank was the top bank among Ukraine's 163 banks according to its total assets (UAH 20.014 billion). Its network includes 1,945 branches throughout the country. In 2005, PrivatBank increased its net profit by 2.9 times compared to 2004, to UAH 475.6 million. The bank's net assets rose 49% over the year, to UAH 22.058 billion, while its own capital rose by 59%, to UAH 2.034 billion, including its statutory capital of UAH 1.13 billion. At the beginning of 2006, PrivatBank's main stockholders were Hennadi Boholiubov (38.76% in direct ownership; and 16.29% indirect ownership) and Ihor Kolomoisky (38.76% and 16.29% respectively).

PRIVATBANK PLANS TO BOOS STATUTORY CAPITAL 40% Largest Ukrainian bank PrivatBank (Dnipropetrovsk) is going to increase its statutory capital by 40% or UAH 460.98 million - to UAH 1.59 billion by additional issue of shares.

As Interfax-Ukraine learned from the bank on Thursday, the question of issuing shares with the face value of UAH 100 will be considered at a general stockholders' meeting on March 25 2006.

TAS- KOMMERZBANK TO DOUBLE ITS STATUTORY CAPITAL The Kyiv-based TAS-Kommerzbank intends to boost its statutory capital by 2.1 times or by UAH 250 million, to UAH 482.6 million, according to a representative of the bank. As the chairman of the bank's supervisory council, Mykola Vinohradov, told Interfax-Ukraine, the decision to hold an additional issue of 25 billion nominal shares with the face value of one kopek was made by the bank's stockholders at a meeting on February 14. The subscription for the stocks is to be held in March or April 2006. According to Vinohradov, the structure of the stockholders' capital in the bank won't change much following the additional issue. Earlier, the bank planned to increase its statutory capital by UAH 100 million. However, the stockholders decided to increase the sum of the additional issue to UAH 250 million. At present, the statutory capital of the bank is UAH 232.6 billion. In addition, Vinohradov said that the meeting passed the bank's business plan and budget for 2006. According to him, by the end of 2006, the bank's net assets are expected to almost double from UAH 2.2 billion to UAH 4 billion. He also said that this would be thanks to an increase in the volume of retail services. TAS Kommerzbank (until 1996 named Intellekt Innovational Bank, and until 2001 named Kyiv-Privat) has been operating in Ukraine since October 1991. Kyiv-based TAS Insurance Group owns 90.06% of the stocks in TAS Kommerzbank, while TAS-Capital Insurance Company owns a 9.93% stake in the bank. The beneficiaries of TAS Insurance Group and TAS-Capital Insurance Company are the present chairman of the board of directors in TAS Kommerzbank, the ex- governor of the National Bank of Ukraine Serhiy Tihipko and Natalia Tihipko. The bank unites 24 branches and 64 departments. As of January 1, 2006, the volume of its assets was UAH 2.025 billion, the volume of credit issued to businesses was UAH 1.103 billion, to individuals was UAH 342.588 million, and its profit in 2005 was UAH 9.430 million.

PRAVEX-BANK TO UP STATUTORY CAPITAL BY 28% Kyiv-base Pravex-bank is to boost its statutory capital by UAH 30 million or by 28%, to UAH 138.96 million, through an additional issue of shares with the face value of UAH 1 each. As the bank reported in press, the decision to increase the statutory capital was taken at a general stockholders' meeting in December 2005. "The assets are being attracted in order to extend the volume of the bank's operations,' the bank's release reads. According to the bank, the subscription will be performed in two stages from February 24 till March 17 2006. Pravex bank was created in 1992. Early this year among its key stockholders were Pravex-Brok Ltd. (27.84%); Serviden Enterprises Limited (20.12%), Commercial Systems Ltd. (9.71%), and Leonid Chernovetsky (35.67% directly and 43.28% indirectly).

According to the NBU, as of early October 2005 Pravex bank ranked 17th among 163 Ukrainian banks.

ACTIVE-BANK TO BOOST STATUTORY CAPITAL 8 TIMES Kyiv-based Active-Bank is to boost its statutory capital 8 times or by UAH 275.75 million, to UAH 31.275 million, Interfax-Ukraine learned from the bank on Thursday. The decision to increase the statutory capital was taken at a general stockholders' meeting on February 15, the bank said. "Active-Bank has submitted to the NBU a package of documents for registration of the bank's new statute. The owners of the bank did not change," the bank reported. According to the bank, after the statutory capital increase, its regulatory capital will grow to UAH 341 million. Active-bank was registered in 2002. At the end of 2005, the bank ranked 57th among Ukraine's 163 banks in terms of total assets. The bank's net profit in 2005 was UAH 21.015 million, which is 8 times more than 2004.

VOLUME OF MORTGAGE CREDITS IN UKRAINE TOPPED UAH 10BN IN 2005 The volume of the mortgage credits given by Ukrainian banks in 2005 exceeded UAH 10 billion, Executive Director of the Ukrainian National Mortgage Association Anton Serheyev has told Interfax- Ukraine. According to him, the mortgage portfolio amounted to 2% of GDP, and its share in the aggregate credit portfolio of commercial banks was 7%. At present, mortgage credits are offered by 90 Ukrainian banks, 11 of which occupy almost 85% of the country's banking market. In particular, the volume of Dnipropetrovsk-based PrivatBank's mortgage credits over the first nine months of 2005 grew 2.3 times - from UAH 3.2 billion to UAH 7.5 billion. The share of mortgage credits in the bank's aggregate portfolio grew from 3.7% to 7.5%.

COURT REJECTS SPF'S APPEAL THAT ADDITIONAL SHARE ISSUE BY ORANTA WAS ILLEGAL Kyiv Economic Court on February 9 rejected an appeal by the State Property Fund (SPF) against Kyiv-based OJSC National joint-stock insurance company Oranta that the fifth additional issue of shares in the company was illegal, the SPF's press service reported last week. The court ruling will be appeal by the fund in higher courts in near future, the press service said.

As reported, on September 16, 2005, an Oranta stockholders' meeting decided to increase the company's statutory fund by UAH 35.018 million, or 56.9%, to UAH 79.665 million. The owners of 63.218% of the stocks voted for an additional issue of stock, while the owners of a total of 95.11%of the stocks took part in the meeting. The state representative did not vote for the issue, and the SPF intended to block the issue, as this would dilute the state's stake. As earlier reported, the subscription for the stocks of this issue was completed on February 3, 2006. Oranta reported the purchase of 45% of the stocks in the company by a group of Kazakh investors. Later, the company reported that Colorino Trading Limited and Saleta Limited (both based in Cyprus) had become stockholders in the company through buying a 45.1% stake. The companies bought stakes of 20.2% and 24.9% respectively. According to Oranta, as of February 2, the SPF owned a 25%+1 share stake, and Kyiv-based Ukrsotsbank owned a 14.4% stake. The national joint-stock insurance company Oranta is one of the leading companies on the Ukrainian market for classic insurance. It has 642 representative offices in all regions of Ukraine. Over 11 months in 2005, the company signed 6,700 insurance policies, the volume of insurance premiums collected by the company was UAH 350 million, and the volume of insurance payments by the company was UAH 139 million. As of December 1, 2005, Oranta's statutory capital was UAH 44.647 million, its assets were UAH 185.462 million, and its accumulated insurance reserves were UAH 106.599 million.

OIL&GAS/POWER

SPF TO OVERSEE GALICHINA REFINERY ACTIVITY The State Property Fund (SPF) will create a working group to monitor the activity of the Drohobych-based Refinery Galichina, the SPF told Interfax-Ukraine on Tuesday. On February 25, the SPF will hold a meeting at which it will analyze the financial report on the enterprise's work in 2005. They will also agree on when to hold a stockholders' meeting of the enterprise. The SPF also reported that it would insist on the inclusion of the fund's representatives on the refinery's supervisory council. As reported, on February 1, an interagency meeting of the fund concerning the return of a 30% stake in the refinery to state ownership, decided to conduct a probe into the financial and economic activity of the Galichina refinery. The meeting decided to cancel a ban on the release of information about the owners of the stock holding, and to return it to the state through court action. Closed JSC Economic Union Galichina purchased a 30% stake in Galichina refinery in 1995.

The statutory fund of OJSC Galichina is worth UAH 8.707 million, and the face value of its shares is UAH 0.01 each. The state owns a 25%+1 share in Galichina. Privat group of Dnipropetrovsk is also a minor shareholder, and is, experts believe, the owner of the stocks for sale.

SPF AGAIN TO PROBE ECONOMIC ACTIVITY AND PRIVATIZATION OF LUHANSKNAFTOPRODUCT The State Property Fund has decided to withdraw sale of a 36.54% stake in Luhansknaftoproduct at the Ukrainian International Stock Exchange planned for March 10, because of the repeat check of the enterprise's financial and economic activity and privatization. As Interfax-Ukraine learned form the SPF's press service on Wednesday, this was stipulated in SPF order No.267 of February 10. As earlier reported, on February 1, the SPF announced its intention to sell the above mentioned stake at the Ukrainian International Stock Exchange with the initial price UAH 6.642 million. A total of 51% of Luhanslnaftoproduct's shares were transferred to the statutory fund of Kyiv-based Ukrnaftoproduct, while 36.54%belong to the SPF. According to the SPF, as of October 1, the enterprise's balance losses were UAH 1.452 million, its bills payable were UAH 388,200, and its bill receivable were UAH 4.624 million.

RENTA-GROUP TO EVALUATE STATE STAKE IN UKRNAFTOPRODUCT Sumy-based Renta-Group Ltd. has been declared the winner of a tender to assess the value of the state's 50% plus one share stake in Kyiv-based joint-stock holding company Ukrnaftaprodukt, the State Property Fund reported to Interfax-Ukraine last week. The evaluation is to be conducted in order to sell Ukrnaftaprodukt at an open auction. Ukrnaftaprodukt was created under a cabinet decree of January 30, 1998, on the basis of the Ukrainian union for oil and fuel supplies. The following shareholding were transferred to the new company's statutory fund - Kirovohradnaftoproduct - 8.9%, Lysychansknaftoproduct - 2.2%, Luhansknaftoproduct - 51%, Mykolaivnaftoproduct - 6.4%, Svitlovodsk petroleum storage depot - 30%, Kharkivnaftoproduct - 26%, Khersonnaftoproduct - 50% plus one share, and Khmelnytsknaftoproduct - 6.02%. According to the State Commission for Securities and the Stock Market, as of mid-2005, the State Property Fund owned a 50% plus one share stake of the company, while Naftoproduct Ukrainy owned a 44.19% stake.

UKRAINE, RUSSIA SUPPORT FRENCH-GERMAN PARTICIPATION IN GAS CONSORTIUM Ukraine and Russia support France and Germany's participation in an international consortium for the management of Ukrainian trunk gas pipelines, Naftogaz Ukrainy CEO Oleksiy Ivchenko said. Ivchenko said that this issue was discussed at the last meeting of participants in the gas consortium, which was attended by Russian Ambassador to Ukraine Victor Chernomyrdin. "We spoke about inviting the German and the French. There were no objections from the Russian side," he said.

He said that at the meeting it was decided to hold a tender on March 31 to select a general contractor for the construction of the Bohorodchany-Uzhgorod pipeline strand. Ivchenko said that all land issues have already been resolved with local councils along the entire length of the pipeline. He said that construction of this pipeline would make it possible to increase gas exports to Europe by 19 billion cubic meters.

UKRAINE VIEWS POLAND AS PROSPECTIVE PARTNER IN GAS TRANSPORTATION CONSORTIUM, PREMIER SAYS Ukraine sees Poland as a prospective participant in the international gas transportation consortium, Ukrainian Premier Yuriy Yekhanurov has said. "I think our cooperation is possible in the frames of the international consortium," he said at a joint press conference with his Polish counterpart Kazimierz Marcinkiewicz in Warsaw on Thursday. The cooperation concerns not only construction of gas pipelines, but also the use of Ukrainian underground gas storage facilities, he said.

UKRAINE TO SET UP NEW COMPANY TO MANAGE GAS STORAGE, SAYS PREMIER Ukraine's under-utilized gas storage facilities are to be put under the management of a new, publicly owned company, Ukrainian Premier Yuriy Yekhanurov has said. Yekhanurov announced Ukraine's plans in an interview with Polish newspaper Gazeta Wyborcza ahead of his visit to Poland on Thursday. "Speaking about the storage facilities, we want a separate enterprise to be created," he said. "We could store 36 billion cubic meters of gas there, but we're using only half of the capacity." He also said that when Polish businessman Jan Kulczyk visited Ukraine with the intention of purchasing at least a billion cubic meters of gas, he was surprised to learn that Ukraine is not using its gas storage facilities at full capacity. The premier also said Ukraine has no intention of selling the gas transportation system and storage facilities to a private company. "We won't give it to any private company - it will remain the property of the Ukrainian people," the premier said.

NAFTOGAZ MAY FACE $660M LOSS IN 2006 IN SUPPLYING GAS TO HEAT SUPPLY COMPANIES The losses of national JSC Naftogaz Ukrainy from making natural gas supplies to municipal heat supplying companies may be up to $ 660 million in 2006, Ukrainian Finance Minister Viktor Pinzenyk reported on Tuesday. "A very considerable risk is the one connected with covering the losses from gas supplies to municipal heat supplying companies. The Finance Ministry estimates it at the level of UAH 3.3 billion or about $660 million. If we sign it to the losses of Naftogaz Ukrainy and if the conditions of the company's operation do not change, it will be possible to cover the company's operational expenses. But then there will be no possibility for credit servicing and investing by Naftogaz Ukrainy," he said. According to him, this situation may have a serious impact on the state budget balance. The minister also said the absence of clear guarantees of a stable gas price was also a risk for the budget, "The gas price may be changed after a well-grounded demand from RosUkrEnergo. And it can be backdated, what is more," he said. At the same time, the minister said that: "if the gas price for households remains unchanged and the maximum price is at the level of $110, the budget's balance could be preserved in the next few months."

GAZ UKRAINY UPS GAS SALES 18.3% IN JANUARY Gaz Ukrainy in January 2006 sold 8.1 bcm of natural gas in Ukraine, which is 18.3% or 1.3 bcm more year-over-year. The increased sales were caused by increased gas consumption (of 1 bcm by households and by 0.4 bcm by heat supplying companies) due to low temperatures, Gaz Ukrainy's press service reported on Wednesday. Last month Gaz Ukrainy reduced sales of natural gas to industrial enterprises by 0.2 bcm year-over-year, and to energy generating companies by 0.11 bcm. The total cost of the gas sold by the company in January was UAH 1.9 billion, which is 13.3% or UAH 0.22 billion more year-over- year. The level of payments by consumers for the sold gas was 72%, compared to 63% in January 2005. According to Gaz Ukrainy, the real price per thousand cubic meters for gas sold to household gas supplying companies was UAH 104, while in January 2005 it was UAH 107. Gaz Ukrainy sells natural gas extracted in Ukraine by Naftogaz Ukrainy, and gas from Russia and Central Asia.

DONBAS FUEL CORP TO INVEST $140M IN 2006 Donbas Fuel and Energy Corporation (DTEK) will invest up to $140 million in its enterprises in 2006, Maksim Tyminchenko, the corporation's general director, said at a presentation in Kyiv. He said the budget would be formed from the profits of DTEK's members. Investment came to $105.4 million in 2005, he said. DTEK was set up in 2005 to manage the energy assets of Donetsk- based System Capital Management. The corporation includes coal producers Pavlohradvuhillial and the Donbas Komsomolets deep mine and the Vostokenergo company. The corporation's partners are the Donetsk-based Service-Invest and PES-Energovuhillia. The corporation exists in parallel with the Donbas Fuel and Energy Company, which has 15 members.

UKRAINIAN GOVERNMENT APPROVES TRANSMISSION LINE CONSTRUCTION PLAN FOR LINE FROM RIVNE, KHMELNYTSKY NPPS The cabinet has approved a project to build an electricity transmission line and the Kyivska substation to transmit and distribute electricity from Rivne and Khmelnytsky NPPs. The project and the title of the construction were approved under cabinet resolution No.45 of February 1, which was posted on the cabinet's official Web site. According to the project, the capacity of the Kyivska 740/330 kV line will be 1 million kilovolt-amperes, the length of the 330 kV voltage line is 110 kilometers, and of the 750 kV voltage line - 1.6 kilometers. All the facilities must be commissioned before 2007.

The general estimated cost of the project is UAH 739.395 million, including equipment worth UAH 273.262 million, and construction work worth UAH 216.086 million. Its budget financing in 2006-2007 will be UAH 150 million for each year. The project was developed by the Ukrenergomerezhproekt state research and development institute, which is based in Kharkiv.

RUSSIAN ORGENERGOSTROI TO TAKE PART IN CHECKING OF UNFINISHED REACTORS 3, 4 AT KHMELNYTSKY NPP

OJSC Kyiv Scientific and Research Institute Energoproject has signed an agreement on contract work with Russian Moscow-based OJSC Orgenergostroi on checking the construction of unfinished reactors three and four of Khmelnytsky NPP. Orgenergostroi and Energoproject representatives held a check at the NPP from February 14-16, the PR department of the national nuclear power generating company Energoatom reported on Thursday. Valeriy Dorf, the deputy head of Orgenergostroi, said that no critical damage at the third reactor of the NPP were found and its construction can be completed. Orgenergostroi specialists will launch checks using unique techniques approved by the IAEA after the signing of all necessary documents, Energoatom said. As reported, in July, the Ukrainian government urged the Fuel and Energy Ministry together with Energoatom to check the facilities, equipment and constructions at the Khmelnytsky plant's third and fourth reactors. The building of Khmelnytsky NPP began in 1981. Its first reactor was launched at the end of 1987, and the second, in August 2004. It is planned to build four reactors at the NPP. Energoatom is the operator of all Ukrainian NPPs. The company exploits 15 nuclear reactors with a total capacity of 13,835 MW.

CABINET APPROVES CONSTRUCTION OF NEW UNIT AT SLOVIANSK HEAT POWER PLANT WITH CAPACITY OF 125 MWT The Cabinet of Ukraine has approved a feasibility study on upgrading the first line at Sloviansk heat power plant, foreseeing the construction of a new power-generating unit. The feasibility study was ordered by cabinet resolution No. 69 of February 8. The estimated electricity generating capacity of the new unit is 125MWt, while its heat generating capacity is 110 Gcal. The construction is to be completed in 30 months and will pay for itself in eight years, according to the feasibility study. The total estimated cost of the project is UAH 363.946 million, including UAH 212,771 in expenses for installed facilities, UAH 48.075 million for construction and installation work, and UAH 4.862 million for launching the new unit. Teploelekroproekt research institute in Donetsk prepared the feasibility study. Sloviansk heat power plant, run by OJSC Donbasenergo, is located in Donetsk region. Only one power-generating unit with a capacity of 800 MWt is operating at the plant, which was put into operation in December 1971. The first line of Sloviansk heat power plant consisted of five power-generating units with a capacity of 100 MWt each, which are currently idle.

YUSCHENKO WANTS COMPLETE INFORMATION ON ROSUKRENERGO Ukrainian President Viktor Yuschenko marks that Ukraine insisted on full transparency in the activities of all participants in the gas market from the very beginning of the talks with Russia and this position of Ukraine remains unchanged, the presidential press service reports. He pointed out that Ukraine has quitted non-transparent barter schemes in payment for energy resources and has declared its readiness to shift to the market relations in the field. The Ukrainian-Russian gas agreement allowed for appropriate energy supplies to Ukraine consumers on the peak of the heating system at the lowest in Europe price, Yuschenko said. He said that Ukraine would not allow for non-transparent schemes in gas sector. If necessary, the government will look for alternative forms of organization of activities on the Ukrainian gas market and its cooperation with Russia. The president said he shared the concern expressed by public, political, business structures and international organizations, including the EU, over lack of information on activities of RosUkrEnergo founded by Gazprombank (Russia) and Raiffeisen Investment A.G. (Austria) and on its founders, the press service said.

All of attempts made by the Ukrainian side to obtain required information on the company have failed. Though Ukraine has nothing to do with the foundation of the company, Ukraine cannot help reacting to the damage caused by the conflict around RosUkrEnergo to the reputation of the country, the press service said. Yuschenko ordered the government to collect complete information on RosUkrEnergo and to make it public in order to secure transparent organization of gas relations between Ukraine and Russia and to obey the principles of fair competition, the press service reports.

U.S. PUZZLED THAT ROSUKRENERGO MEDIATES IN GAS AGREEMENTS BETWEEN UKRAINE AND RUSSIA The United States is puzzled over the involvement of RosUkrEnergo in the recent Russian-Ukrainian agreements, U.S. Ambassador to Ukraine John Herbst has said. The United States believes this is a suspicious organization. It is hard to understand why it plays a significant role in such an important agreement. The United States cannot grasp why a mediator is needed in such an agreement and why there can't be an agreement between the two states or between the two large companies (Naftogaz Ukrainy and Gazprom), John Herbst told the press in Kyiv on Thursday.

According to open data, the RosUkrEnergo's income was about $3 billion in 2005. With that, the staff of the company includes only 12 employees, he said. "I believe it would be better if this $3 billion were in the money box of Ukraine or Russia," Herbst said. The ambassador did not comment on whether he thought Ukraine should give up using the services of RosUkrEnergo. "Ukraine is sovereign state and it endorses its own decisions," he said.

UKRAINE CALLS ON RUSSIA TO REPLACE ROSUKRENERGO WITH GAZPROM IN GAS SUPPLIES SCHEME

Ukraine's government is seeking an agreement with Russia to replace RosUkrEnergo in the scheme of gas supplies to Ukraine, Ukrainian Premier Yuriy Yekhanurov has said.

"I have sent a request to the head of the Russian government, Premier (Mikhail) Fradkov: if the Russian side, which itself proposed RosUkrEnergo, thinks the company is not suitable, we are anticipating its replacement with pleasure and Gazprom would be the best replacement. I am waiting for an answer in this regard," Yekhanurov told the press in Warsaw on Thursday.

ROSUKRENERGO REPLACEMENT GROUNDLESS - KHRISTENKO Russian Industry and Energy Minister Viktor Khristenko considers a proposal to replace RosUkrEnergo in the system for supplying Russian gas to Ukraine to be groundless. "RosUkrEnergo can be replaced by another market participant only when there will be another construction, that is clear to the sides," Khristenko said at a meeting with journalists on Thursday. "Leave well enough alone," he said. The minister said that if it is attempted to change the current construction, this will only create new difficulties in supplying gas to Ukraine. "The situation has been regulated, agreement that have been reached are based on using RosUkrEnergo as a trader working with the main volumes of Central Asian gas, and as a structure positioning itself both on the Ukrainian and on Western markets," Khristenko said. "The structure is sufficiently transparent," Khristenko said.

UKRAINE'S SECURITY SERVICE NOT INVESTIGATING ANY CRIMINAL CASES ON ROSUKRENERGO, SAYS SBU HEAD The Head of Security Service of Ukraine (SBU) Ihor Drizhchany says that the SBU is not investigating any criminal cases connected with RosUkrEnergo. "The SBU isn't investigate any criminal cases on this company, and never has," Drizhchany said in an interview with reporters in Kyiv on Friday. However, the Security Service is holding checks on this company, he said. As reported, on February 14, Ukrainian President Viktor Yuschenko emphasized that Ukraine insisted on full transparency in the activities of all participants of the gas market from the very beginning of the talks with Russia, and this position of Ukraine remains unchanged. He pointed out that Ukraine has given up non-transparent barter schemes for payment for energy and has declared its readiness to shift to market relations in the field. The Ukrainian-Russian gas agreement allowed for the required energy supplies to Ukraine consumers at the peak of the heating season at the lowest price in Europe, Yuschenko said.

He said Ukraine would not allow non-transparent schemes in gas sector. If necessary, the government will look for alternative forms of organization for the Ukrainian gas market and for its cooperation with Russia. The president said he shared the concerns of the public, politicians, business structures and international organizations, including the EU, over the lack of information on the activities of RosUkrEnergo, which was founded by Gazprombank (Russia) and Raiffeisen Investment A.G. (Austria) and on its founders, the press service said.

KIROVOHRADOBLENERGO SAYS KRYVY RIH ORE PROCESSOR HAS VIOLATED ELECTRICITY DEBT PAYMENT AGREEMENT The leadership of OJSC Kirovohradoblenergo has declared that the Kryvy Rih Oxidized Ores Processing Integrated Plant has violated an agreement on paying off its debt for electricity and warned against possible repeated cuts in electricity supplies to the enterprise, the press service of the energy company told Interfax- Ukraine last week. "Taking into account the present situation on the electricity market, we can't allow ourselves to subsidize the enterprise. Over the last two months of 2005, the debt of the enterprise grew by UAH 0.5 million, and currently it is estimated at UAH 1 million. Despite the agreement on the prolongation for a month of the repayment term, which expired on January 25, the company did not pay its debts for electricity," the press service reported, referring OJSC Kirovohradoblenergo Director General and the Chairman of the Board of Directors Oleksandr Niverchuk. He also said that in January, the plant did not pay even for electricity consumed that month. According to the press service, Kirovohradoblenergo has already warned the enterprise against possible cuts in its electricity supply. As reported, on December 26, Kirovohradoblenergo cut electricity at the enterprise because of its considerable debts. On December 27, electricity supplies were resumed, and the enterprise, with the help of Kirovohrad regional administration, signed an agreement on restructuring its debts for electricity and postponing the payments until January 25. The construction of Kryvy Rih Oxidized Ores Processing Integrated Plant started in 1985. After the collapse of the Soviet Union, Ukraine became legal representative of the plant with 56.4% share in the project. Romania's share was 28% and Slovakia owned the rest of the plant. Hungary was among the negotiators in Soviet times. Around $200 million is needed to complete construction and launch the first line of the plant. The estimated cost of the plant's construction was $2.4 billion, out of which $1.65 billion has been spent. The plant's production capacity is 10 million tonnes of pellets, and the production capacity of the first line is 6.6 million tonnes. For ten years after the completion of the plant's construction, Ukraine (or an investor after winning a tender) is to supply 17 million tonnes of pellets to Slovakia, and 30 million tonnes of pellets are to be supplied to Romania. Mittal Steel is interested in purchasing the plant. Inhulets and Poltava Ore Mining and Processing Mills, Magnitogorsk steel mill in Russia and Sinosteel in China are among potential investors as well.

IT&TELECOMMUNICATIONS

SCM DIRECTOR GENERAL CONFIRMS INTEREST IN UKRTELECOM'S PRIVATIZATION CJSC System Capital Management (SCM), Ukraine's largest asset management company, is interested in the acquisition of OJSC Ukrtelecom, SCM Director General Oleh Popov said. He made a statement to that effect in Kyiv on Thursday following the presentation of the Donbas Fuel and Energy Company at the Ukrainian Chamber of Commerce and Industry. Ukrtelecom currently occupies about 70% of the Ukrainian fixed telecom market, servicing 9.7 million subscribers. Its gross revenue in 2005 amounted to about UAH 8 billion. Currently the state owns 92.86% of Ukrtelecom's stocks. The authorities cannot start the company's privatization since 1997.

TELENOR WON'T TAKE PART IN UKRTELECOM PRIVATIZATION Norway's Telenor does not plan to take part in the privatization of the Ukrainian national communications operator OAO Ukrtelecom, Telenor Corporate Communications Vice-President Dag Melgaard told Interfax.

Despite the fact that Ukrtelecom received a license for mobile communications, it is still an operator of fixed communications, he said. "We have no interest in the privatization of Ukrtelecom. We're happy cooperating with Kyivstar and our strategy involves providing mobile services and not stationary ones. Ukrtelecom is not a mobile operator," Melgaard said. Telenor owns 56% of CJSC Kyivstar GSM, Ukraine's largest mobile communications operator.VIMPELCOM OFFERS TO BUY KYIVSTAR FROM ALTIMO AND TELENOR FOR $5 BN No. 2 Russian cellular provider VimpelCom last week offered to buy 100% of Kyivstar GSM from Norway's Telenor and the Alfa Group's Altimo for $5 billion, the company said in a press release. VimpelCom "confirmed that it has sent in the past week an offer to both Telenor ASA and Altimo (the telecom subsidiary of Alfa Group) to acquire 100% of Kyivstar for a total consideration of $5 billion in VimpelCom common registered shares plus the assumption of debt," the release said. Kyivstar, in which Telenor owns 56.5% and Alfa Group 43.5%, is Ukraine's leading cellular provider with 14.4 million subscribers as the end of January 2006. VimpelCom said it was confident its offer to acquire Kyivstar would create significant value for its shareholders. "The indicative price of $5 billion reflects VimpelCom's estimates not only of Kyivstar's current market position and operating margins, but also of VimpelCom management's belief that it can generate significant synergies, as well as significant operating efficiencies, over the next five years from the combination of Kyivstar and VimpelCom," the release says. "Including the expected synergies, the acquisition is expected to be accretive on a net earnings basis to VimpelCom public shareholders from 2007," the release says. "This transaction, which would be subject to approval by our public minority shareholders, would put us firmly on track to become the number one telecoms company in the CIS," the release cites VimpelCom CEO Alexander Izosimov as saying. "VimpelCom management will continue to seek to pursue and negotiate a potential transaction as it believes that the combination of VimpelCom and Kyivstar is compelling from a strategic and financial perspective," the release says.

ALTIMO SUPPORTS VIMPELCOM OFFER TO BUY KYIVSTAR Russia's Altimo, part of Alfa Group, supports an offer made by No. 2 Russian cellular provider VimpelCom last week to buy Kyivstar GSM from Norway's Telenor and Altimo. If Telenor, the second-biggest shareholder in VimpelCom and Kyivstar, approves the transaction, Altimo is ready to support it, Altimo said in a press release. "The merger of these two big mobile companies is in the interests of all VimpelCom shareholders and completely coincides with the company's development strategy as approved by the shareholders," the release says. VimpelCom last week offered to buy 100% of Kyivstar from Telenor and Altimo for $5 billion, the company said in a press release. VimpelCom "confirmed that it has sent in the past week an offer to both Telenor ASA and Altimo (the telecom subsidiary of Alfa Group) to acquire 100% of Kyivstar for a total consideration of $5 billion in VimpelCom common registered shares plus the assumption of debt," the release said. Kyivstar, in which Telenor owns 56.5% and Alfa Group 43.5%, is Ukraine's leading cellular provider with 14.4 million subscribers as the end of January 2006. Alfa Group, which owns 32.9% of the voting shares in VimpelCom, and Telenor, which has 26.6%, have been fighting recently over VimpelCom entering the Ukrainian market. Alfa wants VimpelCom to enter the Ukrainian market by buying Ukrainian RadioSystems and minority shareholders support the deal, although Telenor is against it. A merger is also being considered between VimpelCom and Kyivstar. However, Telenor is against such a merger since it would reduce its total share package to less than 50%. This would force Telenor to remove Kyivstar's financial results from its consolidated report.

VIMPELCOM TO GIVE ALTIMO, TELENOR SEVERAL MTHS TO DECIDE ON KYIVSTAR OFFER No. 2 Russian cellular provider VimpelCom could give Alfa Group's Altimo and Norway's Telenor several months to decide on its offer to buy Kyivstar GSM, Alexander Izosimov, VimpelCom general director, said during a conference call on February 13. "We're not setting a deadline, but it needs to be understood that time is a critical factor. The logistics of the transaction hang on the fact that we will merge with Kyivstar before we make a large investment in Ukrainian Radio Systems," he said. "This could take several months, but definitely not six months," he said.

VIMPELCOM RATINGS UNAFFECTED BY ALL-SHARE BID FOR KYIVSTAR Standard & Poor's Ratings Services said that its ratings and outlook on Russian mobile telecommunications operator Vimpel- Communications (VimpelCom; BB/Positive/--) are unaffected by the company's announcement that it has launched a bid for Ukraine- based mobile telecommunications operator Kyivstar GSM (BB-/Watch Positive/--) for a consideration of $5 billion in VimpelCom common registered shares plus assumed debt, the ratings agency said in a release. The all-share nature of the proposed transaction mitigates a substantial portion of credit risk associated with a debt-funded cash bid, the release says. The market-consolidating transaction would also enable VimpelCom to achieve immediate scale in the buoyant Ukrainian mobile telecoms market. VimpelCom is already present in Ukraine through its ownership of the fourth-largest player, Ukrainian Radio Systems (URS), and the potential transaction would likely allow VimpelCom to limit future spending on URS' network. Although the likelihood for the transaction to be executed as proposed appears modest at this stage, it is still possible that Kyivstar's shareholders will eventually reach an agreement that would lead to VimpelCom assuming full control. Importantly, the ratings do not factor in a significant cash component from VimpelCom, should the acquisition bid be revised. Any significant cash component of a bid could have negative implications for VimpelCom's ratings or outlook.

TELENOR NOT YET PLANNING TO CONSIDER VIMPELCOM OFFER Norway's Telenor is not yet planning to consider an offer by VimpelCom, the No. 2 cellular operator in subscriber numbers in Russia, to buy Telenor's stake in Ukrainian cellular operator Kyivstar, Dag Melgaard, Telenor vice president fro public relations, told Interfax. Telenor is not planning to submit the VimpelCom offer to its board of directors or a shareholders' meeting, he said. Telenor will not discuss the VimpelCom offer until normal work relations are reestablished with Alfa Group's Altimo, Melgaard said. Altimo and Telenor are the main shareholders in VimpelCom. "We don't have any basis to start a dialogue with Alfa," Melgaard said. Telenor is still insisting that corporate governance be resumed at Alfa, that business ethics be observed and well as contractual obligations.

In answer to a widely held opinion that the sale of Kyivstar could get rid of some disagreement between Telenor and Alfa, which own a respective 56.5% and 43.5% in Kyivstar, Melgaard said that this is a mistake, since even after the sale of Kyivstar, the conflict over VimpelCom management won't be resolved. Melgaard said Telenor is not holding any unofficial talks with Alfa Group and is waiting for a hearing date to be set by the Ukrainian Appeals Court and also a lawsuit at the New York Arbitration Court. The Ukrainian court case could be postponed until after parliamentary elections set for March 26.

VIMPELCOM MAY LOSE ONE LICENSE IN UKRAINE The Ukrainian antimonopoly authorities may revoke one license from VimpelCom if the company buys Kyivstar, Alexander Izosimov, general director of the Russian cellular operator, said during a conference call on Tuesday. "We can work under both (licenses), if we are permitted. Usually this is impossible. We understand that one of the licenses will be revoked," he said. In November 2005 VimpelCom bought 100% of Ukrainian Radio Systems, which owned a license to provide cellular communications services in Ukraine. Last week VimpelCom sent a proposal to Telenor and Altimo to acquire 100% of Kyivstar-GSM for $5 billion, which may be paid for with VimpelCom common shares, and also to take on the company's debts. Kyivstar, which is 56.5% owned by Telenor and 43.5% by Alfa Group, is the leading cellular operator in Ukraine, with 14.4 million subscribers on January 31, 2006.

ALFA GROUP NOT WILLING TO SELL STAKE IN VIMPELCOM - FRIDMAN The Alfa Group is not prepared to sell its shares in VimpelCom, Russia's No. 2 cellular provider, Mikhail Fridman, Alfa group's chief, told reporters. "We're not willing," Fridman said. Asked who stood to benefit from the settlement of the conflict between Alfa and Norway's Telenor due to VimpelCom's entering the Ukrainian market, Fridman said: "The consumer." Alfa Group's Altimo, which owns a 32.9%-voting stake in VimpelCom, and Telenor, with a 26.6% voting stake, have been locked in a dispute over VimpelCom's expansion into Ukraine. Last week, VimpelCom offered to buy 100% of Kyivstar GSM from Telenor and Altimo for a total consideration of $5 billion in VimpelCom common registered shares plus the assumption of debt. Kyivstar, in which Telenor owns 56.5% and Alfa Group 43.5%, is Ukraine's leading cellular provider with 14.4 million subscribers as of the end of January 2006.

S&P PUTS KYIVSTAR ON CREDITWATCH International ratings agency Standard & Poor's placed its 'BB-' long-term corporate credit rating on Ukraine-based mobile telecommunications operator Kyivstar GSM on CreditWatch with positive implications, the ratings agency said in a release. This follows the announcement of a bid for the company by Russian mobile telecommunications operator Vimpel-Communications (VimpelCom; BB/Positive/--) for a consideration of $5 billion in common registered shares plus assumed debt, the release says. At the same time, the 'BB-' long-term senior unsecured debt rating on the company's loan-participation notes issued by Dresdner Bank AG (A/Stable/A-1) was also placed on CreditWatch with positive implications. "The CreditWatch placement reflects the potential for the ratings on Kyivstar to be raised by one notch if VimpelCom successfully completes the proposed all-share purchase of 100% of Kyivstar," said Standard & Poor's credit analyst Michael O'Brien. The transaction could remove a rating constraint constituted by the potential knock-on effects related to a dispute between Kyivstar's direct shareholders, Norway-based Telenor ASA (A- /Negative/A-2), which holds 56.52% of the company's shares, and Storm, controlled by Altimo, an affiliate of Russia-based Alfa Group, which holds 43.48%. Furthermore, the potential transaction would lead to consolidation in the Ukrainian market, enabling Kyivstar (under VimpelCom ownership) to pursue an unfettered strategy in Ukraine. A successful transaction could also result in a number of operating and financial synergies, leading to a strengthening of Kyivstar's business profile. Nevertheless, completion of the potential transaction would not automatically lead to an upgrade. Standard & Poor's assessment of the business environment in Ukraine would also be a key consideration. In addition, the ratings on Kyivstar remain constrained by the political, business, and regulatory risks associated with operating in Ukraine (foreign currency BB- /Stable/B; local currency BB/Stable/B), which allow for only limited--although possible--leeway for a rating upgrade. The CreditWatch is likely to be resolved following completion or cancellation of the potential transaction. "Although we believe that the likelihood for the transaction to be executed as proposed is modest at this stage, we cannot rule out Kyivstar's shareholders eventually reaching an agreement that would lead to VimpelCom assuming full control," O'Brien added. In the event of cancellation, the ratings would likely be affirmed. Importantly, should a revised acquisition bid include a significant cash component from VimpelCom, potential rating upside for Kyivstar would be unlikely, and a negative rating action would not be ruled out.

KYIVSTAR UPS REVENUES BY 72% Ukrainian mobile operator closed JSC Kyivstar's revenues rose by 72.4% in 2005, the company has reported. Norwegian Telenor owns a 56.51% stake in the company and a 43.49% stake is owned by Russian Alfa-group. Kyivstar's revenues were 7.3 billion Norwegian krones ($1 billion). The operational profit of the operator rose by 39.7%, to 2.83 billion krones. Its EBITDA indicator rose by 57%, to 4.05 krones. Kyivstar has 13.93 million subscribers. The average monthly revenue per subscriber fell to 61 Norwegian krones ($8.9). Telenor considers Kyivstar the main source of the Norwegian company's growth, Telnor Director General John Fredric said at a press conference on Thursday.

COURT RULES ILLEGAL TAX AUTHORITY'S DEMAND ON UMC TO PAY VAT ON DUTIES TO PENSION FUND The Kyiv Economic Court has ruled illegal a demand by the State Tax Administration (STA) on Kyiv-based CJSC Ukrainian Mobile Communications (UMC) to pay VAT on its payments to the Pension Fund. As a correspondent of Interfax-Ukraine reported, the Kyiv Economic Court satisfied in full the appeal of CJSC UMC to recognize the STA's decisions on debts on VAT on payments to the Pension Fund as illegal, including a fine of UAH 68.055 million for the period from January 2002 through June 2004. The court expenses will be paid by the tax agency. The court's ruling can be appealed according to current legislation. As reported, in 2005, UMC several times appealed to tax agencies of different levels against the STA's claims. The company applied to the Kyiv Economic Court on December 9 last year, following a warning by the tax administration to pay the disputed sum in twenty days. In July 2005, the STA decided that the UMC should pay debts on VAT on payments to the Pension Fund for the period from January 2002 through June 2004. The tax agency insisted that the payments to the Pension Fund from mobile communication services should be taxed at the rate of 6%, according to effective legislation. However, UMC said that the law stipulates VAT should be paid not by the mobile service operator but by subscribers, but as the duty is not included in the price for mobile services, it could not be taxable.

As reported, In December last year CJSC Kyivstar GSM, CJSC UMC and Astelit Ltd. (Life:) trademark), Golden Telecom Ltd. and CJSC Ukrainian radio systems (URS) sent a letter to President Viktor Yuschenko, expressing concern about the worsening investment climate in the telecommunications sector. The operators faced ambiguous interpretation of tax laws by tax agencies, the letter read. Tax claims for January 2002 amount to around UAH 68 million for UMC, UAH 28 million for Kyivstar, and around UAH 2 million for Golden Telecom.

NCRC TO CHALLENGE IN COURT BAN ON DISTRIBUTION OF FREQUENCIES FOR UKRAINIAN HIGH TECHNOLOGIES The National Communications Regulatory Commission of Ukraine (NCRC) will challenge in Kyiv Economic Court of Appeals the ban on the distribution of radio frequency bands for Ukrainian High Technologies Ltd, a source in the NCRC told Interfax-Ukraine. "(We) appealed to the court against the ruling of Kyiv Economic Court that banned the distribution of radio frequency bands for Ukrainian High Technologies until the hearing of the case," the source said. As reported, on February 2 at the preliminary hearings, the Economic Court banned the NCRC from rearranging frequency bands of the Ukrainian High Technologies, and the ruling of December 21 remained in effect. On December 14, the NCRC decided to cancel the license of Ukrainian High Technologies issued to the company in 2002, and to register it for frequency bands used in the city of Kyiv and Kyiv region, and in Kharkiv. The decision was motivated by non- observance of the conditions of the license by the operator. In turn, Ukrainian High Technologies appealed against the decision in court, challenging it as illegal as the operator said it had fulfilled all the conditions of the license, the Director General of the company Yuriy Chuikov said. Ukrainian High Technologies' investors also considered it illegal. The Kyiv Economic Court suspended the fulfilling of the NCRC's decision on the cancellation of the license on December 21. Ukrainian High Technologies is the operator of a WiMAX-based wireless broadband access to the Internet. The company's investors include Russian Technology (part of the Alfa Group of Russia) and Intel Capital (Intel's strategic investment unit). The company has a license for the use of 3.5 GHz frequencies and other permits for the deployment of a wireless broadband access network.

MANUFACTURING

EUROCAR TO UP ITS STATUTORY FUND ALMOST 26% CJSC Eurocar, based in Solomonove in Zakarpattia region, the official producer of Volkswagen Group Concern's cars (Skoda, VW, Audi), is to increase its statutory fund by 25.7%, to UAH 88.14 million through an additional issue of stocks worth UAH 18 million, according to the company. As the company told the press, the question of increasing of the company's statutory fund was put on the agenda of a regular meeting of the stockholders scheduled for March 28. A total of 783,480 nominal shares with the current face value of UAH 112.5 are to be issued. The present stockholders will have a preferential right to buy shares of an additional issue. The funds raised from the issue are to be allocated to the replenishment of circulating assets and extension of the production facilities. The Eurocar plant started work in December 2001, and in April 2002 it launched mass production of Skoda Octavia cars. In August 2002, it launched production of Skoda Fabia cars, and in March 2003, Skoda Superbs. In October 2003, it started producing Volkswagen cars, and in March 2004, it started to assemble Audis. In May 2005, the construction of the second line of the enterprise, foreseeing construction of a new assembly workshop, welding and painting workshops, was started. At the first stage of realization of the second assembly line, the capacity of the enterprise is to reach 45,000 units per year, while at the second stage it is to reach to 120,000 units (the capacity of the first assembly line was 15,000 cars per year). A total of UAH 1 billion is to be invested in the project for the second assembly line. In 2006, the enterprise is planning to assemble 21,500 cars, which is 92% more than in 2005. CJSC Atoll-Holding group of companies unites Eurocar, the Ukrainian Insurance Group, EuroLeasing, Formula Motor (importer of Seat cars,) and VIPcar (importer of Bentley cars.) As of September 2005, CJSC Atoll-Holding owns a 68.8% stake in CJSC Eurocar. The company's statutory fund is UAH 70.14 million.

KIA CAR SALES IN UKRAINE UP 9 TIMES TO 260 CARS IN JANUARY KIA car sales rose nine times, to 260 cars in Ukraine in January, compared to 29 cars year-over-year, Serhiy Krasulia, the press secretary of Bogdan Corporation, which includes KIA Motors Ukraine, has told Interfax-Ukraine. "That is an absolute record, especially taking into consideration that January has never been an active month for sales," KIA Motors Ukraine head Borys Tkalenko said. "We have occupied a high position on the market at the beginning of the year, and intend to retain it until the year's end," he added. He also said that in February the company intends to sell at least 300 cars.

He said the success has been reached thanks to a sales promotion entitled "Ukrainian Prices." During the sales promotion, the prices of KIA cars were reduced by 10%. "Taking into consideration the competitive market in Ukraine, the company has made a decision to reduce costs for Ukrainian consumers," Tkalenko said. He also said that the promotion would also include KIA Rio cars as of February 1. He said that the price of a basic model is UAH 76,000, against UAH 85,000 before. He said that due to the great demand for its cars the company has stepped up the development of its dealer network. He said the company has 18 partner-firms and also works through the dealer network of UkrAvtoHolding, which is represented in every regional center. He said that currently the KIA Cerato and Rio are the company's best selling models. He named Chevrolet, Skoda and Mitsubishi, as KIA's main rivals.

In February 2005, KIA Motors Ukraina joined Bogdan Corporation, and in late October 2005, the Lutsk Car Plant launched KIA production.

ZAZ PLANS TO SELL ABOUT 500 SMALL-CLASS BUSES IN UKRAINE IN 2006 Zaporizhia Car Assembly Works (CJSC ZAZ) is planning to sell 400- 500 small class busses assembled on the Indian TATA chassis in 2006, Interfax-Ukraine has learned from ZAZ's board chairman Mykola Yevdokymenko. "We started production of these buses this year and they will appear on the market soon," he said. The bus has 26 passenger seats, it is assembled with a TATA engine and transmission, with the rest of the parts produced in Ukraine. Asked what distinguishes these buses from Etalon buses with TATA chassis, produced by Boryspil Car Plant, he said that this is a native design from Zaporizhia constructors, which stands out for its high quality and excellent technical features. He did not disclose the price but said that the bus is competitive in terms of technical development, quality and price on the Ukrainian market. Yevdokymenko said this is not the last development of ZAZ engineers in bus construction. "We will be actively present at the bus market both in Ukraine and abroad," he said. No further details of the project were disclosed. ZAZ is one of the leading Ukrainian car producers. In 2005 it upped car output by 17.6% year-over-year, to 148,160 cars. At present ZAZ also produces TATA trucks on its facilities in Illichivsk. The major bus producer in Ukraine is Bogdan corporation, which assembles small-class buses on the basis of Japanese Isuzu buses.

Last year it sold above 2,000 buses.

AUTOKRAZ RESUMES TRUCK SUPPLIES TO KYRGYZSTAN AFTER TWO-YEAR BREAK Kremenchuk-based AutoKrAZ Holding Company in Poltava region, Ukraine's only heavy truck producer, plans to supply at least 29 KrAZ dump trucks to state concern Kyrgyzaltyn (Kyrgyzstan). As the holding's press service reported on Thursday, the first shipment of nine KrAZ-6510 dump trucks with a 6x4 wheel arrangement is being sent to the Kyrgyz concern, which unites ore and gold mining industries. The sum of the contract was not disclosed. The press service reported that due to economic and political instability in Kyrgyzstan, AutoKrAZ suspended shipments of its produce to the country (73 trucks were shipped to Kyrgyzstan over 15 years by AutoKrAZ). The company said that the new Kyrgyz government is going to develop mining industry, especially gold mining. Investments received by Kyrgyzaltyn permitted the company to restart development of gold fields and to renew its ore transport vehicle fleet. According to AutoKrAZ, Kyrgyzaltyn plans to increase gold extraction in 2006 and in this connection to purchase 20 more KrAZ-6510 heavy load trucks. AutoKrAZ produces 25 base models, over 150 modifications of the trucks for all sectors of the economy and the military. The trucks are exploited in over 60 countries. In 2005, the plant increased production of KrAZ vehicles 1.6 times compared to 2004, to 3,571 trucks, including 204 vehicles equipped with engines meeting Euro-2 standards. Last year, the enterprise exported its vehicles to Russia, Uzbekistan, Kazakhstan, Turkmenistan, Iraq, and sent assembly kits to Vietnam. This year, it plans to increase shipments of KrAZ vehicles to Central Asia. Kyrgyzaltyn is one of the biggest enterprises in Kyrgyzstan.

AMC ALLOWS SCM TO BUY LARGE STAKES IN TWO KRYVY RIH ORE EQUIPMENT PLANTS The Antimonopoly Committee of Ukraine (AMC) has allowed Donetsk- based System Capital Management Company (SCM) to buy large stakes in CJSC Kryvy Rih Mining Equipment Plant and OJSC Kryvy Rih Central Ore Repairs Plant, the AMC's press service told Interfax- Ukraine on Thursday. The committee said that through the purchase of the stakes, SCM will control over 50% of the votes on the boards of the two enterprises. The ACM also obliged the purchaser not to discriminate against customers of the plants that are not a part of the SCM. As the Ukrainian mass media reported, the enterprises were bought by the SCM from former owner UkrSib Group. CJSC Kryvy Rih Mining Equipment Plant produces spare parts for ore mining facilities, in particular, excavators and hogging and grinding equipment. Ore mining and processing mills (Pivnichny, Central, Inhulets, Pivdenny and Poltava mills) are the consumers of the enterprise products in Ukraine. The enterprise exports around 20-25% of the spares it makes. In 2004, the enterprise's revenues were over UAH 220 million, and its net profit was UAH 6 million. According to the State Commission for Securities and Stock Market, as of early September 2005, Kharkiv-based UkrSibbank owned a 78.33% stake in the enterprise, while Kharkiv-based Ukraine-Trading Ltd. (11,4%) owned 11.72% of CJSC's stocks. As of early September 2005, 30.67% of the stocks in OJSC Kryvy Rih Central Ore and Repairs Plant belonged to UkrSibbank, and 23.14% of its stocks were owned by the Interregional Stock Union.

SCHENCK UKRAINE SEES 41% RISE IN '05 TURNOVER The Schenck Ukraine company, a subsidiary of the German Schenck Process Concern, boosted turnover by 41% in 2005 year-over-year, to UAH 21.1 million. Director General of Schenck Ukraine Andriy Lukash said this at a press conference at Interfax-Ukraine on Thursday. In his words, the company's profit in 2005 grew by 47%, to UAH 2.316 million. In 2006, the company plans to boost turnover by 42%, to UAH 30 million. Lukash said that about 64% of the company's revenues come from the implementation of metallurgical and cement production projects, 18% - from logistics projects, and about 5% - from projects in the light and food industries. In 2006 the company is to bring some new solutions and products onto the Ukrainian market. They include solutions for cement industry: powdered coal feeders, secondary fuel feeders and chrome neutralizing systems. These systems are designed to reduce gas consumption, Lukash said. Schenck Ukraine has implemented a number of projects in Ukraine, including large deployments at steelmakers Kryvorizhstal and Azovstal and cement producers Doncement and Mykolaivcement. Schenck Ukraine has been working in Ukraine since 2001. It has implemented over 500 projects in Ukraine with the use of Schenck equipment. Schenck-branded equipment has been working at Ukrainian production facilities since 1978 when Kryvorizhstal installed belt weighers. Schenck Process develops, manufactures, assembles, markets and sells a full range of solutions, products and turnkey systems on the basis of combining process engineering expertise, reliable components and field-proven technology. Schenck Process is the global market leader of solutions in measuring and process technologies in industrial weighing, feeding, screening and automation. Its turnover in the world in 2005 was estimated at EUR 230 million.

SCHENCK UKRAINE MAY PRODUCE CONCRETE CONSTRUCTIONS FOR RAIL WEIGHBRIDGES Schenck Ukraine company may start producing concrete constructions for dynamic rail weighbridges in Kyiv, Schenck Ukraine Director General Andriy Lukash said at a press conference in Interfax-Ukraine on Thursday. According to him, the company is currently holding a tender to find a weighing systems' spare parts producer, in which several companies are participating. "We intend to have a producer from Kyiv," he said. The director general reported that Schenck Ukraine has already invested about EUR 100,000 into the production of forms for these concrete systems.

SITRONICS SELECTS ABN AMRO, CREDIT SUISSE TO ORGANIZE EUROBOND ISSUE Sitronics, part of AFK Sistema, has selected ABN AMRO and Credit Suisse to organize its debut eurobond issue in accordance with Reg S guidelines, the company said in a press release. The issue is expected to be placed in February 2006 amid current market conditions. The details of the placement are not being disclosed yet, a Sitronics source told Interfax. Sitronics (formerly known as KNC), was formed in May 1997 and is one of Russia's largest diversified groups of high-tech businesses. Sistema owns 100% of the company. The Sitronics group also includes STROM Telecom, Kvazar-Micro, the Molecular Electronics Research Institute, the Mikron plant, Kvant and Videofon-MV. Sitronics shareholders include AFK Sistema, with 94.53%, the company's chief designer Gennady Krasnikov with 2.46%, Ned Electronic GmbH owns 2.45% and others have 0.56%. The company sells its products in Russia and the CIS, Western and Eastern Europe, North America, the Middle East and Southeast Asia.

SITRONICS NET PROFIT SOARS IN 9 MTHS Sitronics net profit to US GAAP soared 17.8-fold year-over-year to $69.335 million in January-September 2005, the company said in an investment memorandum for a eurobond issue. Revenue doubled to $652.256 million in the period and operational profit grew 11-fold to $135.632 million, the document says. Sitronics net profit grew 730% to $19.143 million in 2004. Revenue rose five-fold to $488.092 million and operational profit was up six-fold to $39.917 million.

SITRONICS INVESTMENT TO AMOUNT TO $145M IN 2006-07 Investment by OAO Sitronics in 2006-2007 will amount to about $145 million not including acquisitions, the company said in an investment memorandum for a eurobond issue. The investment will mainly be to develop the Czech company STROM Telecom, the Molecular Electronics Research Institute and the Mikron plant.

FERROUS&NON-FERROUS

UKRAINE REDUCES IRON ORE EXPORTS 0.9% IN JAN Ukraine reduced iron ore exports 0.9% year-over-year in January to 1.45 million tonnes, a representative of Ukrrudprom, the country's iron ore producers' association, told Interfax.

Sintering ore exports fell 1.9% to 582,000 tonnes and pellets 8.3% to 667,000 tonnes, but iron ore concentrate exports jumped 41.7% to 197,000 tonnes. The association said bad weather hampered iron ore exports in January. A source at Poltava ore-mining and dressing mill (PGOK), the country's biggest iron ore pellet producer, is selling its products mostly abroad. It is not exporting to Russia's Magnitogorsk Iron & Steel Works (MMK) but it is boosting exports to China, the source said. The source said PGOK wanted to sell its products in Ukraine, but that steel mills were not buying its pellets due to a drop in output and the worsening situation on the external markets. Ukraine increased iron ore exports 8.5% to 19.46 million tonnes in 2005.

UKRAINE RAISES IRON ORE IMPORTS FROM RUSSIA 29% IN JAN Ukrainian steel mills raised iron ore imports from Russia tentatively 29% year-over-year in January to 138,000 tonnes, even though ore stockpiles at the country's own mines are bulging, a representative of Ukrrudprom, the Ukrainian association of ore producers, told Interfax. The source said the Illich Iron & Steel Works (MMK) from Mariupol imported 85,000 tonnes of concentrate and that the Yenakiyive mill imported 53,000 tonnes of sintering ore. Ukrainian mines have stockpiled around 1 million tonnes of ore and it was hard to see why the Mariupol plant continued to import ore from Russia, the source said. Iron ore stockpiles at Ukrainian mines have grown to 2.126 million tonnes, Yuriy Putria, deputy chairman of Ukrrudprom, told a conference of representatives from the Ukrainian mining complex in Dnipropetrovsk on February 15. Stockpiles grew to 223,000 tonnes in January, he said. Putria said some metallurgical enterprises have been bringing ore from Russia when Ukraine already has such products. In particular, the Illich works in Mariupol, one of Ukraine's three biggest steel mills, imported 85,000 tonnes of Russian iron ore concentrate in January, despite the fact that Ukrainian mining enterprises have stockpiles of about 960,000 tonnes of concentrate. As a result of the significant stockpiles of ore at Ukrainian mines, plants have had to lower production of this raw material, Putria said. He issued a warning to metallurgical enterprises: if this trend continues, mining enterprises will be forced to export their goods and the domestic market will become their second priority. Putria also said that Ukraine exported about 1.4 million tonnes of iron ore to China in 2005 and may export 1.5 million-2 million tonnes in 2006. In addition, Ukrainian metallurgical enterprises were previously expected to produce 33-34 million tonnes of pig iron, however these figures have been corrected somewhat. Putria said that no more than 15.1 million tonnes of pig iron would be produced in the first six months of 2006 and total output in 2006 will not exceed 30 million tonnes. Ukrainian mining enterprises will be forced to export their products, while also fighting for the domestUKRAINE SCRAP EXPORTS PLUMMET 79% IN JAN Ukrainian ferrous scrap metal exports fell 78.9% year-over-year in January to 27,000 tonnes, Ivan Zaitsev, general manager of the UAVtormet scrap metal association, said at a meeting with mining and metals industry chiefs and government officials in Dnipropetrovsk. Deputy Industrial Policy Minister Volodomyr Hranovsky said the EUR30/tonne export duty on scrap exports would soon be extended to shipments to Moldova. "We will be subjecting an annual 500,000 tonnes of scrap exports to Moldova to export duty," Hranovsky said. Ukraine reduced scrap metal exports 48.5% to 1.26 million tonnes in 2005. Ukraine exported 67,500 tonnes of scrap in December, compared with 175,700 tonnes in the same month of 2004. Scrap metal procurement fell 17.2% to 7.62 million tonnes in 2005. Supplies to Ukrainian steel mills fell 5.9% to 6.35 million tonnes.

UKRAINE REDUCES COKE OUTPUT 12.6% IN JAN Ukraine reduced coke production 12.6% year-over-year in January to 1.58 million tonnes on the back of falling demand from the country's steel mills, Anatoly Starovoit, head of Dnipropetrovsk- based Ukrainian coke association Ukrkoks, told Interfax. "Demand is the only problem, there are no others. There's enough coal and capacity," Starovoit said. Starovoit said he expected demand to pick up in March, though. The country could produce 19 million-20 million tonnes in 2006 as a whole, he said. Coke production could be higher if more coke was exported, but freight costs are prohibitive, Starovoit said. He said it cost Ukrainian producers $36-$40 to ship a tonne of coke from the Donbas to Ukraine's western border, but just $12 for transit of Russian coke. "The higher tariffs were introduced at a time when Ukrainian steel mills couldn't get enough coke, but the situation has now changed and I think the government will listen to our requests to lower rail tariffs for coke exports," he said. Ukraine reduced coke production 14.3% to 18.86 million tonnes in 2005.

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UKRAINIAN COKE PRODUCTION ('000 TONNES, PRELIMINARY DATA): Coking and chemical plant January 2005 January 2006 Avdiyivka 346 287 Donetskkoks 110 64 Yenakiyeve 49 42 Azovstal (Markokhim) 213 201 Alchevskkoks 225 220 Makiyivkoks 86 77 Yasynivsky 139 109 Bahliykoks 87 65 Dniprodzerzhynsk 72 57 Dniprokoks 75 60 Zaporizhkoks 166 168 Kryvorizhstal 233 225 Kharkivsky 5 5 TOTAL 1,807 1,579 Source: Interfax-Ukraine

EOT

UKRAINIAN PRODUCER REDUCES IRON ORE OUTPUT Sukha Balka, an iron ore producer from Kryvy Rih in Ukraine's Dnipropetrovsk region, produced 250,000 tonnes of commercial ore in January, down 2.3% year-over-year, the company told Interfax. The company produced 258,000 tonnes in December 2005. Production rose 5.6% to 3.24 million tonnes in 2005. The Privat Group of Dnipropetrovsk controls Sukha Balka. Zaporizhia Iron Ore Combine, a Ukrainian-Slovak joint venture in Zaporizhia region, boosted production of market iron ore 8% year- over-year to 355,000 tonnes in January, a company source told Interfax. The company produced 353,000 tonnes of market ore in December. Production grew 7.7% in 2005 as a whole to 4.21 million tonnes. The company mines the Pivdenno-Bilozerske and Pereverzivske iron ore deposits, and produces market iron ore. The company's main shareholders are Minerfin of Slovakia and Zaporizhstal, one of Ukraine's largest steel companies. The Kryvy Rih State Iron Ore Combine raised production of iron ore commodities by the deep mining method 2.1% year-over-year in January to 587,000 tonnes, the company told Interfax. Output was 612,000 tonnes in December 2005. Output was level with 2004 at 6.46 million tonnes last year as a whole. Solaim, a Dnipropetrovsk company and member of the Privat Group, controls 93.07% of the Kryvy Rih combine.

KRYVY RIH OXIDIZED ORE PROCESSOR CAN'T PAY FOR MUNICIPAL SERVICES DUE TO ARRESTED ACCOUNTS, SAYS DIRECTOR GENERAL The Kryvy Rih Oxidized Ores Processing Integrated Plant is unable to pay to for municipal services and electricity as its accounts were arrested in November last year, the enterprise's Director General Vasyl Yeremenko told Interfax-Ukraine on February 13. "Since November 2005 we have not been able to make payments, as Kirovohrad Economic Court had arrested the accounts of the enterprise. We applied several times to the Industry Ministry for help, but everything has remained unchanged. We received a warning against cuts in gas as well, but no one reacts to our letters," Yeremenko said. According to him, the Industry Ministry runs the enterprise. However, Kirovohrad regional administration has been helping the enterprise find a way out of the situation, he said. "We had an agreement that by January 25 we would pay up - everyone knew this, but we still don't have any results. I went to the Industry Ministry and the regional administration. We sent letters from behalf of Kirovohrad regional council, but we left with nothing. It's a long time since we were able to solve this problem by ourselves," he said. As reported, the construction of Kryvy Rih Oxidized Ores Processing Integrated Plant started in 1985. After the collapse of the Soviet Union, Ukraine became the legal representative of the plant with a 56.4% share in the project. Romania's share was 28% and Slovakia owned the rest of the plant. Hungary was among the negotiators in Soviet times. Around $200 million is needed to complete construction and launch the first line of the plant. The estimated cost of the plant's construction was $2.4 billion, out of which $1.65 billion has been spent. The plant's production capacity is 10 million tonnes of pellets, and the production capacity of the first line is 6.6 million tonnes. For ten years after the completion of the plant's construction, Ukraine (or an investor after winning a tender) is to supply 17 million tonnes of pellets to Slovakia, and 30 million tonnes of pellets are to be supplied to Romania. Mittal Steel is interested in purchasing the plant. Inhulets and Poltava Ore Mining and Processing Mills, Magnitogorsk steel mill in Russia and Sinosteel in China are among potential investors as well.

NIKOPOL PLANT REDUCES FERROALLOY OUTPUT 15% IN JAN Nikopol Ferroalloy Plant (NZF), Ukraine's biggest ferroalloy producer, reduced ferroalloy production 14.8% year-over-year in January to 73,000 tonnes, the company told Interfax. The company, which is Ukraine's monopoly producer of silicon manganese and ferromanganese, produced 56,100 tonnes of silicon manganese against 57,200 tonnes in January last year, and 16,900 tonnes of ferromanganese (27,500 tonnes). In December 2005, NZF produced 64,400 tonnes of ferroalloys, including 49,600 tonnes of silicon manganese and 14,700 tonnes of ferromanganese. NZF imports raw material to produce ferroalloys. The Dnipropetrovsk-based Interpipe Corporation controls NZF.

FINAL DECISION ON NFW TO BE ADOPTED AFTER PARLIAMENT ELECTIONS A final decision on the fate of Dnipropetrovsk-based Nikopol Ferroalloy Works (NFW) will be taken after the forthcoming parliamentary elections, experts say. "If it is possible to create a stable parliamentary coalition and a new government after the elections, serious changes will be introduced into the issues of privatization and repeat privatization," Volodymyr Fesenko, the CEO of the Center f Applied Political Research, Penta told the press on February 10. He said that taking into consideration a number of conflicts around the NFW, to leave the plant in state ownership would be a compromise solution. The Verkhovna Rada, Ukraine's parliament, has recently approved a bill putting NFW onto the list of enterprises not to be privatized. Fesenko said this was due to a coincidence of a number of political interests. Andriy Yermolaev, the head of the Sofia Center for Social Research, had earlier favored the signing of an amicable agreement to settle the issue, says that the Verkhovna Rada's decision is a compromise reached through lobbying on the issue. "I wouldn't be in a hurry with the sale. However, if the NFW is returned to state ownership, it would be better to create a big, competitive state enterprise on its base," he said.

Oleksandr Riabchenko, the head of the International institute of privatization and property management and investments, says that the activity of the future parliament with respect to NFW will depend on which side wins the elections. He said it is reasonable to leave the enterprise in the state property for a while. "It is necessary for the state to have a stock holding in the enterprise. At the same time, state representatives and representatives of the groups Interpipe and Privat will have to continue running NFW. That will allow a real estimation of the value of the enterprise to be made. After that, it will be possible to sell the stocks," he said. As reported, the SPF in May 2003 sold 25% of NFW's stocks to Prydniprovia financial corporation for UAH 205 million, and then sold it another 25%+1 share stock holding for UAH 205.5 million.

AZOVSTAL REGISTERS ITS TRADEMARKS

Mariupol-based opened JSC Metallurgical Mill Azovstal has registered its exclusive rights to use its trademarks, according to a company press release. The mill has received a license for its trademark for goods and services, which was approved by the state department of intellectual property of the Education Ministry of Ukraine. "Receiving the document strengthens the exclusiveness of the product. The trademarks are very important for the promotion of goods on the markets and also for protection from unfair competitiveness," according to the mill's press release. The release also reads that Azovstal is paying considerable attention to increasing its product quality and its certification on the basis of new scientific achievements. Opened JSC Azovstal is a full-metallurgical-cycle enterprise and holds a monopoly in the production of several kinds of metal stock. Its production facilities are designed to produce about 6 million tonnes of pig iron, over 7 million tonnes of steel, and 4.5 million tonnes of rolled stock.

AZOVSTAL PLACES $175 M IN DEBUT ISSUE OF FIVE-YEAR EUROBONDS Opened JSC Azovstal steel mill (Mariupol, Donetsk region), which is among Ukraine's top three steelmakers, has placed a debut issue of five-year loan participation notes worth $175 million with a fixed coupon. The notes were issued with the right to buy them back in two years, the company reported in a press release on Thursday. The yield of the securities is set at 9.125% annual interest. A six- month payment on the coupon is foreseen. "During the placement, the amount of the bids was 1.5 times higher than the original offer. Seventy investors from 20 countries bought Azovstal's eurobonds," reads the press release. Asian investors bought 34% of the notes, British investors - 27%, Swiss ones - 13%, German ones - 8%, investors from other European countries - 11%, U.S.-registered offshore companies - 7%. Almost half of the notes, 46%, were bought by banks, 31% - by assets management firms, 12% - by hedge funds, 11% - by other financial organizations. "The wide diversification of demand for the mill's corporates and favorable borrowing conditions have confirmed investors' high interest in Azovstal and the SCM group's business (a key stockholder in the mill). We're pleased with the results of the placement, which was a success despite a general volatility of Ukrainian issuers' securities caused by the Ukraine-Russia gas dispute and the political instability pending the (parliamentary) election in the country," the press release quotes Financial Director of OJSC Azovstal Serhiy Novikov as saying. The note placement was lead-managed by ING, which is also the mill's authorized agent for placing the loan participation notes.

Moscow Narodny bank was the co-manager.

PGO OPENS CRIMINAL CASE AGAINST KRYVORIZHSTAL OFFICIALS FOR ABUSE OF POWER The Ukrainian Prosecutor General's Office has opened a criminal case against some officials of Kryvorizhstal metal mill (Kryvy Rih, Dnipropetrovsk region) for abusing their authorities, the press service of the Prosecutor General's Office told Interfax- Ukraine on February 13.

The criminal case was instituted under part 2 of article 364 of the Criminal Code of Ukraine, which carry a jail term of from five to eight years and deprivation of the right to occupy certain positions for three years after release from prison. The pre-trial investigation is being conducted by the chief investigation department of the Prosecutor General's Office.

ARCELOR DISCUSSING MARIUPOL STEEL MILL BUY - REPORTS European steel giant Arcelor is in talks concerning the purchase of the Mariupol (Illich) Iron & Steel Works (MMK), one of Ukraine's three biggest steel mills, Ukrainian media reports cited sources close to Volodomyr Boiko, the Mariupol plant's chief, as saying. The mill produced 5.5 million tonnes of rolled steel in 2005. Arcelor tried to buy Kryvorizhstal, Ukraine's biggest steel mill, last fall, but lost out to Mittal Steel at an auction.

MARIUPOL STEEL MILL NOT FOR SALE - BOIKO There are no plans to sell the Mariupol (Ilich) Iron & Steel Works (MMK), one of Ukraine's three biggest steel mills, to European steel giant Arcelor, Ukrainian or Russian businessmen, Volodomyr Boiko, the Mariupol plant's chief, told Interfax. Ukrainian media reports have cited sources close to Boiko as saying that Arcelor was in talks concerning the purchase of the steel mill. Boiko said he had met with Arcelor representatives, but that did not mean the steel mill was going to be sold. "Five months ago I met with representatives of Arcelor, but I have also met with (Donetsk-based businessman) Rinat (Akhmetov) and (Vadim) Novinsky (a Russian businessman who controls the Inhulets iron ore mine and Makiyivka steel works in Ukraine), (Alexei) Mordashov (chairman of the board of directors at Russia's Severstal and, yesterday, with (Vladimir) Lisin (chairman of Russia's Novolipetsk Steel)," Boiko said. But there is no intention to sell the Mariupol plant, which is owned by its employees, he said. Boiko also said he thought somebody was trying to tarnish the plant's image by spreading reports to the effect that it will be sold. CJSC Illich-Stal owns 90.4101% of the plant's shares and private individuals and legal entities own the rest. The plant controls 21.4% of Ukraine's ferrous metals market. The mill produced 5.5 million tonnes of rolled steel in 2005.

STATE AGENCY FOR BANKRUPTCY AND FINANCIAL READJUSTMENT MANAGER OF KOSTIANTYNIVKA STEEL MILL TO SELL 10% STAKE AT TENDER The Donetsk branch of the State Agency for Bankruptcy and the financial readjustment manager of OJSC Kostiantynivka Metallurgical Works (OJSC KMW in Donetsk region) have announced a tender to sell a 10% stake in the company. According to the agency and the manager, the tender is to be held on March 14, 2006. The deadline for bids is March 7, 2006. The starting price for the 10% stake in OJSC KMW is UAH 1.492 million (VAT not included). The winner of the tender will sign a purchase and sale agreement with the financial adjustment manager according to the approved procedure, the report of the agency and manager reads. As reported, in May 2004, Donetsk Regional Economic Court opened a case on the bankruptcy of OSJC Kostiantynivka Metallurgical Works and introduced a moratorium for satisfying the claims of its creditors. The court appointed Viktor Frankfurt as the asset manager of the company. In January 2005, the Antimonopoly Committee of Ukraine (AMC) allowed CJSC Artemivsk VISTEK engineering works in Donetsk region and OJSC Kostiantynivka Metallurgical Works to found CJSC Kostiantynivka Metallurgical Works, which is to produce cold- drawn and hot rolled steel. Artemivsk VISTEK engineering works produces and high-strength chains, connecting links, welding rods, and nuts and bolts. OJSC Kostiantynivka Metallurgical Works produces alloy and constructional steel, and wire made of low-carbon steel for reinforcement. According to the State Commission for Securities and Stock Market (SCSSM), as of April 1, 2004, the state owned a 100% stake in the company. OJSC KMW owns a 49.93% stake in Donetsk-based CJSC Radonmet, founded by the KMW and Radon Company, and a 49.92% stake in CJSC Kostiantynivka Iron Works. The company's statutory fund is UAH 455,154, and the face value of each of its stocks is UAH 5.25.

UKRAINE'S METALLURGISTS AND MINERS TRADE UNION ASKS YUSCHENKO TO RETAIN SMART-GROUP AS MMP INVESTOR The central committee of the trade union of metallurgists and miners has requested Ukrainian President Viktor Yuschenko to retain Russian opened JSC Smart-Group as the investor in closed JSC Makiyivka Metallurgical Plant (MMP), which was created in 2004 as an enterprise with a full metallurgical cycle on the basis of fixed assets of the open JSC Makiyivka Metallurgical Mill (both located in Donetsk region)

According to the letter, the trade union is particularly worried about the State Property Fund's (SPF) intention to return Makiyivka Metallurgical Plant to state ownership. At the same time, the report says that Smart-Group has proved to be an experienced manager and a socially oriented company since becoming the plant's investor. Wage arrears have been fully paid off (UAH 33 million), arrears for gas worth UAH 331 million have also been paid off, average wages rose from UAH 760 to UAH 1,120, and a total of 36 working facilities have been repaired. "It is planned to allocate even more considerable funds for these purposes before 2008. Nothing of the kind has been done for seven years by any of the other six investors in the plant," the document reads. "Stopping Smart-Group from running the plant will definitely entail destabilization and production stoppage. The consequence could be social breakdown and a boycott of the forthcoming Verkhovna Rada elections," the trade union says. Union Head Volodymyr Kazachenko, who signed the letter, requests that Yuschenko prevent unreasonable decisions from being taken.

MMP is Ukraine's oldest metallurgical enterprise, and the one with the lowest output. A total of seven investors have been involved in the plant in the last 10 years. The MMP readjustment plan is being conducted according to cabinet resolution No.225 of April 14, 2004. According to the resolution, Gaz Ukrainy was ordered to "solve the issue of financial support and attract investments in the enterprise." Gaz Ukrainy brought in Makiyivstal as an investor. At present, a readjustment plan for OJSC Makiyivka Metallurgical Plant has been completed, apart from the valuation and sale of a 24.8% stake in the plant. Makiyivstal says that one of its main successes in 2005 was a rise in average monthly pig iron production by 35% compared to 2004, steel by 32%, and rolled steel by 35%. The average monthly wage level rose from UAH 700 to UAH 1,124. As a whole, wages have risen by 209% in 1.5 years. The total payments to the budget into social and non-budget funds were UAH 106 million, compared to UAH 59.6 million in 2004. The enterprise also paid debts worth UAH 331.3 million to Naftogaz Ukrainy.

MAKIYIVKA STEEL PLANT AIMS TO BOOST FINISHED ROLL OUTPUT 150% IN 2006 The Makiyivka Metallurgical Plant (MMZ) plans to increase production of finished rolled products by about 150% to 1.4 million tonnes in 2006. The plant also plans to produce 1.3 million tonnes of pig iron and 1.6 million tonnes of crude steel this year, deputy chief executive Tatyana Ponomarenko said at a press conference. "On average, this is 50% more than in 2005," she said. It was reported earlier that MMZ produced 1.03 million tonnes of crude steel and 825,000 tonnes of pig iron in 2005. Ponomarenko also said that MMZ's program of updates for 2006 would focus on energy conservation, creation of the plant's own iron ore supply base, and modernization of steel making facilities. The company plans to spend UAH 705 million on maintaining fixed assets, modernization and overhauls.

IUD'S ALCHEVSK MILL UPS ROLL OUTPUT 2.1% IN JAN The Industrial Union of Donbas (IUD) Corporation's Alchevsk Metallurgical Combine (AMK) raised finished roll output tentatively 2.1% year-over-year in January to 241,000 tonnes. An official at the mill, which is from the Luhansk region, told Interfax that crude steel production fell 2.3% to 300,000 tonnes but pig iron production rose 2.5% to 250,000 tonnes and sinter production rose 12.9% to 419,000 tonnes. In December 2005, the mill produced 256,000 tonnes of finished roll, 328,000 tonnes of crude steel, 258,000 tonnes of pig iron and 441,000 tonnes of sinter. IUD's Dzerzhinsky Metallurgical Combine (DMK) in the Dnipropetrovsk region said it reduced finished roll output 0.7% year-over-year in January to 274,000 tonnes. The company told Interfax that production fell 1.7% to 289,000 tonnes of crude steel, 9.5% to 249,000 tonnes of pig iron and 6.9% to 435,000 tonnes of sinter. In December 2005, DMK produced 284,000 tonnes of finished roll, 307,000 tonnes of crude steel, 267,000 tonnes of pig iron and 466,000 tonnes of sinter.

PETROVSKY MILL BOOSTS ROLL PRODUCTION 68% IN JAN The Petrovsky Metallurgical Plant of Dnipropetrovsk (DMZ) boosted finished roll production tentatively 68% year-over-year in January to 106,000 tonnes.

The company, which exports most of its output, told Interfax that crude steel production rose by 42.3% to 111,000 tonnes, but that pig iron production fell 2.3% to 126,000 tonnes. In December 2005, the mill produced 102,000 tonnes of finished roll, 118,000 tonnes of crude steel and 140,000 tonnes of pig iron. In 2005 as a whole, the mill raised roll output 16.3% to 1.09 million tonnes. The Privat Group controls the steel mill.

UKRAINE'S ILLICH STEEL PLANT TO STOP IMPORTING RUSSIAN COKE The Illich Metallurgical Works of Mariupol, one of Ukraine's biggest steel mills, plans to stop importing coke from Russia as of February, while Mittal Steel Kryvy Rih has started importing coke from Poland, the head of industry association Ukrkoks said. The Illich plant imported 29,000 tonnes of coke from Russia in January, while Mittal Steel Kryvy Rih (formerly Kryvorizhstal) imported 45,000 tonnes from Poland, Anatoliy Starovoit said at a mining and metals industry conference. Coke imports in January 2005 totaled 60,000-70,000 tonnes. "It's crazy to import coke into Ukraine, as it is profitable for use to import coal and make coke from it, and get coke gas as well," Starovoit said. Ukrainian coke production is declining due to weak domestic demand, he said. Average daily shipments of metallurgical coke currently amount to 42,000-43,000 tonnes. He said there is weak demand for some coking coal mined in Ukraine, especially K and Zh brands, while Mittal Steel Kryvy Rih plans to import coal from Karaganda, Kazakhstan as the prices are more attractive. Demand for coke will hopefully increase after prices go up for natural gas, which will make coke more economically viable, Starovoit said. It was reported earlier that Ukrainian coking plant reduced coke production by 12.6% year-over-year to 1.58 million tonnes in January amid weak domestic demand. Starovoit forecasted that coke production would grow in March, as preliminary orders indicate a slight increase in demand.

ILLICH STEEL MILL CONTINUES BIDDING FOR AUSTRIAN BANK BURGENLAND OJSC Mariupol-based Illich steel mill, in a consortium with Donetsk-based CJSC Ukrpidshypnyk and Kyiv-based Aktiv-Bank Ltd., is continuing to bid for a controlling stake in Bank Burgenland of Austria, a mill spokesman said on Wednesday. However, as Chairman of Illich mill's board and MP Volodymyr Boiko told Interfax, the enterprise is not going to invest a large sum of money in this deal because a large-scale renovation project is under way at the mill. "As for the bank - these are all tall stories. Nobody is going to invest such sums ($300 million) in the bank, as a large-scale renovation project is currently under way at the mill: But we can partly participate if we see benefits. If not, then we won't (participate)," he said. As was reported, a consortium of the Illich mill, Ukrpidshypnyk and Aktiv-Bank Ltd. on December 6, 2005, submitted a bid for a controlling stake in Bank Burgenland, having offered EUR 140 million for the bank. Moreover, the Ukrainian consortium announced it was ready to raise the bank's capital by EUR 100 million. The first stage of the tender ended on December 20, 2005. In December, Aktiv-Bank Governor Yuriy Ivanov told Interfax- Ukraine, the acquisition of this bank would make it possible to raise funds at lower rates both as for the participants in the consortium and other Ukrainian industrial companies. "The main objective is to raise cheaper funds for the production sector," the banker said. Moreover, he said, if the Ukrainian consortium wins the tender, the rights of ownership of the Austrian bank will be sealed for Slav Handel, Vertretung und Beteiligung A.G. (Austria), which in its turn will belong to the Illich mill and Ukrpidshypnyk. The assets of Bank Burgenland A.G. grew by 1.66% in 2004, to EUR 3.174 billion, while its balance profit amounted to EUR 205.139 million. The Province of Burgenland owns 97.97% of the bank's common stocks and 82.12% of its statutory capital. The Illich mill ranks among Ukraine's top three steel makers. CJSC Ukrpidshypnyk trades in coal, furniture, and construction materials. It also provides passenger transport services. Aktiv-Bank Ltd. ranked 57th among Ukraine's 163 working banks in terms of overall assets by the end of 2005. Its profit amounted to UAH 21 million.

UKRAINE BOOSTS PIPE OUTPUT 10% IN JAN Ukraine boosted steel pipe output tentatively 10.1% year-over- year to 146,000 tonnes in January, Leonid Ksaverchuk, general director of the Dnipropetrovsk-based Ukrtruboprom association, told Interfax. Ksaverchuk said the pipe industry as a whole would have worked steadily in January, if it hadn't been for gas supply restrictions, which affected the Nyzhniodniprovsky pipe mill in particular. Ukraine raised steel pipe output 12.6% to 2.29 million tonnes in 2005.

BOT

UKRAINIAN PIPE OUTPUT IN JAN 2006 (PRELIMINARY, '000 TONNES):

Company January 2005 January

2006

Pipe Company 3.6 6.0

Niko Tube 16.0 11.1

YuTiST 3.3 5.2

NZNT (stainless tubes) 0.9 1.0

Trubolit 0.1 0.3

Nyzhniodniprovsky Pipe Plant 41.6 40.8

(NDTZ)

Dnipropetrovsk Pipe Plant (DTZ) 15.7 16.2

Novomoskovsky Pipe Plant (NTZ) 10.6 12.9

Khartsyzsk Pipe Plant (KhTZ) 14.7 25.1

Luhansk Pipe Plant (LTZ) 9.1 14.5

Kominmet 11.3 9.5

Illich steel mill 5.7 3.8

Donetsk Metals Plant 0.2 0.0

Other 0 0

TOTAL: 133.0 146.4

Source: Industrial Policy Ministry

EOT

NIKOPOL STAINLESS STEEL PIPE PLANT BOOSTS OUTPUT 26% IN 2005 The Nikopol Stainless Steel Pipe Plant (NZNT) increased production by 26% in 2005, to 14,200 tonnes (8.165 million meters) of stainless steel pipe. The company said in a press release that exports to countries outside the CIS jumped 72% last year. "NZNT now ships to 50 countries. For the first time last year the company shipped to Australia. The markets of Russia and Ukraine, where sales increased by respectively 12% and 35% year-over-year, remain stable," the release said. The company is now finalizing discussion of a detailed plan for investments in production that will cover the whole production process. "The amount of investment will exceed $20 million in the next two years alone. Deliveries of new equipment are expected as early as the beginning of 2007," NZNT said. NZNT said one of its important marketing campaigns last year was its China project. "The company's goal is to ship high-tech product to the Chinese market, above all thin-walled pipes for the chemical industry and heat exchange pipes for the nuclear power sector," the release said. The company aims to continue to expand its presence on the world market this year, especially in the Americas, Asia and the Middle East. NZNT was set up in May 2000 on the basis of pipe press and drawing divisions of the Nikopol Pivdennotrubny Pipe Works (NPTZ) in Dnipropetrovsk region with financing from UVIS. PKP UVIS, a supplier of stainless steel pipes and rolled products, has offices in Nikopol, Zaporizhia and in Russia.

INTERPIPE'S TURNOVER FALLS 25% IN 2005 Dnipropetrovsk-base Interpipe Corporation's turnover fell by 25% in 2005, from $4 billion in 2004 to $3 billion, according to an official at the company. As the director of the investment department of Interpipe Corporation Maksym Beliachenko said in Kyiv last week, 45% of Interpipe's commodity turnover was on the Ukrainian market, while 29% was on the Russian market and 35% was on the markets of other countries. He was speaking at the second International investor's conference "The Roadmap for Prosperity" in Ukraine organized by Renaissance Capital Ukraine. He said Interpipe is planning by 2010 to increase the volume of its services in the structure of the corporation's activity to 60%, while in 2005 it was 15%. In particular, the corporation is planning to involve itself in the retail trade, property trade, the development of construction projects, and transport and logistics. Beliachenko said that human services are a promising direction. He said that among the projects scheduled for the near future is the construction of a business center in Kyiv. He did not disclose where the center would be located, however, he said it will be constructed on the banks of the Dnipro River. He also said that the corporation is reducing the number of the staff in the corporate center. "There were 800 employees, currently there are 160 employees, and by the end of the year we are planning to have less than 50 employees," he said. The procedure of making decisions will be more transparent and effective, he said. Interpipe is one of the largest privately held companies in Ukraine. Since 1990, the company has operated in various sectors of economics, such as metallurgy, raw materials and engineering. The group is the fourth largest pipe company in the world in terms of capacity, the third biggest producer and supplier of railway wheels, and the biggest supplier of silicomanganese. Its share of the market for seamless pipes is 4.1%, railway wheels 10%, and manganese ferroalloys 11.4%. The corporation manages OJSC Novomoskovsk Pipe Plant, CJSC Nikopol seamless pipe plant Niko Tube, and OJSC Nikopol Ferroalloy Plant. In 2005, Kryvorizhstal Steel Mill was returned to state ownership through the court, and money was returned to its previous purchasers, including Interpipe Corporation.

CONSTRUCTION&REAL ESTATE

CEMENT FACTORIES SELL 94.2% OF OUTPUT ON DOMESTIC MARKET IN JANUARY Ukrainian cement factories sold 94.2% of their output on the domestic market in January, the Ukrcement Association told Interfax-Ukraine. Cement sold in bulk accounted for 78.2% of the total sold on the domestic market, while 77.4% of the cement for export was sold in bulk. As was the case before, the highest level of cement consumption in January was registered in Ukraine's north (28.8%, including 21.7% in Kyiv). In Ukraine's west, cement consumption reached 24.8% of the Ukrainian market, in the south - 20.3%, in the east - 13.8%, and in the center - 12.3%. As Ukrcement said, last month some factories had to stop running some furnaces due to limits on gas consumption, which resulted in a reduction in cement production. At the same time, production also fell because of a decrease in output during the winter period, which is typical for the market. Moreover, Ukrcement is currently engaged in elaborating measures designed to trim gas consumption in the production of construction materials. As was reported, in January 2006, Ukraine's cement factories cut cement production by 3.4% from January 2005, to 489,000 tonnes. In 2005, cement factories boosted cement production by 13.4%, to 12.144 million tonnes.

LIMITS ON GAS SUPPLIES TO SCUTTLE PRODUCTION PLANS OF UKRAINIAN CEMENT ENTERPRISES

Limits on gas supplies would threaten production plans at a number of Ukrainian cement enterprises, the Ukrcement Association has told Interfax-Ukraine. The association said that limits gas supplies caused stoppages of furnaces in January at the Odesa-based Cement and Mykolaiv-based Pivdencement cement plants. The gas limits prevented the enterprises producing cement of the necessary quality, the association said. The association said that the gas supply limitations also affected the work of Bakhchisarai-based mill Budindustria, Crimea, OJSC Dniprocement, OJSC Kryvy Rih Cement, and Kramatorsk- based Pushka, Donetsk region. Other Ukrainian cement producers continue working, the association said. The association also reported that the plants are startingREFRACTORY PLANTS OF UKRAINE MAY STOP AFTER RISE IN GAS PRICE After the rise in the price of gas Ukraine's refractory plants have been teetering on the edge of stoppage due to unprofitable production facilities and a lack of orders, according to a representative of the Ukrvohneupor association. He was speaking at a meeting of the representatives of mining and smelting enterprises of Ukraine in Dnipropetrovsk on Wednesday. According to the representative, in January refractory plants were already operating at a loss, and following the sharp rise in the price of gas they could stop operating. He said that the price of gas represents 30% of the production cost of refractory products. In addition, the expert said that a sharp fall in the volumes of sale of refractory products was seen in Ukraine, as Mittal Steel Kryvy Rih refused to purchase these products at the prices proposed by refractory plants. The representative asked the Deputy Industry Minister Volodymyr Hranovsky to work to resolve the issue. He also said that refractory plants propose to hold a meeting at Mittal Steel Kryvy Rih to find mutually acceptable variants for signing agreements on supplying refractory products to the steel mill. Hranovsky, in turn, said a meeting with the leadership of Mittal Steel Kryvy Rih is to be held, where, in particular, the issues on buying Ukrainian-made refractory products and supplying hardware enterprises with rods will be discussed. According to Hranovsky, if Mittal Steel Kryvy Rih does not pay attention to the ministry's arguments, Ukraine would have to introduce restrictions on coke coal and coke imports, as well as on refractory products. Refractory enterprises of Ukraine are currently operating at 50- 60% of their production capacity.

VICTIMS OF CONSTRUCTION SCAM IN KYIV SLAM MAYOR FOR HIS POSITION ON SITUATION Victims of a construction scam in Kyiv, investors in Elita-Center Ltd. slam Kyiv authorities' attitude towards the deceived investors. "Today Kyiv Mayor Oleksandr Omelchenko moved forward another accusation against us. It turned to be that we did something wrongful while paying for apartments in cash. The fact is that many of us transferred money via banks, but those who paid in cash did not violate any of the Ukrainian laws. We are surprised with the cynical position of the authorities in their accusing victims of the tragedy," a statement by the deceived investors reads.

"We believe that our Kyiv mayor, whom we elected, must seriously treat his duties and tackle the situation rather than neglect our problems," the statement reads.

PRIMARY HOUSING MARKET FRAUD CONNECTED WITH CASH INVESTMENTS Primary housing market fraud is on the rise because individuals are investing cash into construction, the head of the main department of the Interior Ministry in Kyiv, Vitaliy Yarema, told the press on February 10 while commenting on the Elita-Center Ltd. scam. "The mechanism of the fraud had been so closely worked out that there is no legal form of protection, particularly as the investors provided cash," he said. He also said that the government has to take corresponding measures to protect citizens' rights. He said that currently the company's assets are being confiscated to compensate investors for the losses. He said it would be possible to compensate investors for their losses as soon as the head of Elita-Center is detained. He said that by February 9 a total of 200 investors of Elita- Center had contacted law enforcement agencies. According to some data, a total of 1,500 investors were involved in the scam. The total sum of stolen money is about UAH 400 million.

He said the chief accountant of the company had already been detained and two heads of the company managed to escape from Ukraine to Russia on January 30. As reported, the Ukrainian Interior Ministry has opened a criminal case against the top management of Elita-Center.

At the same time, the leadership of Finance and Construction Group Elita Center Ltd. has refuted its participation in fraud on the Ukrainian housing market. The group included R&D Center Progress Ltd.; Closed JSC Construction and Engineering Company BIK; ABF Ltd.; Finance and Construction Company Elita-Center Ltd.; BMU Khimbud Ltd. and ElitaBudInvest, which signed agreements on construction of multi- storey buildings in Kyiv.

INTERIOR MINISTRY, CONSTRUCTION MINISTRY CHECKING COMPANIES OPERATING ON REAL ESTATE MARKET The Interior Ministry of Ukraine, jointly with the Construction Ministry, is planning to hold checks on companies operating on the real estate market in light of the scandal around Kyiv-based Elita-Center Holding. As the head of the department of the state service for fighting organized economic crimes Leonid Skalozub told the press on Tuesday, the criminal investigation department of the Interior Ministry, jointly with the Construction Ministry, are planning to conducts such checks. "We have already given the relevant order to investigators," he said. He said that information for checking companies should be given by citizens, businesses and contractors. Skalozub said the police are ready to take such information from the authorities, as "they issue licenses and study them, and they should oversee them." Speaking on the structure of Elita-Center Holding, Skalozub said that it was a group of companies uniting 14 enterprises, and most of which were operating legally. According to him, persons currently on the wanted list bought these structures and then used them to carry out the fraud. He also said that only some structures of the group were engaged in the actual raising of investments. "Funds were transferred not to accounts, but through cash via cash vouchers. According to him, there were a total of seven land plots for construction. Three of them were registered to the mother of persons under investigation; four plots were bought by the same person on the secondary market via various structures. Skalozub did not rule out that the share of responsibility of the local authorities would be determined during the investigation. In particular, he said that Kyiv authorities that issue licensees should control construction, as the police have no right to check structures without any reason. The grounds for a check could be a request from citizens. Asked about the possibility of returning money to the victims of the fraud, Skalozub said that as a rule, this would depend on whether it was possible to find the perpetrators of the fraud. As reported, on February 9, the press service of the Interior Ministry reported a large fraud at the capital real estate market. During the checks, the law enforcement bodies found that no construction was held at a number of addresses, while agreements on purchasing apartments under the addresses were signed. In addition, cases of double and even triple registration of papers on the same apartment were registered. Kyiv central department of the Interior Ministry of Ukraine has opened a criminal case on the fraud of Elita-Center Ltd. Several hundred stockholders in the company have complained to the law enforcement bodies. The number of defrauded citizens is expected to be around 1,500, and the total sum of the fraud will be around UAH 400 million. Meanwhile, the leadership of the Elita-Center Financial and Construction Group Ltd. refuses to be implicated in the fraud of Elita-Center Ltd. on the real estate market and accused them of using the name of the company.

KYIV CITY COUNCIL TO CREATE COMMISSION TO INVESTIGATE ELITA- CENTER SCAM Kyiv City Council will create a commission to investigate a real estate scam allegedly perpetrated by the Elita-Center company group. The creation of the commission was stipulated in a resolution by Kyiv Mayor Oleksandr Omelchenko, who will personally monitor the investigation. According to the document, the commission will investigates the validity of claims made in the mass media, and within a week will check the state registration of Elita-Center as a subject of commercial activity, the legality of the granting of construction sites to the participants of the group, the coordination of the construction project and the granting of construction permits. Based on the results of the investigation, the commission will issue suggestions for overcoming the Kyiv housing market crisis caused by the Elita-Center scam. The commission consists of deputy Kyiv Mayor Volodymyr Yalovy, Valeriy Borysov, Mykhaylo Holytsia, Anatoliy Mukhovikov, Vasyl Prysiazhniuk, head of Kyivmiskekspertyza Anatol Karmynsky, a number of Kyiv city council deputies, including Oleksandr Ovchar, Lev Partskhaladze, Volodymyr Poliachenko, head of state architecture and construction control department Oleksandr Rebytsky, first deputy chief of the Interior Ministry's Kyiv city main department Oleksiy Rudenko and representatives of the construction investors.

ELITA-CENTER INVESTORS' COMMITTEE AND KYIV'S AUTHORITIES SEEKING WAYS TO COMPENSATE VICTIMS OF FRAUD

Elita-Center investors' committee and Kyiv's authorities are considering various ways to compensate the victims of a huge fraud on Kyiv's housing market. One way would be to create special fund founded by the victims of the fraud and Kyiv's authorities, investor group representatives have told Interfax-Ukraine. It is also possible to include a big construction company and banks into the fund, and Salkom judicial company will provide judicial protection. About 1,200 investors of Elita-Center group have already registered officially. According to some estimates, the number may rise to 1,500.

ELITA-CENTER SCAM NOT TO CAUSE PRICE HIKE ON HOUSING MARKET The Elita-Center fraud will not influence housing prices, the head of Ukrainian Construction consortium Andriy Zaika said at a press conference in Kyiv on February 13. According to him, price fluctuations in the wake of the Elita- Center scam will be not serious, but the prices on the secondary market may "rise, as the flats have been built and the houses have been commissioned." At the same time, the primary market "will face a standstill, due to the elections, but after the elections the market will awake and the volume of sales will rise," Zaika believes. "If there is price fluctuation, it will be really insignificant, as the prices today are quite high," he said. He also said that the housing market operators should resist any possible panic due to the Elita-Center scam. "It is an issue of reputation. All companies will face difficulties with the withdrawal of investors now, as people are afraid. Construction companies have investors lining up in queues, who are finally starting to check the papers (of the construction companies)," he said. Zaika also reported that the construction companies are drafting the proposals on developing a system to prevent fraud. According to him, the Ukrainian Architecture and Construction Ministry must centralize the system state architecture and construction control, for which the local authorities are at present responsible.

CALLS FOR SPECIAL MUNICIPAL FUND TO COMPENSATE DEFRAUDED CONSTRUCTION INVESTORS A special municipal fund should compensate private investors for their losses through the Elita-Center housing constriction fraud, according to Kyiv City Council deputy and President of the 21st Century company Lev Partskhaladze. He believes that the assets of such a fund should be used by the city authorities to compensate individuals that invested in the housing construction scam. Partskhaladze also said that the fund must be formed by payments from the budget and construction companies. "I would call it a fund for investors' protection, so that the city administration could pay from it. We are ready to transfer UAH 1 million to the fund in order to improve our poor investment climate. If the problem is not solved, the real estate market could collapse, as this example is not the best for market participants and for the city," he said, commenting on the Elita- Center scam.

EXPERT CONSIDERS PRIVATE FOREIGN INVESTMENTS AS BEST SOURCE FOR FINANCING COMMERCIAL REAL ESTATE PROJECTS IN UKRAINE The best source for financing commercial real estate projects in Ukraine is private foreign investments. This opinion was aired by Director General of Kyiv-based Global Solutions development firm Serhiy Tumasov on Tuesday. "Mainly these are private investors - they agree to invest funds in riskier projects than key major banking investors do," he said. Tumasov said that the involvement of private Western investors makes it possible to raise funds faster than if to borrow funds from major banks. "Nowadays our development firms should focus on private foreign investors who, if their documents are in order, may provide funds within a month or two. Loans from major foreign banks may come not earlier than in six months," he said. Judging from Global Solutions' experience, Tumasov says, it is evident that private Western investors are interested in investing large sums of money. "We've recently met with Korean investors who say that they're not interested in projects worth $40 million. The smallest sum they're ready to invest is $100 million, and $300 million," he said. Tumasov said that Ukraine's financial system could not afford resources for such investments. "An average office building whose space is 30,000 square meters costs about $30 million. The top ten banks alone may finance such a project from beginning to end. With limitations on lending per borrower, the top five banks alone are able to provide such a financing. The rest of the banks may lend under small projects worth up to $5 million. In fact, in Ukraine there is nowhere to borrow money from, it's easier to borrow it in the West," he said.

RATINGS AGENCY SEES HIGH RISK ON UKRAINE'S CONSTRUCTION MARKET Ratings agency Credit-Rating has reported that Ukraine's construction market faces a high level of risk According to the agency, most investment and construction companies that finance house building by placing direct or discount bonds do not have any experience in constructions work or similar projects. Of the 82 issuers of construction bonds ranked by the agency as of 2005, only three companies have a uaBBB investment category rating. Another 30% of the companies that issued construction bonds with credit ratings with the uaBB and uaB categories have experience in the construction and investment spheres.

Among the remaining enterprises, only a third have licenses to conduct construction work, and none of these have any experience in the sphere and have completed no projects. Another 30% of the companies start placing the bonds without having all of the basic construction documentation, which increases the risk of the non-fulfillment of obligations in time. The agency says that this mainly concerns companies on Kyiv's market and also the Odesa and Kharkiv markets. Of the 82 companies, 55 work in Kyiv.

EXPERTS SAY KYIV LAND PLOTS CANT BE SOLD AT AUCTION ABROAD

Land in Kyiv cannot be sold at auction abroad, experts from financial and investment companies told Interfax-Ukraine on Tuesday. According to the head of the department of financial instruments of Kyiv-based Ukrsotsbank Erik Naiman, "(Kyiv) land being auctioned off in London is impossible due to legal problems, and is wrong from the point of view of business." Kyiv-based CJSC Alfa-Bank assets' department head Vitaliy Mikhaile said last year the Kyiv-based 21st Century Company listed its stock on London's stock exchange. He said that company intends to implement real estate construction projects in Kyiv. He denied Kyiv's land was being sold abroad. "The sale of Ukrainian land to nonresidents is banned by the legislation," he said. Lviv-based TMM Ltd. Director General Mykola Tolmachev said, "Ukrainian land cannot be sold in Britain."

As reported, deputy head of the Bloc of Yulia Tymoshenko (BYT) Mykola Tomenko reported that Kyiv land plots were being sold at auctions abroad. The 21st Century has been operating since 1995, the group also includes the network operator of the Kvadrat-Ukraine real estate company, the development company Housing 21st Century, which specializes in housing, as well as a number of hotel and office projects, the Shvydko chain of fast food restaurants, four restaurants in Kyiv, and a land bank for future projects.

TRANSPORT

UKRZALIZNYTSIA TO ALLOCATE UAH 30M FOR ENERGY SAVING IN 2006 Ukraine's Rail Road Administration, which is also known as Ukrzaliznytsia, is to allocate UAH 30 million for energy saving measures, according to Ukrzaliznytsia Director General Vasyl Hladkykh. "The railway has been working on energy saving programs since 1997, but those were not large-scale measures. In order to launch a real energy saving program, a considerable sum is necessary. The UAH 30 million that Ukrzaliznytsia will allocate for energy saving this year will make 2006 a turning point in this sphere. We expect a considerable economic effect - (savings of) UAH 200 million," Vasyl Hladkykh said last week in Kharkiv. According to him, the railway is constantly looking for economical and rational ways for using fuel and energy resources. The share of the fuel and energy expenditures in the overall operating expenditures on railway transport constituent 19%. "Railways consume about 46,000 tonnes of fuel per month, which is why we must, first of all, find ways to save diesel fuel," he said. Ukrzaliznytsia's head reported that 2007 would be the year of electrification. Ukrzaliznytsia estimates the transfer from diesel to electricity will result in six-fold savings on energy expenses.

FINNISH-MADE HIGH-SPEED TRAIN MAY START OPERATING IN UKRAINE BY END OF 2006 Ukraine's Rail Road Administration Ukrzaliznytsia is planning to launch the first Finnish-made Pendolino high-speed train by the end of 2006, Ukrzaliznytsia head Vasyl Hladkykh told journalists last week. "An instruction has been issued that by the end of the year one Pendolino train must be operating in Ukraine," he said. According to him, Ukrzaliznytsia technicians will go to Finland to hold talks next Sunday. Speaking about the route of the train, he said: "It makes sense for the Pendolino train to operate on the southern railway network." He said the purchase of another four similar trains is planned for 2007, one of which may be built in Ukraine. As head of Southern Railways Viktor Ostapchuk explained, Ukrzaliznytsia plans to purchase one used Pendolino train, which will cost approximately EUR 20-25 million. Pendolino trains can travel at up to 300 kilometers per hour.

AIR CARRIERS SAY BORYSPIL AIRPORT NEEDS TO BE DE-MONOPOLIZED Representatives of enterprises based at Boryspil state international airport have demanded that the airport be de- monopolized and market relations be set in place. Airline AeroSvit's Executive Director Andriy Shkatiuk made the demand at a company press conference on February 10.

"The airport is a natural monopoly and blocs our development, organizing construction work using our money while not providing quality services," he said. He also said that despite Boryspil airport's profitability being 62% last year, the companies working at the airport saw losses or zero profitability. He said that at the same time, AeroSvit and Ukrainian International Airlines increased total passenger carriage by 65% in 2005, compared to 2004. He proposed the airport be de-monopolized according to the resolution of the European Council 96/97/EC of October 15, 1996. He also proposed to extract the air security service from the airport, and to create an enterprise managed by the State Air Service. He also said he does not understand why the airport's leadership wanted all the enterprises leasing its territory to sign agreements with the Judicial Commercial Agency Ltd. as of January 1, 2006. Currently the airport serves over 50 international routes, and about 20 routes to CIS countries and domestic routes. AeroSvit's share of total passenger turnover is 30%.

AEROSPACE

ZENIT LAUNCH VEHICLE, DM BOOSTER LAUNCH U.S. TELECOMMUNICATIONS SATELLITE INTO ORBIT The Russian-Ukrainian Zenit-3SL launch vehicle and the DM booster launched the U.S. EchoStar X telecommunications satellite into the orbit specified, the Mission Control Center told Interfax- Military News Agency on Thursday. "The satellite has been launched into the orbit specified and put under the customer's control. The launch was carried out by the international Sea Launch Corporation," a Mission Control official said. According to him, all systems of the launch vehicle and the booster operate normally. The 4,333 kg heavy satellite was launched into the geostationary orbit at an altitude of over 35,000 km. In addition to that Zenit launch vehicle, the Sea Launch system comprises the Odyssey sea launch platform, and the Sea Launch Commander vessel. The satellite was launched from the Pacific Ocean. The Sea launch company was incorporated in April 1995 by Boeing Commercial Space Company from Seattle, WA, the U.S., holding 40% of the stock; the Energia space company from Korolyov, Russia, with 25% of the stock; Kvaerner Maritime a.s. from Oslo, Norway, with 20% of the stock, and the Yuzhnoye design bureau and Yuzhmash enterprise from Dnipropetrovsk, Ukraine, with the remaining 15%. The launch site includes the command craft, the Odyssey launch platform and the Zenith-3SL launch vehicle. The Sea launch system is used to lift 2-tonne spacecraft to geostationary orbits, 6-tonne satellites to transitional orbits, and 11-15-tonne vehicles to near earth orbits with inclination of 0-90 degrees. Sea launch is headquartered in Long Beach, California. It is the most reliable satellite launch provider via the Boeing launch Services Company. Employment of the reliable Zenit carrier rocket, convenient launch sites, situated on the equator, and adherence to the launch timeframe allow Sea launch to launch super-heavy satellites into orbit.

UKRAINE EXPORTS $150M WORTH OF SPACE INDUSTRY PRODUCTS AND SERVICES IN 2005 Ukraine exports of space industry products and services in 2005 amounted to $150 million, which is 3.5% up year-over-year, Ukraine's National Space Agency Director General Yuriy Alekseyev told reporters in Kyiv on Thursday. Of this sum, Ukraine got $90 million from its share in the Sea Launch international launch project, and $60 million as a result of joint projects with Russia.

FOOD&AGRICULTURE

COURT STARTS VOLOCHYSK BREAD MILL BANKRUPTCY CASE The Economic Court of Khmelnytsk region has started a case on the bankruptcy of a Khlib Ukrainy's subsidiary, Volochysk Bread Mill. As a court press release published last week reads, the case was initiated on November 17, 2005. As Interfax-Ukraine learned, the case was initiated on the appeal of Loture Ltd., which is a large operator on the Ukrainian grain and oil market. Andriy Maksymov has been appointed the resource administrator at the mill. Creditors' appeals will be accepted till March 11 2006. As earlier reported, a conflict between Volochysk Bread Mill and several grain trading companies emerged due to mill's transport infrastructure failing to fulfill signed contracts. As the top management of the Khlib Ukrainy announced in October 2004, some grain trading companies signed agreements on grain supplies by the mill. According to the contracts, UAH 11.7 million was transferred to the mill, UAH 10 million of which was transferred by the then mill head Roman Lytovchenko to the accounts of front companies.

UKRAINE MAY BOOST SUNFLOWER OIL EXPORTS BY ALMOST 50% IN '05/'06 MY, SAYS UKROLIYAPROM In the 2005/2006 (September through August) marketing year Ukraine may boost sunflower oil exports by 47.7%, from the 2004/2005 MY, to 950,000 tonnes. Deputy Director General of the Ukroliyaprom Association Stepan Kapshuk announced these figures at the third national conference Agroperspective-2006. The Problems of the Establishment of Market Relations in Ukraine's Agriculture Sector. The conference was held in Kyiv on February 15-16. In his words, in the current MY Ukraine is expected to refine 1.6 million tonnes of sunflower oil (in the 2004/2005 MY it refined 1.274 million tonnes), domestic consumption is forecasted at 650,000 tonnes (630,900 tonnes). During the current MY Ukrainian companies exported 540,000 tonnes of sunflower oil, which was almost twice as much as over the same period last year, Kapshuk said. Experts say that the production and export of sunflower oil grew due to an increase in the yield of sunflower seeds last year by 1.5 times from 2004, to 4.7 million tonnes. Ukroliyaprom previously reported that during the last MY Ukraine exported 643,000 tonnes of sunflower oil, which was 34% down on the 2003/2004 MY. Ukraine exports this farm produce to 44 countries. The Ukrainian edible oil refineries' overall facilities are able to process 5.5 million tonnes of sunflower seeds a year, according to Ukroliyaprom.

SUNFLOWER OIL PRICES MAY CLIMB BY 2-3% BECAUSE OF GAS PRICE HIKES, SAYS UKROLIYAPROM The price of sunflower oil in Ukraine may climb by 2-3% because of the recent gas price hikes, Director General of the Ukroliyaprom Association Stepan Kapshuk said.

"The price (of sunflower oil) may grow by 2-3% if the gas price rises to $150 per 1,000 cubic meters," he told reporters on Wednesday during the third national conference Agroperspective- 2006. The Problems of the Establishment of Market Relations in Ukraine's Agriculture Sector, which was under way in Kyiv on February 15-16. Kapshuk said the low impact of the gas price on prices in the sector is linked with the fact that all edible oil refineries use sunflower seed shell burning technology, thus considerably economizing on consumption of fuel. Some refineries are currently working on co-generation projects, he added. He said prices for raw sunflower oil are within UAH 2,650-2,700 per tonne. According to Ukroliyaprom, from the beginning of the marketing year, which started in September 2005 and will end in August 2006, to the beginning of February, Ukraine produced 730,000 tonnes of sunflower oil. The refineries have already processed about 1.8 million tonnes out of 4.7 million tonnes of sunflower seeds harvested in 2005. The standard limit gas price for industrial consumers is set at UAH 422.1 per 1,000 cubic meters at present.

RAMBURS PLANS TO INVEST ABOUT $3 M IN UPGRADING ITS NEW MIXED FODDER FACTORY Kyiv-based Ramburs plans to invest about $3 million in the modernization of a mixed fodder factory it bought in December 2005. "The factory looks shabby. We're planning to modernize (it) and, I think, we'll be producing mixed fodder in a year," Oleksiy Havrylov, the chairman of CJSC Ramburs' supervisory council, said at a specialized agricultural conference on Wednesday.

The third national conference Agroperspective-2006 - Problems of the Establishment of Market Relations in Ukraine's Agriculture Sector - was underway in Kyiv on February 15-16. The fodder factory acquisition deal is estimated at $500,000, he said. The factory is located in Kyiv region's Pereyaslav- Khmelnytsky district. Havrylov also said that his company plans to increase the factory's capacity to 20 tonnes of produce per hour by 2007. Currently, the factory produces about 6 tonnes of mixed fodder per hour. Moreover, Ramburs is mulling the possibility of buying some more mixed fodder factories, as it believes this market is promising, although risky, the company's spokesman said. "We hope that the many cattle breeding factories whose construction was announced will reach the announced capacity in a year and a half. And we'll be able to offer them high-quality mixed fodder, which is produced by only a few companies," Havrylov said. Ramburs is a structural subunit of the United Grain Group, which also unites CJSC Ramburs-Elevator, the Unified Grain Company, five Ukrainian-based grain storage facilities whose overall storage capacity is 340,000 tonnes.

NUTRITEK COMPLETES PURCHASE OF UKRAINIAN BABY FOOD PLANT The Nutritek Group has completed the purchase of a 56% stake in Khorol Baby Food Plant in Ukraine's Poltava region, the group said in a press release. The completion of this deal ensures Nutritek of assured access to the rapidly growing Ukrainian market, the release says. In addition, Nutritek will strengthen its position on the baby food markets of CIS and Baltic countries. In 2006, Nutritek plans to invest some $5 million in development at the plant, which has a significant share on Ukraine's baby dairy food market. The investment will be spent on upgrades to existing production to ensure that the output of baby and medicinal goods of the new generation correspond to modern requirements, the release says. The deal was part of Nutritek's strategy to become the leader on the Russian baby food market by 2007, when it plans to hold an IPO. The company plans to continue making acquisitions of baby food plants as part of the strategy, the release says. The Nutritek Group, which was founded in 1990, unites 12 plants that produce dairy products, baby food and specialized food. The group also includes two large agriholdings in Estonia and Russia's Vologda region in addition to a plant in Yaroslavl with capacity to produce 11,000 tonnes. The group's turnover was about $200 million in 2004 and sales are expected to be $240 million in 2005. The largest shareholders in the group are: Marshall Milk Investments Limited, with 70.43%; Finland's FIM Fund Management has 3.81%; Third Point of the U.S. owns 3.46%; Seneca Capital in the Cayman Islands has 2.08% and Switzerland's Clariden Bank owns 2.04%. The Khorol Baby Food Plant produces 500 tonnes of products per day. It exports products to Moldova, Russia, Turkmenistan, Azerbaijan and Kazakhstan.

AVK PLANS TO INCREASE SALTY SNACK MARKET SHARE TO 4.5% BY 2007 DUE TO NEW BRAND The AVK confectionery company, a large Ukrainian confectionery producer, is planning to increase its stake on the Ukrainian salty snack market to 4% - 4.5% by the end of 2006, due to the launch of a new brand, HRUSTERS. "AVK expects to increase its share on the Ukrainian salty snack market to 4% - 4.5% in money terms by the end of 2006 due to a wide range of HRUSTERS-branded products," the company said. Nowadays, AVK is presented on the salty snack market with the Mix trademark whose share is about 2%. In spring this year the company plans that the Mix trademark will be placed under the umbrella of the new brand. The reason for the introduction of the new products on the market is high growth dynamics in the consumption of snacks in Ukraine, the company said. "Today this is a very attractive and fast growing market: in 2005 salty snack sales in Ukraine grew by 60% in money terms," the company's press release quotes AVK Marketing Director Oleksiy Ostapchenko as saying. Ostapchenko said that the development of the snack segment would make it possible for the company to improve its general economic results. "An increase in snack sales will make it possible to reduce the impact of the seasonal factor in the confectionery business. This will allow the company to evenly load all its production facilities and ensure a high stable level of AVK sales during the whole year," he said. According to the company, the highest confectionery sales are registered in autumn and winter, whereas salty snacks are in hot demand in spring and summer. The first HRUSTERS products, HRUSTERS Chip by Chip potato chips and HRUSTERS Light Rolls seafood flavored snacks made of rice, are being currently produced at the company's facilities. HRUSTERS Chip by Chip will cost 1.9 hryvnias per pack, while HRUSTERS Light Rolls - 2.1 per pack. AVK runs confectionery factories in Dnipropetrovsk, Donetsk, Mukacheve, and Luhansk.

POLISH CONFECTIONER JUTRZENKA PLANS TO BOOST EXPORTS TO CEE, MAY START PRODUCTION ABROAD Polish confectioner Jutrzenka aims to significantly boost exports, especially to countries in Central and Eastern Europe, from the current 8% of revenues and may even start production in lower-cost countries, Jutrzenka CFO and Vice-President Bohdan Stankiewicz told Interfax. "In three years, we would like to achieve the target of 20%, or a dream - a 25% share, of exports in total sales," Stankiewicz said. Exports accounted for less than 8% of Jutrzenka sales in 2005, at just PLN 22.7 mln on total sales of PLN 288.7 mln. Jutrzenka currently exports to the Czech Republic, Slovakia, Slovenia, Hungary and Bosnia but is planning to move further into Romanian and surrounding markets. Stankiewicz said the company is looking at opportunities in Romania and other CEE countries in the hope of emulating the strategy of foreign companies in the ninetiUKRAINIAN ICE-CREAM PRODUCERS' DIRECT LOSSES FROM RUSSIA'S BAN ON DAIRY FOODS TOTAL $500,000 Ukrainian ice cream producers' direct losses from Russia's ban on the import of meat and dairy foods from Ukraine have totaled $500,000. President of the Ukrainian Ice Cream Association Ihor Bartkovsky said this at a press conference at an international specialized exhibition, the World of Ice and Ice Cream, to be held in Kyiv on March 14-17, 2006. As he put it, 325 tonnes of Ukrainian-made ice cream were held at the border with Russia, which made ice cream producers sustain losses worth $500,000. Bartkovsky also said that last year Ukraine exported 4,425 tonnes of ice cream, exports to Russia accounted for 71% of the overall exports. Among the largest exporters of Ukrainian ice cream to Russia last year were the following companies: Luhanskkholod, Hercules, and Lasunka, he said. In his words, Ukraine supplies ice cream to other countries as well, and is currently looking for alternative to Russia sales markets. Bartkovsky expressed hope that the problem of Ukrainian meat and dairy exports to Russia would be settled in the near future and the export of Ukrainian ice cream to Russia will renew. In 2005 Ukraine produced 120,930 tonnes of ice cream, which was 9.1% up on last year, according to the Ukrainian Ice Cream Association. The export of Ukrainian-made ice cream last year grew by 62%, to 4,425 tonnes, while 730 tonnes of ice cream were imported, which was 4.6% down on 2004. As was reported, on January 20, 2006, Russia slapped a ban on the import of Ukrainian meat and dairy foods.

UKRAINIAN ICE-CREAM PRODUCTION LIKELY TO RISE BY 5% IN 2006 Ice-cream production in Ukraine is likely to rise 5% in 2006, to 127,000 tonnes, according to the Ukrainian Ice-Cream association, which unites 27 ice-cream producers in Ukraine. Association Executive Director Irina Hudz made the forecast at a press conference dedicated to the World of Ice and Ice-cream 2006 international specialized exhibition, on Tuesday. The exhibition will take place in Kyiv on March 14-17. She said that on average, ice-cream production has risen by 5% annually in the past 10 years. Association President Ihor Bartkovsky said that last year was both difficult and successful for the producers. He said that in 2005, production was 9.7% up, to 120,930 tonnes.

The producers also increased ice-cream exports by almost 62%, selling 4,425 tonnes. At the same time, exports were more than six times greater than imports in 2005. In particular, Ukraine imported 730 tonnes of ice-cream, which is 4.6% less than in 2004. He said that Lithuania, France, Russia, Moldova and Germany are main importers of the produce. He also said the association forecasts an ice-cream price rise in 2006 due to the price rise for energy.

CONSUMER GOODS&SERVICES

SUN INTERBREW UKRAINE TO UP ITS STATUTORY FUND 44.2% Kyiv-based OJSC SUN Interbrew Ukraine, a large brewery, is to increase its statutory fund by 44.2%, or by UAH 29.2 million, to UAH 95.1 million through the merger of Kharkiv-based OJSC Rohan, OJSC Mykolaiv Yantar and CJSC Chernihiv Desna breweries in the company, SUN Interbrew says. As the company told the press, its statutory fund is to be increased through an additional issue of stocks with the current face value of one kopek, which are to be exchanged for the stocks in the breweries merged with SUN Interbrew Ukraine.

According to the company, the nominal price of a SUN Interbrew Ukraine share should be equal to the nominal price of a share in the statutory funds of the companies merged with SUN Interbrew Ukraine. In addition, the stockholders of these companies have a right to exchange their stocks for the company's stocks from the additional issue in a ratio stipulated in an agreement on the merger of the companies. The issue of increasing OJSC SUN Interbrew Ukraine's statutory fund is to be discussed at a special meeting of stockholders on March 3. The company's statutory fund is currently UAH 65.95 million. As reported, in late December 2005, SUN Interbrew Ukraine Ltd. completed its reorganization into an open joint-stock company. The reorganization, in the form of a merger of Chernihiv-based CJSC Desna Brewery, Kharkiv-based OJSC Rohan brewery, and Mykolaiv-based OJSC Yantar brewery with opened JSC SUN Interbrew Ukraine, which will be SUN Interbrew Ukraine Ltd.'s legal successor, would make it possible to achieve a number of important competitive advantages on Ukraine's beer market, the company says. The reorganization will make it possible to optimize the company's organizational structure, which will make the breweries' technical development simpler, and will foster the company's development. Moreover, SUN Interbrew Ukraine also expects to considerably economies through the introduction of a SAP automated management system and the creation of an integrated logistics system, which will speed up and simplify the delivery of its products to any destination in Ukraine. Opened JSC SUN Interbrew Ukraina includes three big breweries: Chernihiv-based Desna, Kharkiv-based Rohan, and Mykolaiv-based Yantar. The portfolio of the beer brands consists of international trademarks: Stella Artois, Beck's, Brahma, Staropramen, and also of national: Chernihivske, Rohan, Yantar, and Taller.

In first half of 2005, the share of SUN Interbrew Ukraina on the Ukrainian brewery market was 36.5%.

RADOMYSHL BREWERY PLANS TO BOOST STATUTORY FUND 2.2 TIMES OJSC Radomyshl brewery (Zhytomyr region) plans to increase its statutory fund 2.2 times, to UAH 149 million, through an additional issue of shares worth UAH 80 million. As Interfax-Ukraine learned form Ridna Marka corporation, one of the owners of the brewery, the proceeds of the issue will be used to purchase equipment for a third production line for wheat beer production. The company expects that the launch of the third line will triple the brewery's output capacity to 10 million decaliters annually. The line is planned to be launched in late 2006 or early 2007. The additional issue of simple personal shares with a face value of UAH 0.25 each will be considered at the general stockholders' meeting on March 27. The statutory fund of the Radomyshl brewery is UAH 69 million. According to the State Commission for Securities and Stock Market, as of December 1 2005 the brewery's major stockholders were Autoexpo Company Ltd. (19.4%) and Cyprus-based Nakin Investments Limited (13.12%).

OBOLON DROPS BEER OUTPUT 3% IN JANUARY Kyiv-based closed JSC Obolon, a major Ukrainian beer producer, in January reduced beer output by 3% year-over-year, to almost 4 million decaliters. As Interfax-Ukraine learned from the company's press service, it share of the Ukrainian market grew by 4.3 percent notches year- over-year, to 31.1%. As the press service reported, the general fall in beer output seen on the market was caused by the recent extremely cold weather. As earlier reported, Obolon in 2005 increased beer output by 37.7% year-over-year, to 76.8 million decaliters. The company also increased exports by 24.6%, and its share of Ukrainian beer exports is 82.2%. From 2000 to 2004, Obolon invested over UAH 300 million into modernizing its production facilities.

NO LAW VIOLATIONS DURING UZHGOROD COGNAC PLANT PRIVATIZATION During the check-up of the Uzhgorod Cognac Plant, the SPF specialist detected no violations of the privatization process. Interfax-Ukraine learned about that from the State property Fund's press service on Tuesday. The process of transferring the cognac plant to the ownership of its workers via leasing with further purchase began in 1991. Uzhgorod cognac plant is one of the major cognac producers in Ukraine.

SPF SIGNS ADDITIONAL AGREEMENT ON SALE AND PURCHASE OF KHCM

The State Property Fund (SPF) signed an additional agreement with Lutsk-based closed JSC Volyn Silk Mill on the agreement on the sale and purchase of a 51.76% stake in opened JSC Kherson Cotton Mill (KHCM), the SPF told Interfax-Ukraine on February 13. According to the agreement, the purchaser should, before the end of H1 2006, pay off the mill's wage arrears in accordance with a schedule agreed with the trade unions and regional state administration. The agreement also sets out the SPF's mechanisms of influence if the purchaser does not fulfill its obligations. The SPF says that the talks with KHCM's owner have lasted for half a year. As reported, in June 2004, the State Property Fund recognized the closed JSC Volyn Silk Mill (Lutsk) the winner of a tender for the sale of a 51.76% stake in the open JSC Kherson Cotton Mill. According to terms of the tender, in one year the new owners had to pay outstanding wage arrears of UAH 1.957 million, over five years pay UAH 15.893 million to the Pension Fund, over three years pay UAH 10.414 million in taxes and budget payments, as well as pay UAH 6.559 million in debts to Ukrsotsbank according to the agreement on restructuring the mill's debts.

RUBIZHNE CPM UPS PRODUCTION OF CORRUGATED BOXES BY 9% IN JANUARY Rubizhne Cardboard Packaging Mill in Luhansk region, Ukraine's biggest producer of cardboard packaging, in January increased production of corrugated boxes by 9% year-over-year, to 12.29million square meters, a source in the field told the agency. According to the source's data, during this period, production of commodity corrugated cardboard fell by 37.4%, to 195.000 square meters. Production of the components of corrugated cardboard (cardboard and fluting) grew by 6.5%, to 14,100 tonnes. During this period, output was worth UAH 29.33 million, up 10.2% over the same period last year. At present, the mill has a stable position in the market for corrugated packaging, selling about 32% of its output in Ukraine. The mill is the country's only producer of micro corrugated packaging with F and N profiles and seven-layer corrugated cardboard. The mill exports about 25% of its output to Russia, the CIS and the Baltic countries. According to the source, over ten months, the industry's enterprises increased production of cardboard boxes by 15.6%, to 305.3 million square meters. According to the source, in general the enterprises of the sphere increased the cardboard box output by 9.9%, to 23.83 million square meters, while the commodity corrugated cardboard output fell by 29.5%, to 6.5 million square meters. Other big producers of corrugated packaging include the Osnova Concern (Zhydachiv Pulp and Paper Mill and Izmail Pulp and Cardboard Mill) and Kyiv Cardboard and Paper Mill.

The market for corrugated products in Ukraine is developing dynamically - the annual growth of consumption of corrugated packaging is 10-15%.

BOT

PRODUCTION OF CARDBOARD BOXES/COMMODITY CORRUGATED CARDBOARD IN

UKRAINE IN JANUARY 2006, THOUSAND SQUARE METERS:

Producer January 2005 January 2004 % to

2005

Rubizhne Cardboard 153,572 131,610 116.7

Packaging Mill

Zhydachiv Pulp and 48,253 42,386 113.8

Paper Mill

Kyiv Cardboard and 57,187 44,050 129.8

Paper Mill

Izmail Pulp and 25,707 26,173 98.2

Cardboard Mill

Donetsk-Vtorma Ltd. 19,578 18,696 104.7

Kokhavynka paper factory 835 914 91.4

Kyiv factory of 169 167 101.2

technical paper

Total in pulp and paper 305,301 263,996 115.6

industry

Total in Ukraine 484,053 406,528 119.1

Source: Ukrpapirprom

EOT

WESTERN UNION LOWERS RATES FOR MONEY TRANSFERS FROM CZECH REPUBLIC, POLAND, KAZAKHSTAN, GREECE TO UKRAINE U.S. company Western Union has lowered tariffs for money transfers to Ukraine from the Czech Republic, Poland, Kazakhstan and Greece. The rate change was announced by acting head of the Antimonopoly Committee of Ukraine Yuriy Kravchenko at a press conference on Thursday. According to him, the tariffs for transfers from the Czech Republic for the sum of $100 dropped 2.3 times (from 14% to 6% of the transferred sum), for $200 down 2.3 times (from 10.5% to 4.5%), for $300 down 1.8 times (from 9% to 5%). For transfers from Poland the sum of $100 was 2.2 times down (from 13.1% to 6%), $200 was 2.3 times down (from 10.5% to 4.6%), and $300 was 1.7 times down (from 8.7% to 5.1%). From Kazakhstan tariffs dropped for the sum of $100 by 2.2 times (13% to 6%), $200 by 2.2 times (from 10% to 4.5%), and $300 by 1.7 times (from 8% to 4.7%). From Greece the tariffs dropped for EUR 100 by 3.1 times (from 15.3% to 5%), EUR 200 by 1.9 times (from 9.9% to 5%), and EUR 300 by 1.6 times (from 7.8% to 5%). As Kravchenko said, the U.S. company informed AMC about its intention to lower tariffs for money transfers from Israel in Q2, 2006. He also said that in 2004 the company followed the AMC's recommendations and lowered by 2.2 times tariffs for money transfers from Russia of $100. Beginning from April 1 last year, tariffs for money transfers from Portugal, Spain and Italy were also lowered. As Kravchenko said, the company's share of the Ukrainian market of international money transfers is more than 50%. In 2004, when the AMC initiated the investigation, it amounted to 80%.

INTERFAX-CEA LAUNCHES INTERFAX-1000 - CIS BANKS REVIEW The Interfax Center for Economic Analysis (Interfax-CEA) has issued the Interfax-1000 - CIS Banks review, which for the first time enables a comparison of all the major banks in Russia, Ukraine, Kazakhstan and other CIS countries in terms of asset value and other financial indicators. "Banking systems in CIS countries are becoming less disconnected and the flow of bank capital from one country to another is becoming stronger", Interfax-CEA General Director Mikhail Matovnikov said. "The time has come when for many banks it is a mistake to view them solely within national borders and without an understanding of the wider context it is impossible to understand the development trend of different banking systems", he said. The top three banks in the Interfax-1000 are Russia's Sberbank, Vneshtorgbank and Gazprombank and the top ten includes two Kazakh banks (Kazkommertsbank and Bank TuranAlem). Ukraine's largest bank, PrivatBank, is ranked number 14. The list has information on assets, capital, loan portfolios and funds raised for 1,000 CIS banks (815 Russian and 185 banks from other CIS countries) as of July 1 2005 and January 1 2005. The review also contains a short description of banking systems in Russia, Ukraine, Kazakhstan, Belarus, Azerbaijan, Armenia, Georgia, Kyrgyzstan, Uzbekistan and Moldova. The Center for Economic Analysis is an analytical center, which is part of the Interfax International Group and provides macroeconomic forecasts, analyses the situation on financial markets and regional economies, and reports on tendencies in the money market in Russia and the Commonwealth of Independent States. The CEA's most popular editions are rankings of Russia's largest banks and insurance companies, known as Interfax-100, highly reputed among players on the financial market.

ITALIAN TV CHANNEL MAY LAUNCH PROGRAM FOR UKRAINIANS Italian TV may start broadcasting a program for Ukrainians in Italy, the information department of the Verkhovna Rada has announced. Ukrainian MP Ihor Ostash, the leader of the parliamentary group for interparliamentary ties with Italy, visited the Italian province of Naples where he met with top managers of the 8th Italian TV channel and discussed the possible creation of a special program for Ukrainians, the information department reported. The Ukrainian side has sent an appeal concerning the issue to the speaker of the Italian parliament, Pierre Ferdinando Cosini. About 320,000 Ukrainian citizens are officially registered as living in Italy.

STATISTICAL SUMMARY

UKRAINE ECONOMY GROWS 0.9% IN JAN - STATISTICS Ukrainian GDP grew 0.9% year-over-year in January, the State Statistics Committee said. Nominal GDP was UAH 29.844 billion. January saw decline of 1% in the extractive industry and 4.6% in the manufacturing sector, however agricultural output grew 4.3% and output in the utilities sector (electricity, gas and water) grew 13.2%. GDP grew 6.5% to UAH 24.278 billion in January 2005. Economic growth slowed to 2.4% in 2005 as a whole, from a record 12.1% in 2004. The government was forecasting growth of 7% this year until recently, but the economics ministry has just said the forecast would be withdrawn. Economics Minister Arseniy Yatseniuk said last week that GDP growth would not exceed 2.4% this year.

UKRAINE'S INDUSTRIAL OUTPUT FALLS 2.9% IN JAN Ukrainian industrial output fell by 2.9% in January 2006 over January 2005, the State Statistics Committee has reported. According to the committee, industrial output fell by 15.3% compared to December 2005, due to seasonal factors.

Output in the mining industry fell by 1% in January 2006 over January 2005. Coal and turf producers decreased production by 2.2%, and metal- ore producers by 0.4%. Hydrocarbon producers increased output by 9.7%. Processing industry output fell by 4.6%, while the food industry increased its output by 6.6%. Pasta producers increased their output by 37.4%, fat production rose by 21.6%, fruit and vegetable processing rose by 11.3%, meat output rose by 9.6%, milk, 8.1%, and tobacco by 5.2%. Steel processing and metallurgical output fell by 4.2%; pig iron, steel, ferroalloys producers' output fell by 5.2%, and non- ferrous metals by 25.8%. Pipe producers raised their output by 13.5%. Coke producers reduced their output by 24.9%. Engineering output rose by 3.7%, while output in the chemical and petrochemical industries fell by 4.7%. Pharmaceutical industrial output rose by 6.1%, while rubber and plastic production rose by 6.6% and 10.3% respectively.

UKRAINE'S RETAIL TURNOVER 31.3% UP IN JANUARY - STATISTICS The retail turnover of Ukrainian retail firms and restaurants in Ukraine in January 2006 was estimated at UAH 7.6 billion, which was 31.3% up on January 2005 (in comparable prices), the State Statistics Committee reported. In January 2005 Ukraine's retail turnover growth rate was 19.8% down on January 2004. The retail turnover growth rates in January were the highest in the cities of Kyiv (55.8%) and Sevastopol (43%), and the following regions: Odesa (42%), Vinnytsia (39.8%), Dnipropetrovsk (38.6%), Ivano-Frankivsk (38.6%), Kyiv (38.2%) regions. The lowest rates were in Transcarpathia (0.3%), as well as Chernivtsi (3.6%), Luhansk (9%), and Kirovohrad (12.3%) regions. Among the leaders ensuring the highest retail turnover in money terms were the city of Kyiv (UAH 1.5234 billion), and the following regions: Dnipropetrovsk (UAH 630.7 million), Donetsk (UAH 599.6 million), Kharkiv (UAH 561.3 million), Lviv (UAH 464.2 million), Odesa (UAH 453.5 million) and Zaporizhia (UAH 308 million), which account for 59.88% of Ukraine's overall retail turnover.

SURPLUS OF FOREIGN TRADE WITH SERVICES IS $3.2 BILLION IN UKRAINE IN 2005 The surplus in foreign trade in services was $3.22 billion in Ukraine in 2005, the State Statistics Committee (SPF) reported on Wednesday. The committee said that in 2005, exports of services rose by 15.6%, to $6.13 billion, while imports rose by 41.4%, to $2.91 billion.

Foreign trade operations were carried out with partners from 202 countries. According to the SPF, transportation services made up the bulk of Ukrainian exports, at 73%, while various business, professional and technical services accounted for 9.5% and repair work 5.4%. In imports, transporting services accounted for 21.5%, state services were 19.5%, various business, professional and technical services were 16%, financial services were 8.8%, and royalty and licensing services were 7.2%. Exports rose by $826.8 million compared with 2004. Russia (42%), Britain (4.9%), Switzerland (4.8%), the United States (4.6%), Cyprus (4%), Germany (3%), Belgium (2.4%), and Hungary (2.1%) are the main trade partners of Ukraine. The volume of services to the CIS countries was $2.85 billion, which is 46.4% of the total export volume. It rose by 13.3%, or by $333.7 million. Service exports to Belarus fell by 8.8%, or by $ 4.5 million, while those to Moldova fell by 5.4%, or by $1.9 million. Russia remains the main trade partner of the CIS countries. It consumed 90.4% of the total services, worth $2.6 billion, that Ukraine exported to the CIS. The volume of services exported to other countries was 53.6% of the total services provided and amounted to $3.3 billion. Exports rose by 17.7%, or by $493.2 million: in particular to Switzerland, by $97.2 million; Cyprus, by $92.6 million; Germany, by $44.9 million; the United States, by $38.6 million; Denmark, by $35 million; Italy, by $26.8 million; the Netherlands, by $21.6 million; Poland, by $20.3 million; Turkey, by $18.3 million. Imports of services to Ukraine rose by $852.3 million, in particular: maritime transport, by $44.7 million; air transportation, by $52.3 million; railway, by $48.4 million; tourist services, by $52.8 million; construction, by $67.9 million; financial, by $130.4 million; computer services, by $51.3 million; royalty and licensing services, by $117.4 million; various business, professional and technical services, by $169.9 million; state services, $68.9 million. Imports of insurance services fell by 36%, or by $33.9 million.

Imports of services from the CIS countries were $520.7 million, or 17% of the total imports volume of Ukraine. The imports from the CIS countries rose by 27.9%, or by $113.4 million: in particular from Russia, by $96.5 million; Turkmenistan, by $10.1 million. Imports of services from Kyrgyzstan fell 9.6 times, or by $4.2 million. Imports from other countries were $2.4 billion, or 82.1% of the total volume of the imports to Ukraine. The volume of services imported from other countries rose by 44.8%, or by $738.9 million. The imports rose, in particular from: the U.S., by $133 million; the U.S., by $86.3 million; Austria, by $58.8 million; Turkey, by $51.1 million; Sweden, by $36.3 million; Switzerland, by $36.2 million; France, by $32.8 million; Germany, by $26.9 million; Virgin Islands, by $25 million.

COAL EXTRACTION IN UKRAINE UP 1.6% IN JANUARY Coal extraction in Ukraine in January 2006 was 6.418 million tonnes, an increase of 1.6% or 102,500 tonnes year-over-year, Interfax-Ukraine has learned from the Fuel and Energy Ministry. The ministry said energy coal extraction grew by 19.7% or 670,000 tonnes, to 4.69 million tonnes, while the coking coal extraction dropped by 19.5% or 568,200 tonnes, to 2.349 million tonnes. In January, the coal extraction enterprises over fulfilled their target figures by 10.4% (603,800 tonnes), including energy coal by 14.2% (506,900 tonnes), and coking coal by 4.3% (96,900 tonnes). In 2005, coal extraction in Ukraine dropped by 2.6% or by 2.115 million tonnes year-over-year, to 78.37 million tonnes. Energy coal extraction grew by 5.4%, to 45.206 million tonnes, while coking coal extraction dropped by 11.9%, to 32.832 million tonnes.

GAS TRANSIT DOWN 5%, CONSUMPTION UP 17.8% IN UKRAINE IN JAN Y-O-Y The transit of natural gas via Ukraine's pipeline system fell by 5% or 0.6 billion cubic meters in January year-over-year, to 11.5 billion cubic meters, while Ukraine's gas consumption grew by 17.8%, or by 1.6 billion cubic meters, to 10.6 billion cubic meters over January 2005. The Energy Ministry released these figures to Interfax-Ukraine on Wednesday. The transit of natural gas to countries of Western Europe and Balkans fell by 5.9% or by 0.7 billion cubic meters, to 11.1 billion cubic meters, whereas the transit of natural gas to CIS countries was almost the same as in January 2006, at 0.4 billion cubic meters. Gas supplies to Ukraine, including gas transit, grew 4.4% or by 0.7 billion cubic meters year-over-year to 16.6 billion cubic meters. In January 2006, total gas consumption grew by 17.8% or by 1.6 billion cubic meters over January 2005, to 10.6 billion cubic meters, and the gas consumption by end consumers grew by 18.3%, or by 1.5 billion cubic meters, to 9.7 billion cubic meters. The gas supplied to industry totaled 3 billion cubic meters.

ELECTRICITY GENERATING 7% UP IN UKRAINE IN JANUARY

Electricity generating in Ukraine rose by 7%, or by 1.231 billion KWh, to 18.783 billion KWh in January, the Fuel and Energy Ministry has told Interfax-Ukraine.

Last month, Ukrainian Heat Power Plants (HPP) increased electricity generation by 19.9% and Nuclear Power Plants (NPPs), by 3.9%, while Hydroelectric Plants (HP) reduced output by 32.5%. The NPPs stake in electricity generation in January was 46.7% (48.1%, in January 2004), for HPPs it was 4.0% (6.3%), and for municipal heat-power stations it was 4.4% (5.5%). Electricity exports from Ukraine to the countries of Eastern and Central Europe in January were 432.2 million KWh - a rise of 10.2% compared to January 2005. NPPs, HPPs and district boiler-houses of the Fuel and Energy Ministry increased heat supplies by 11.7%, to 4.9 million Gcal.

BOT

ELECTRICITY PRODUCTION IN UKRAINE:

Producers Jan 2005 Jan 2006 changes.

Million KWh Stake Million KWh Stake from Million KWh %

from total

total production,

production, %

%

NPP 8,444.5 48.1 8,777.7 46.7 333.2 3.9

HPP 7,024.6 40.0 8,425.0 44.9 1,400.4 19.9

HP 1,109.1 6.3 748.5 4.0 -360.6

-32.5

HEM 973.9 5.5 832.4 4.4 -141.5

-14.5

Alternative 0.9 0.0 0.0 0.0 -0.9 -

sources

Total 17,553.0 100 18,783.6 100 1,230.6 7.0

(Source: The Fuel and Energy Ministry

EOT

ELECTRICITY CONSUMPTION IN UKRAINE 7.6%UP IN JANUARY Electricity consumption in Ukraine, including transmission loss in the power grids, grew by 7.6% or 1.279 billion kWh year-over- year in January, to 18.042 billion kWh. End customers consumed 12.840 billion kWh last month, which is 3.1% or 388.6 million kWh more than in January 2005, the Fuel and Energy Ministry told Interfax-Ukraine on Wednesday. In January, industry increased consumption by 0.7%, to 6.850 billion kWh, whereas the general public increased consumption by 7%, to 2.656 billion kWh. The industry's share in total consumption fell from 54.6% in January last year to 53.3% this January, while the public's share grew from 19.9% to 20.7%.

As reported, electricity consumption in Ukraine in 2005 grew by 0.5% or by 934.3 million kWh in comparison with 2004, to 176.952 billion kWh, including growth in end customers' consumption of 2% or 2.680 billion kWh, to 137.826 billion kWh. Industry in 2005 cut electricity consumption by 0.5%, to 77.889 billion kWh, while electricity consumption by the public grew by 7.5%, to 26.395 billion kWh.

VEGETABLE OIL OUTPUT UP 51.7%, BUTTER - 14.4% IN JANUARY Production of unrefined vegetable oil in Ukraine grew by 51.7% in January 2006 year-over-year - to 172 million tonnes, the State statistics committee has reported. If compared to December 2005, the unrefined oil output dropped by 5.2%. According to the committee, butter output in Ukraine in January 2006 grew by 14.4% year-over-year and dropped by 9.3%, compared to December 2005 - to 4,900 tonnes. As earlier reported, unrefined vegetable oil production in Ukraine in 2005 grew by 0.4% year-over-year - to 1.299 million tonnes, butter production grew by 2.6%, to 117,000 tonnes.

UKRAINE DROPS MEAT PRODUCTION 0.3%, MILK DOWN 1.3%, EGGS PRODUCTION UP 11.5% IN JANUARY Ukraine produced 229,800 tonnes of meat in January, which is 0.3% down year-over-year, the State Statistics Committee has reported. Agriculture enterprises produced 68,800 tonnes of meat, which is 20.1% up year-over-year, while private farmers produced 161,000 tonnes of meat, which is 7% down. According to the committee, milk production in Ukraine in January 2006 was 627,800 tonnes, which is 1.3% down year-over-year. Agriculture enterprises produced 156,300 tonnes of milk, which is 3.6%% up year-over-year, private farmers produced 471,500 tonnes of milk, which is 2.8% down. In January, 932.9 million eggs were produced in Ukraine - an 11.5% rise year-over-year, of which 645.9 million were produced by agriculture enterprises and 287 million by private farmers.

UKRAINE UPS FAT CHEESE PRODUCTION 1.5%, NON-FERMENTED AND SOUR MILK CHEESE - BY 18.9% IN JANUARY Fat cheese output in Ukraine grew by 1.5% in January year-over- year, to 16,800 tonnes, the State Statistics Committee said. According to the committee, compared to December 2005 fat cheese production dropped by 17.3%. Production of non-fermented and sour cheese in January 2006 grew by 18.9% year-over-year but dropped by 7.7%, if compared to December 2005 - to 6,700 tonnes. As earlier reported, fat cheese output in Ukraine grew by 21.7% in Ukraine year-over-year - to 271,000 tonnes, non-fermented and sour milk cheese - by 16.4% - to 82,100 tonnes.

FINANCIAL MARKETS

EQUITY MARKET

STOCK MARKET PARTICIPANTS CALL ON STATE NOT TO WRECK DEPOSITORY SYSTEM IN UKRAINE Ukrainian stock market operators have called on the state not to ruin the depositary system in Ukraine and not to prevent the work of the only Ukrainian licensed non-governmental depository - Kyiv- based OJSC Interregional Stock Union (ISU). The Chairman of OJSC ISU's Board of Directors Mykola Shvetsov, Director General of the Ukrainian association of investment business Yevhen Hryhorenko, President of Kyiv-based Tekt investment company Vadym Hryb, the representative of Kyiv-based Comex-Securities Dmytro Sapunov addressed the government and the Ukrainian president at a press conference in Interfax-Ukraine on Tuesday. According to the participants of the stock market and the governors of the professional unions, currently the government intends to pass a resolution suspending the presidential decree on common principles of the functioning of the National depository of Ukraine. The approval of the resolution would prompt the collapse of the current depositary system in Ukraine, they said. In addition, they are against the rearranging of Kyiv-based National depository of Ukraine into a full function depository and the creation of a united depository on the basis of the national depository, which the state will enjoy the control over. According to Shvetsov, the participants of the market, not the state, should manage the national depositary, which would protect the stock market from political interference. Hryb agreed with Shvetsov and also said that the depository should guarantee property rights and be based on market principles. In addition, Hryb proposed a scheme to create a united depositary, where the state's share will be 25%, and the share of each participant of the market will be up to 5%. According to him, the state would have a blocking stake, and the participants of the market would not be able to influence the depository's work. "Today we are at critical point - whether to take a large step forwards or backwards," Hryhorenko said. He also said that the participants of the market needed to have freedom of action. Sapunov said that the approval of the resolution on canceling a memorandum of mutual understanding between the Ukrainian and U.S. governments and the World Bank to create a clearing depository would affect foreign investors, who have only just started to come to the Ukrainian market. Hruhorenko said that the cancellation of the memorandum and the creation of one more depository would create senseless competition between the National Depository of Ukraine and the ISU. As reported, on January 18, the government decided to cancel a memorandum on mutual understanding with the U.S. government and the World Bank on the creation of a clearing depository in the securities sector. In early February, the participants of the stock exchange sent a letter to the president, government, National Bank of Ukraine, and State Commission for Securities and Stock Market (SCSSM) with the request to reinstate the validity of the memorandum. As earlier reported, the stockholders of Kyiv-based National Depositary of Ukraine, which is 86% owned by the state, announced their intention to rearrange the depository into a full-function depositary, which could be a rival to the ISU and allowed it to increase its statutory capital from UAH 5 million to UAH 30 million at the meeting in December 2005. The cancellation of the memorandum granted the National Depositary of Ukraine the possibility of realizing its plans. The position of the stock market is that a central depositary could be created, as in other countries, only as technical market agency owned and managed in a transparent way by the professional participants of the securities market, according to a statement signed by the Association of Ukrainian banks, the PFTS, the professional association of registrars and depositories and the Ukrainian association of investment businesses.ISU DEPOSITORY SERVICES UAH 85BN BY FEBRUARY BEGINNING The Kyiv-based Interregional Stock Union (ISU) depositary has serviced assets worth UAH 85 billion, including non-documentary securities worth UAH 49.3 billion and documentary securities worth UAH 35.8 billion, the union has reported in press release. The total refers to securities serviced since the depository's founding in March 1997, up to early February this year. According to the results of 2005, the number of issues rose by 25.3%, to an overall total of 1,471, and the number of securities holders rose by 14%, to 163. The number of trade organizers - the partners of the depositary - remained at nine. A total of 5,452 issues of securities in documentary form worth UAH 80.1 billion, were serviced by the ISU by January 1, 2006, as well as 33 issues of securities in non-documentary form worth UAH 1,072 billion. The statutory fund of the depositary of the union, which was founded in March 1997, was UAH 4.365 million by January 1, 2006.

The ISU stockholders are technical center The First Stock System (9.94%), Closed JSC First Ukrainian International Bank (6.25%), Opened JSC State Oschadbank of Ukraine (6.25%), Investment Company Business-Invest Ltd. (6.25%), Ukrsotsbank (5.97%), CJSC PrivatBank (5.97%), OJSC Maritime Transport Bank (5.68%), Depositary and Stock Company Slavutych-Capital Ltd., and ITT- Invest (3.41%).

SPF TO AUCTION OFF SEVERAL UKRAINIAN ENTERPRISES IN 2006 The State Property Fund (SPF) has submitted to the cabinet a list of additional enterprises to be sold at auction in 2006, the SPF told Interfax-Ukraine on February 13. The sales, if endorsed, would raise UAH 5.9 billion, the SPF said. The list is an addition to the earlier list No.570 approved by the cabinet on December 26, which contained 518 enterprises.

The SPF has also submitted to the government a list of 26 small enterprises, stock holdings in which will be sold at auction in 2006.

BOT

LIST OF ADDITIONAL ENTERPRISES TO BE SOLD AT AUCTION IN 2006:

Company State stake to be Nominal Planned

sold value, sale

million price,

hryvnias million

hryvnias

OJSC Sumykhimprom 100 5,000.0

OJSC Kyiv Motorcycle 100 7.5* 100.0

Plant

OJSC Luhanskteplovoz 76 41.6 500.0

OJSC Zaporizhia-based 99.994 63.6 63.6

Semiconductors Plant

OJSC Rosava 74.62 51.7 51.7

OJSC Mayak Plant 83.3 16.8 50.0

OJSC Kyiv-based 50.08 29.2 40.0

Leasing Company

Ukragromashinvest

OJSC Luhansk 50 18.775 18,775

Accumulators"

JSHC Ukrnaftoproduct 50% + 1 stock 15.2 15.2

State-run JSHC 100 12.5 12.5

Ukrpapirprom

OJSC Bilopil Machine 100

Building Plant

Siverskodonetsk Azot 100

Amalgamation

Source: the State Property Fund

EOT

SECURITIES COMMISSION GIVES GREEN LIGHT TO CIRCULATION OF FOUR REGIONAL POWER DISTRIBUTORS' AND DNIPROSPETSSTAL'S SECURITIES The State Commission for Securities and Stock Market has lifted a ban on clearing and striking agreements on the purchase and sale of securities in four regional power distribution companies and a steel maker. The ban was lifted from the stocks of the following companies: OJSC Poltavaoblenergo, Chernihivoblenergo, Lvivoblenergo, Prykarpattiaoblenergo, and OJSC Dniprospetsstal. The Commission passed the decision on Tuesday, Commission member Volodymyr Petrenko told Interfax-Ukraine. As was reported earlier, the Commission on February 9, 2006, banned for six months the purchase and sale of securities in six power distribution companies, a gas supplier and a steel producer. The ban covered the following companies: OJSC Poltavaoblenergo, OJSC Sumyoblenergo, Chernihivoblenergo, Lvivoblenergo, Prykarpattiaoblenergo, Luhanskoblenergo, as well as OJSC Cherkasygaz, and OJSC Dniprospetsstal. In 2005, the commission started a crackdown on "double" registers: when two different registrars keep two registers on the same company. The commission has already managed to settle this problem for two open-end JSCs - Prosiana ore-mining and dressing mill and Kyiv shipyard.

PFTS SUSPENDS LUHANSKOBLENERGO SHARE TRADING The First Securities Trading System, also known as PFTS, on Wednesday suspended trade in the shares of OJSC Luhanskoblenergo, Interfax-Ukraine learned from the association. Trading in Luhanskoblenergo's shares was suspended under a February 9 decision of the State Commission for Securities and Stock Market of Ukraine on suspending clearing and signing deals on securities.

BOT

PFTS QUOTATIONS ON 17/02/06

Mcap, Closing Bid USD

Daily Closing Daily High BID Low ASK Daily

thou USD Change Ask USD Change price, price,

sales,

% % 52 week 52 week

thou. $

Ukrnafta

2738271 49.50

5.04 51.49 1.96 49.50 27.18

206.39

Stirol

753331 27.33

0.00 28.22 0.35 28.32 14.84 0.00

Dniproenergo

240879 57.43

0.00 65.35 0.00 81.14 57.82 5.94

Zakhidenergo

317864 24.16

0.83 25.54 0.00 28.31 24.75 31.68

Centerenergo

226765 0.59

1.69 0.63 0.00 1.07 0.51

164.40

Donbasenergo

119392 4.75

0.00 5.35 3.85 4.98 3.56 2.97

Kyivenergo

162976 1.43

0.00 1.58 0.00 1.57 1.44 0.00

Ukrtelecom

3949199 0.21

0.00 0.21 -3.57 0.22 0.13

344.92

Nyzhniodniprovsky Pipe Plant

549520 9.80

0.00 10.59 0.00 9.80 4.15 46.59

Motor Sich

190311 88.12

0.00 95.05 0.00 128.32 85.23 0.00

Avdiivsky Coke

843426 4.20

-1.40 4.51 0.00 4.95 0.96 57.93

Poltavsky GOK

1361386 11.88

3.45 12.87 0.00 11.88 2.83 0.00

Slavutych Brewery

300844 1.39

0.00 1.66 0.00 19.21 1.48 5.68

Azovstal

1858951 0.58

1.03 0.59 -1.00 0.70 0.44 35.47

Zaporizhstal

977334 1.14

3.23 1.18 2.59 1.32 0.99

398.26

Bank Aval

1509802 0.10

6.67 0.11 17.39 0.10 0.04 4.55

Mariupol Steel Plant

2090672 0.60

0.00 0.64 -0.31 0.86 0.46

138.39

Zaporozhkoks

182769 1.49

0.00 1.58 0.89 1.57 0.57 60.89

Sumy Frunze

344797 4.06

0.00 5.64 0.00 4.0594 2.0720

107.07

Mariupol Heavy Machinery Plant

195771 12.28

0.00 13.17 0.15 12.28 5.45 0.00

Total1)

18914260.2

1611.13

PFTS - First Securities Trading System PFTS (NASDAQ-analogue)

www.pfts.com

(Source: Alfa Bank, Interfax-Ukraine

1)AMOUNTS MAY NOT ADD DUE TO ROUNDING

PFTS INDEX

PFTS STATISTICS*

10/02/06 13/02/06 14/02/06 15/02/06 16/02/06 17/02/06

Change, %

Index

388.82 388.09 396.64 407.91 407.42 404.92 +4.141

Total demand, mln USD

20.8851 21.1406 21.3584 21.6337 21.6376 21.8040 +4.400

Total supply, mln USD

24.5010 24.3644 24.774 25.0257 25.0733 24.4812 -0.081

Total trade volume, th. USD

6621.845 17620.2087 11595.5321 8409.0487 20087.3717 32006.6811

+383.350

Total capitalization, mln USD

31448.5010 32401.5030 32554.3762 33077.7822 31828.5030 32952.2198 +4.782

* - for shares during trade session only

PFTS - First Securities Trading System PFTS (NASDAQ-analogue)

www.pfts.com

(Source: PFTS, Interfax-Ukraine

FIXED INCOME MARKET

UKRAINE EO-NOTES 2000(01-07)

13/02/06 14/02/06 15/02/06 16/02/06 17/02/06

Last 104.15 104.10 104.02 104.05 104.00

Diff. abs +0.20 -0.05 -0.08 +0.03 -0.05

Diff. % +0.19 -0.05 -0.08 +0.03 -0.05

Overall vol. 330,000 52,000 38,000 74,000 54,000

Source: Frankfurt Stock Exchange

UKRAINE DL-NOTES 2000(01-07)

13/02/06 14/02/06 15/02/06 16/02/06 17/02/06

Last 102.90 102.90 102.90 102.90 102.85

Diff. abs -0.05 0.00 0.00 0.00 -0.05

Diff. % -0.05 0.00 0.00 0.00 -0.05

Overall vol. 25,000 0 0 0 0

Source: Frankfurt Stock Exchange

RATES OF UKRAINE DL-NOTES REG S 2003/2013

13/02/06 14/02/06 15/02/06 16/02/06 17/02/06

Last 105.75 106.10 105.85 106.00 106.25

Diff. abs -0.25 +0.35 -0.25 +0.15 +0.25

Diff. % -0.24 +0.33 -0.24 +0.14 +0.24

Overall vol. 0 0 0 0 0

Source: Duesseldorf Stock Exchange

CURRENCY MARKET

NATIONAL BANK OF UKRAINE OFFICIAL RATES AS OF20/02/06

CURRENCY RATE

100 Australian dollars 371.6617

100 Azerbaijani manatas 552.5164

100 British pounds sterling 875.9782

10 Belarussian rubles 0.0235

100 Danish krones 80.2488

100 US dollars 505.0000

100 Estonian kronas 38.2883

100 Euro 599.0815

100 Iceland kronas 7.9433

100 Kazakh tenges 3.8547

100 Canadian dollars 436.4893

100 Latvian latas 854.4839

100 Lithuanian litas 174.2581

100 Moldovan leyas 39.0269

100 Norwegian kroner 74.3277

100 Polish zlotys 159.1017

10 Russian rubles 1.7896

100 Singapore dollars 308.7094

100 Slovakian korunas 16.0418

100 SDR 722.3986

100 Turkish liras 380.3451

10000 Turkmenian manatas 9.7115

1000 Hungarian forints 23.8014

100 Uzbek sumas 0.4224

100 Czech korunas 21.1204

100 Swedish kronas 63.8612

100 Swiss francs 383.5103

100 Renminby Yuan (China) 62.7384

1000 Japanese yen 42.5575

www.bank.gov.ua

(Source: National Bank of Ukraine

OFFICIAL CURRENCY RATE CHANGES

RATE 13/02/06 14/02/06 15/02/06 16/02/06 17/02/06 20/02/06 %,

CHG/WEEK

Official 5.0500 5.0500 5.0500 5.0500 5.0500 5.0500 0.000

exchange

rate of the

hryvnia to

the US

dollar

(UAH/$)

Official 6.044850 6.003440 6.008490 6.011520 5.988290 5.990815 -0.894

exchange

rate of the

hryvnia to

EURO

(UAH/--1)

Official 1.7882 1.7884 1.7918 1.7908 1.7894 1.7896 +0.078

exchange

rate of the

hryvnia to

the Russian

ruble

(UAH/RUR10)

(Source: Interfax-Ukraine

MONEY MARKET

KIBID/KIBOR FOR 17/02/06

Rate Overnight 1 day 3 days 7 days 14 days 1

month

KIBID (UAH) 1.17 1.50 1.00 2.38 4.50 7.50

KIBOR (UAH) 2.15 3.00 3.00 5.00 8.50 12.75

KIBID ($) 3.81 4.00 4.00 5.00 5.81 6.56

KIBOR ($) 4.84 5.00 5.00 5.94 7.19 9.06

Source: Infinservice

KIBOR - Kyiv Interbank Offered Rate

KIBID - Kyiv Interbank Bid Rate

The data collected from the banks: Aval, Agio, VABank, Interbank,

Khreschatyk, Credit-Dnieper, TAS-Kommerzbank, Legbank, Nadra,

Mriya, Petrocommerce Ukraine, Rostok, Slavutych, Stoik,

Ukrinbank, Ukrprombank, Ukrprofbank, Transbank, Tavriya,

Dniester, HVB Ukraine

CREDIT MARKET QUOTATIONS ON 17/02/06

Indicator 1 3 months 6 12 18 24 36

month months months months months months

UAH

Best 15.00 14.00 16.00 17.00 20.00 21.00 21.00

Indicative 22.00 22.00 22.00 23.00 20.00 21.00 22.00

USD

Best 12.00 7.00 8.00 12.00 14.00 14.00 14.00

Indicative 15.00 15.50 13.00 17.00 14.00 17.00 -

Source: Infinservice

The data collected from 18 banks

INTEREST RATES ON NBU'S ACTIVE AND PASSIVE OPERATIONS SET FOR

FEBRUARY 20

Rate (%) Current Last set Previous Previously set Change,

rate, % rate, % percentage

notches

Discount 9.5 10.08.05 9.0 8.11.04 +0.5

rate

On active operations- overnight credits

Secured by 11.0 01.02.06 10.0 31.01.06 +1.0

state

securities

For blank 13.0 31.01.06 15.0 8.02.05 -2.0

credits

On passive operations - operations to draw bank funds into deposit

accounts

By 30th day 0.5 20.02.06 - - -

(Source: National Bank of Ukraine

EOT

Discount Rate - a rate at which the NBU provides loans to commercial banks for replenishment of their monetary reserves and lending funds Lombard (Overnight Credit) Rate - an interest rate at which the NBU refinances commercial banks to support their liquidity

*The information contained here is believed to be fully reliable, but is provided for information purposes only with no warranty expressed or implied. The user shall fully indemnify and hold harmless Interfax-Ukraine and any of its Affiliates against any judgment, liability, loss, cost or damage resulting from or arising out of the content the information and recommendations contained herein, as they are not to be used or considered as an offer to sell, or a solicitation of an offer to buy, or related to any omissions, delays, errors or inaccuracies.

POLYNESIA

Tonga Tongan King Appoints New Speaker Wellington Radio New Zealand International WWW-Text in English 20 Feb 06

OSB Transcribed text

Unattributed report: "Tongan King appoints new speaker"

Tonga's King Taufa'ahau Tupou the Fourth has consented to the appointment of Hon. Tu'iha'angana as the new speaker of the Legislative Assembly. The appointment was effective as from Friday, 10 February 2006. The House last year elected Hon. Tu'iha'angana to chair the Committee of the Whole House for the 2005-2007 Session of the House. He has been one of the nobles' representatives for the Ha'apai group since 1991. Hon. Tu'iha'angana, age 38, replaces the former speaker who was found guilty and sentenced to bribery and evasion of customs laws.

Samoa Drug Accused Denied Bail by Samoa's Supreme Court Wellington Radio New Zealand International WWW-Text in English 20 Feb 06

OSB Transcribed text

Unattributed report: "Drug accused denied bail by Samoa's Supreme Court"

Six defendants arrested during drug raids by police in Samoa have been denied bail by the Supreme Court. Justice Lesatele Rapi Vaai said that the charges of possession of marijuana and other narcotics that the defendants face, did not entitle them to bail. The defendants are Semisi Lafi, Patrick Chui, Joseph Faurknar, Tofele Tavui, Duncan Ah Hi, and Francis Matthis. They will remain in custody until the next hearing on 27 February 2006. The police and Transnational Crime Unit have been investigating the importation of illegal drugs since 2003.

French Polynesia Tahiti Organizing Trade Mission to New Zealand to Try and Cut Deficit Papeete Tahiti Presse WWW-Text in English 21 Feb 06

OSB Transcribed Excerpt

Unattributed report: "Tahiti organizing trade mission to New Zealand to try and cut deficit"

The French Polynesia government is organizing a trade delegation of some 20 exporters to New Zealand in an unprecedented attempt to try and reduce the trade deficit and rebalance the trade between Papeete and Wellington. The latest available statistics show that Tahiti imported more than FF11b (US$112.7m / (euro)92.2m) worth of goods from New Zealand in 2004, but exported only FF141m (US$1.4m / (euro)1.2m) in goods to New Zealand. That gave Tahiti a trade deficit of FF10.9b French Pacific francs (US$111.2m / (euro)91m). (passage omitted on superfluous details) Tahiti's main exports to New Zealand are cultured pearls and copra, according to Drollet, who is the main organizer of the upcoming trade mission. (passage omitted on superfluous details)

VANUATU & NEW CALEDONIA

Vanuatu Unlawful Sackings and Illegal Decisions Costing Taxpayers Millions Port Vila Vanuatu Daily Post WWW-Text in English 20 Feb 06

OSB Transcribed

Report by Ricky Binihi: Unlawful sacking, decisions costing taxpayers millions of vatu

The Government of Prime Minister Ham Lini is considering making people with authority in government more accountable for their decisions because it cannot continue to allow them to make irresponsible decisions and expect the taxpayers to (pay to) clean their mess. (passage omitted on superfluous details)

"The people who decide the unlawful dismissal of civil servants, or whose wrongful decision costs the people millions, must be prepared to be held accountable for their decisions", the First Secretary to the Ministry of Finance, Mr Eric Pakoa told Daily Post. Mr Pakoa said the government has discovered that many millions of Vatu must be taken from the national treasury each year to compensate for wrongful dismissal of a civil servant. "That money could have been spent to build new classrooms and clinics but instead it's used to cover the irresponsible decision of a few people", Mr Pakoa said.

Mr Pakoa did not disclose to the Media what the government was thinking of doing to people whose actions backfire and the government suffers financially but said from now on any decision to discipline a civil servant must not be politically motivated. (passage omitted on superfluous details) The illegal decisions of people in the semi-government organizations like the Air Vanuatu, Vanuatu Commodities Marketing Board, Vanuatu Maritime Authority, is also costing the people of Vanuatu millions but nothing has been done so far to address the issue. Take for instance, the unlawful dismissal of Jean Paul Virelala that has the potential to cost the national airline of Vanuatu about Vt50 Million or the seizure of a VCMB dock in Santo by a private businessman. The list goes on and unless Prime Minister Lini's government does something about it, it is unlikely that the practice will stop.

Eretoka (or Hat) Island Returned to Chief Roimata's Descendants Port Vila Vanuatu Daily Post WWW-Text in English 21 Feb 06

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Report by Lora Lini: "Hat Island returned to Roimata descendants"

The Return of the land lease title of Eretoka or Hat island after it was sold for VT1.7m a few years ago was not only a lesson for the descendants of the legendary chief Roimata and land owners of the historical site but should also be a good lesson for the people of Efate and Vanuatu at large. Not only have families concerned received the land title back from the investor but have come to stop any other negotiations to ever sell the island known as the burial site of the famous Chief Roimata of Efate. Mr Douglas Kalotiti confirmed to Daily Post the land title is back and the island is safely back in the hands of landowners and families.

"The sale of the island took place sometime in 1994 bur the investor never developed it over the past 10 years and so we were very lucky to get back the island itself," explained Mr Kalotiti. (passage omitted on superfluous details) Mr Kalotiti confirmed that the island was sold to Ms Katherina Jamieson, an Australian. "The sale was mysterious in that there was no formal agreement and also the payment was in terms of goods and cash money presented to families sometimes for school fees or other expenses that were not really for the purpose of the payment but the investor claimed that the payments were part of the deal," explained Mr Kalotiti.

After learning of the sale of the island, Mr Kalotiti pursued the case himself to try and get the island back. After consultations with the Department of Lands and also the investor, the families were able to get the land title back from Ms Jamieson. Mr Kalotiti also confirmed to Daily Post that the payment made to land owners in 1994 for the full island was about Vtl. 7 million. (passage omitted on superfluous details)

Report Analysing youth mental health problems (and violence) in Vanuatu Port Vila Vanuatu Daily Post WWW-Text in English 20 Feb 06

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Report by Joe Harry: "Analysis on mental health report launched"

After concerns about FSP and rumours that their office might be closing down, the FSP have just achieved a milestone with a launching of a first ever publication on masculinity, mental health and violence in Vanuatu. (FSP is the Foundation of the peoples of the South Pacific. The FSP in Vanuatu was established in 1988 and at its peak had over 100 fully paid members).

This project is being funded by NZAID with the support of the Ministry of Health. The aim of the project is to raise awareness on youth mental problems using quantitative and qualitative data gathered during studies conducted to show links between youth, mental health and violence in Vanuatu. (passage omitted on superfluous details)

Dr Len Tarivonda, representing the Director General of Health at the launching ceremony, said "mental health is public health" and the Ministry of Health had recognized the problem years ago but the issue could not be tackled due to financial constrain and lack of human resources. Speaking during the ceremony launching of the document Dr. Tarivonda also said mental health, road accidents, non-communicable diseases have been classified as the silent epidemic. He thanked FSP on behalf of the government for taking the lead in the area.(passage omitted on superfluous details) Concerns have been raised over people who are obviously in need of psychiatric help who in the past have gone to Noumea for help.

Preparations for National Summit on Land Issues Port Vila Vanuatu Daily Post WWW-Text in English 20 Feb 06

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Report by Len Garae: "Preparing for lands National Summit"

Representatives from different Departments in the Government dealing with land matters especially the Ministry of Land attended a daylong workshop at Chantilly's Hotel last week to prepare the process towards a National Land Summit in September this year. The man behind the proposed summit, Director General of Land, Russel Nari, said after the workshop, a team will be holding similar workshops in the provinces to promote public awareness and educate the public on the various existing forms of legal framework (legislation) that is in place, the rights of the landowner under the existing legal framework, rights of responsibilities of the Government under the legal framework. (passage omitted on superfluous details)

Another part of the process is to be dealt with by the Government as the Manager of land and the developers who include bankers, real estates, chartered accountants and all the others. 'Their contributions are vital as it will work out how to strike a balance the developer making his money while at the same time the landowner also is making money over time", Nari said. In addition he said the new policies are important to make sure that it is not just the father who is making money but also his future generations. He described the ongoing process as a big challenge for the Government and landowner but he said it is better to formulate new land policies now based on 25 years of independence. The new policies will promote investment but at the same time protect the landowner so that both of them benefit from the investments that take place in the country.

Chinese donated ships still not operating Port Vila Vanuatu Daily Post WWW-Text in English 20 Feb 06

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Unattributed report:

The two ships donated by the Chinese Government, the Northern Star and the Southern Star, are still not in use and remain idle for some months after arriving in the country. The Council of Ministers made a decision for the Southern Star to be used by SHEFA, and TAFEA provinces whilst the Northern Star would be used by all the Northern provinces. The Government Business Unit is looking at the possibility of setting up a shipping company operated by the Provincial governments but there is a lack of business experience and Shefa provincial government has been badly burnt in a shipping venture involving MV Ramos in the past and is adequately serviced at present with more than half a dozen ships working around Shefa islands.

Legal and Police Strengthening Projects launched Port Vila Vanuatu Daily Post WWW-Text in English 20 Feb 06

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Unattributed report: "Legal and Police Strengthening Projects launched"

AusAID, The Australian Federal Police (AFP) and NSW Attorney General's office have combined together to inject A$38 million into Vanuatu's justice system with $10m going into support for the Public Prosecutors office, the State Law Office and Public Solicitor's office and $28 million given by AusAID to the Vanuatu Police Force over the next 5 years.

Editorial - PM Lini Needs to Assert His Authority and to Open Up to the Public and Media Port Vila Vanuatu Daily Post WWW-Text in English 20 Feb 06

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Unattributed Editorial: "Editorial Opinion: PM Lini needs to open up to the public and media"

Prime Minister Ham Lini has done well to hold the coalition together and has astutely and successfully sorted divisions out amongst parties to remain in power. He has acted sensibly in refusing the demands of many to take action against members of his coalition and have another reshuffle. Had he done so, it could have backfired on him.

However the problem the Prime Minister now has is that pressure is mounting for him to take control and make his position clear on issues that have resulted from poor decisions or lack of decision by a number of his ministers. He needs to use the media to put his views over and be seen as a more dynamic leader taking action when needed. By doing nothing and making absolutely no comment on issues such as the deportation of West Papuan Ayamiseba, the biscuit trade dispute with Fiji and controversial monopoly to VCMB, the sacking of Patrick Crowby, the Chinese ships, the Air Vanuatu strike, the out of court settlement to Jean Paul Virelala, the VLD and Metenesel Estates saga, the proposed fish factory controversy, his position on Morkin Stevens, the problems at the wharf etc etc. He is leaving himself wide open to allegations that he is not doing a good job as Prime Minister as he has said nothing and made no comment to the public on any of these concerns, preferring to leave it to his ministers.

We believe Lini is a well liked, honest leader doing a good job, at holding the coalition together, but needs to be seen as a Prime Minister who is in control, making firm decisions and letting the public know what is going on. He has to be seen as a strong Prime Minister who has control over his ministers and can sort out problems and controversial issues quickly before they are allowed to fester. The media has also had problems getting any interview at all with the Prime Minister since he came to office, which is highly unusual and we ask that we can conduct an interview and let the public know his position and view on a range of issues affecting his government and his leadership. If he continues to say nothing and do nothing, pressure will only mount for a change.

Commodities Board's Monopoly over Copra and Kava Causes Controversy OSB Report

Compilation from two Vanuatu Daily Post items: "VCMB Could Face Legal Challenge over Kava and Copra Monopoly" 20 Feb and "Farmers Call on Govt to Support Commodities Board (VCMB) Copra and Kava Monopoly" 21 Feb 06

A private lawyer has said that VCMB could face a legal challenge to their monopoly on kava export based on the fact that as a government owned body acting against an agreement signed by Foreign Affairs on behalf of the government. He advised that a class action suit by exporters based on breaches of the Foreign Affairs agreement may be possible.

Meanwhile Agriculture Minister Barak Sope has attacked the decision by VCMB in a letter to the Chambers of Commerce saying the decision goes against CRP (Comprehensive Reform Program) agreements. He advised excluding the private sector from the trade is contrary to national policy as agreed in the CRP and National Business Forum. The controversial decision to monopolise kava and copra goes against the Melanesian Spearhead Group trade agreement, Pacific Island Countries Trade Agreement (PICTA), WHO, CRP and the private sector led growth. Sope also advised that the decision will hurt farmers' incomes, affect the national economy and cause concern amongst aid donors.

A Department of Trade commissioned report funded by the EU on the Trade and Business Environment in Vanuatu in May last year was highly critical of the VCMB stating that its cost structure was far to high, in fact exceeding most government departments. The report recommends that the VCMB be is disbanded and that it is an outdated institution and its work could be done by other government departments such as quarantine, trade and agriculture. Another report made last year on The Development and Marketing of Vanuatu Cocoa arid Coconut Products also stated that the government should not have a direct role to play in the marketing of commodities which is best done by the private sector and that VCMB should be closed down.

Despite all these concerns raised in reports and breaches in trade agreements minister James Bule has steadfastly refused to co-operate and is bulldozing his plans through for VCMB to monopolise the kava and copra industry.

Copra farmers and kava producers attending their weekly meeting with the Vanuatu Commodities Marketing Board (VCMB) say government ministers that hail from provinces that do not produce these commodities should not talk about them. The farmers were reacting to comments made by the Minister of Agriculture, Mr Barak Sope, to the Chamber of Commerce that he was against the VCMB decision to give monopoly to the Vanuatu Farmers' Association. But the farmers from Penama and Sanma say that when they were being exploited by middlemen a national leader never came to their rescue. And they were saddened to learn that only now that they were maximizing the benefits of their produce, a national leader must speak out against them.

The Daily Post understands the general feeling among many farmers is that if the government was genuinely against monopoly in Vanuatu then it would be proper to first address the monopoly that is enjoyed by Unelco and Telecom. "The money Unelco and Telecom makes from their monopoly over power and telecommunications, respectively, does not go to the people in the islands whereas the monopoly over copra and kava puts money directly in the hands of farmers," a farmer said. (passage omitted on superfluous details)

Ayamiseba's Attempted Deportation Causes Concern and Raises Human Rights Issues OSB Report

Compilation of two reports from Wellington Radio New Zealand International WWW-Text in English 20 Feb 06 news bulletins.

Vanuatu's Internal Affairs minister, George Wells has been summoned to file a sworn statement about his reasons for the deportation in court where Mr Ayamiseba is challenging the order. No official reason was given for the Papuan's sudden deportation earlier this month, which failed when neither Australia nor Solomon Islands would accept him. Mr Wells says the bid to deport Mr Ayamiseba does not mean the government is changing its support for Papuans. But Mr Wells says as a foreigner without a valid visa in Vanuatu, Mr Ayamiseba must be dealt with...

"So we used that power to deport Andy, based on his residential status and his public influence in the politics of Vanuatu. So we used that law as we did a few months ago with William Chong, resident from Singapore, "We can't get involved in Vanuatu politics when we know that we're not a citizen. It's a respect, its common sense. That's our reservation we have information, we have our sworn statement by some witness already. All these things are before the court awaiting Wednesday's hearing"

Meanwhile, Mr Ayamiseba's lawyer Felix Kabini says they're preparing a constitutional application to the Chief Justice to challenge the Immigration law amendment. But Mr Wells has defended the amendment, which gives the minister the power to deport anyone without notice if they're considered detrimental to national security or public order.

Compilation of two items from Port Vila Vanuatu Daily Post WWW-Text in English 20 Feb 06 an unattributed item: "Immigration Minister's Expulsion Powers May Breach Constitution" a report by Joe Harry: "Amendment to immigration law undermines human rights, says Advocacy Coalition" and

In light of the attempted deportation of Andy Ayamiseba on 14 February 2006, the Good Governance Advocacy Coalition has expressed great concern over the application of the Immigration Act. The Immigration Act was amended in 2004 giving the Minister the power to expel anyone from the country who in the Minister's opinion, is involved in activities that are detrimental to national security, defence, or public order, a statement from the group said. Members of the Good Governance Advocacy Coalition said they see the application of the amended Immigration Act as in breach of Vanuatu's national Constitution and the fundamental concept of Natural Justice which allows any individual the right to defend him or herself against any allegations. Members of the Good Governance Advocacy Coalition strongly recommend that the Amendment to the Immigration Act in 2004 be scrapped by the elected leaders if respect of Human Rights and Natural Justice as enshrined in the National Constitution.

The Board of Transparency International has issued a statement calling for the government to scrap the amendment to the Immigration; Act stating that it is unconstitutional and should be challenged in court. "The recent amendment brought to the Immigration law by the Vohor Government is starting showing the full consequences of its unconstitutional and unfair application. The lack of transparency in making the amendment has led to a law that allows a government Minister to deport any foreigner without notice or having to give any reason. This breaches the Constitution and the fundamental concept of Natural Justice which allows any individual the right to defend himself against charges laid against him."

"It is difficult not to see the risk of this discretionary power being abused in the light of the numerous abuses of our leaders. In the last few years since the beginning of the Comprehensive Reform Program, discretionary powers of individual leaders have been questioned and limited to avoid the potential abuses, whether it is to give oneself a special liquor licence or duty free exemptions or other privileges. The risks have proven to be obvious: abuse of power corruption." (passage omitted on superfluous details)

"The powers of the Minister under the Immigration Act in relation to the removal of non-citizens of Vanuatu are exceptionally wide. The new section 17 A, which was introduced by amendment to the Immigration Act in 2004 and commenced in March last year, provides that a non-citizen may be removed from Vanuatu by the Minister by Order if, in the Minister's opinion, the person is involved in activities that are detrimental to national security, defence or public order; or is a wanted person in a foreign country for any criminal offence he has committed in that foreign country." (passage omitted on superfluous details) Transparency International's concerns will carry a lot of weight overseas and it remains to be seen whether the government take any action or not.

PNG & BOUGAINVILLE

PNG: Mobile Squads to Remain: Police Commissioner Port Moresby Post Courier (Internet Version-WWW) in English 21 Feb 06

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Unattributed report: "Police mobile squads to remain: Inguba"

The constabulary's police Mobile Squads will not be disbanded. Police Commissioner Sam Inguba made the announcement yesterday in response to concerns raised by former Prime Minister Sir Julius Chan. Sir Julius wrote to Commissioner Inguba urging him to seriously consider the security implications of disbanding the police Mobile Squads before next year's general elections. In a statement, Commissioner Inguba said there was no intention to disband the mobile squads, which serve a useful purpose in police operations. However, he said the members that instigated the unfortunate incident that occurred last September when members of the Police Mobile squad seized control of the Bomana Police College will be removed and punished. Mr Inguba said a full and thorough investigation was carried out into the incident, which occurred during the 30th anniversary of independence celebrations and the Pacific Islands' Leaders Forum. The incident was triggered by dissatisfaction among members of the police Mobile Squad over unpaid allowances. Mr Inguba said policemen identified as responsible for the unlawful action would be dealt with in accordance with the provisions of the Police Force Act. He said Sir Julius would agree that it was unbecoming for members of the police force to take the unlawful actions they did at the Bomana, which included the assault of senior police officers. "Their behaviour bordered on mutiny and will not be tolerated under any circumstances; those that took part in the incident will face the full brunt of the law." A report of the investigation into the incident was given to Mr Inguba on 22 December last year, but it has not been made public.

Oil Firm with PNG Interests Expected to Make Bumper Profit Wellington Radio New Zealand International WWW-Text in English 20 Feb 06

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Unattributed report: "Oil firm with PNG interests expected to make bumper profit"

A Sydney based company with interests in the development of Papua New Guinea's gas-oil project is expected to unveil a bumper annual profit this week. Oil Search Ltd has already reported record annual revenue of more than US$638 million last year, based on production for the year of 12.2 million barrels of oil. Energy companies, including Oil Search, have been well served by the booming price of oil, which rose again today after attacks by militants in the Niger Delta that shut down nearly a fifth of Nigeria's oil production. Prices for Brent crude oil for April delivery rose US$1.57 a barrel to US$61.46 a barrel on London's ICE Futures exchange yesterday.

Older Men with Money Responsible for Spread of HIV/AIDS Port Moresby Post Courier (Internet Version-WWW) in English 21 Feb 06

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Unattributed report: "'Sugar daddies' sweet dealers"

'Sugar daddies' need to use their money wisely instead of spending it on young girls in exchange for sex, says a HIV/AIDS response co-ordinator. National Capital District Provincial AIDS Committee co-ordinator Isu Aluvula said the 'sugar daddies' or the older men with money, had to be wise about how they spent their money. "Look at the sugar daddies, they are the ones passing on the HIV/AIDS virus to the innocent wives and young girls and what is the public doing about it," said Mr Aluvula. Mr Aluvula said the "sugar daddies" include private company executives, bureaucrats, politicians and other big shots. He said these men went around in tinted glass vehicles with young girls. He said the committee had given a submission to the parliamentary inquiry into the entertainment industry in January to do a survey on the entertainment industry. He said the survey should include information like;

- the number of "sugar daddies" who go to the entertainment centres;

- how many licensed and unlicensed entertainment operators;

- how many people go to entertainment centres each day; and

- the activities that take place in the entertainment industry.

He said people needed to make use of the HIV/AIDS Management and Prevention Act because that law gave individuals the power to take legal action against people who knowingly passed on HIV/ AIDS to others. He said the 'sugar daddies' could also be held for adultery. Meanwhile, Mr Aluvula said more people needed to be educated about condoms to promote safe sex.

Chinese Medical Team Attacked in PNG Port Moresby Post Courier (Internet Version-WWW) in English 21 Feb 06

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Unattributed report: "Chinese: Attack will not stop us"

A Chinese doctor has pledged her team will continue to serve the people of Papua New Guinea despite being gagged, tied and bashed in their houses while rascals ransacked the property. Professor Wang Lian, a gynaecologist from Chongqing, China who leads a 10-member Chinese medical team, said their residence at Lawes Rd was broken into last Wednesday morning and their translator and deputy leader of the team Mr Zheng and cook Mr Hang were tied up while their car and household items were taken away. "There were eight of them, they hit me on the head with the butt of the gun, then gagged and bound me with plastic tapes," Mr Hang said. "I was so scared, I didn't know what they were going to do with me."

This happened while the doctors were at work at the Port Moresby General Hospital. Mr Zheng and Mr Hang broke free after the rascals departed. Staff from the Port Moresby General Hospital rushed to their aid. Prof Wang said: "I am so thankful that no one was seriously hurt and the police recovered our vehicle and property within a very short time." Despite the attack she said after working in PNG for more than a year, the past year had been an unforgettable one for her. "What really warms my heart is the friendship of the PNG people, the patients here are very appreciative of what we do. Our team will do our best for the patients here despite the challenges," Prof Wang said. A third Chinese medical team will arrive in November when this team returns home.

Poaching, Illegal Fishing Depleting Fish Stocks in Morobe Province Port Moresby Post Courier (Internet Version-WWW) in English 21 Feb 06

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Unattributed report: "Fish 'scam' opposed"

Malai islanders of Siassi, Morobe Province, say poaching and illegal fishing of their reefs has depleted them of fish and other marine resources. The islanders claim poachers, especially commercial fishermen who used illegal fishing equipment in their activities, have removed almost everything from the reefs. The villagers said they are negotiating with people from the other islands in the area to allow them to fish. A villager who was the first to sound the alarm on the illegal fishing that was taking place in the area, said they believed the commercial fishing activities by an Asian-owned company was the main cause of the depletion of the marine resources. He said the fishermen used equipment including hooker diving gear and cyanide that were illegal. Such equipment and chemicals were causing great damage to the reefs and marine resources.

It is understood the fishermen use cyanide to stun fish that float to the surface of the sea. These are collected and placed in tanks as live fish, which are exported for a healthy profit. But the cyanide, if sprayed on the reefs, also kills off smaller fish and other marine growth. "The damage caused to the reefs will take years to rehabilitate. In the meantime, we have to go elsewhere to find fish for our own sustenance. We are now begging our neighbouring islanders to allow us to catch fish on their reefs," he said. The islanders also plan to take court action to stop efforts to reclaim three fishing boats they commandeered for allegedly fishing illegally in their fishing grounds. The villagers also alleged that attempts had been made to bribe some village leaders to release the boats. "We will not allow this to happen and will take court action to ensure the damage caused to our reefs and environment, our source of food, is paid for," he said. He said they also want to engage Conservation International to carry out an investigation on the extent of the damage. He called on authorities negotiating on their demand for monetary compensation to hasten the process.

Governor urges Aviation Authority to Tighten Airport Security Port Moresby The National (Internet Version-WWW) in English 21 Feb 06

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Unattributed report: "Rapa urges CAA to tighten airport security"

The deputy governor of Western Highlands Wai Rapa has called on the Civil Aviation Authority and Air Niugini to tighten their security at the Jacksons airport. Mr Rapa said this after Kagamuga Airport police confiscated more than 1,500 ammunitions for M16, AR15 and self-loading rifles at the Air Niugini terminal. A passenger who flew up from Port Moresby on an Air Niugini flight last Tuesday morning transported the ammunitions. Mr Rapa said it was unbelievable that the ammunitions were not detected by metal detectors installed inside the Jacksons airport. He said this showed that security at the airport was very weak. He commended the local people who fed police the vital information that led to the arrest of the suspect and the confiscation of the ammunition. Mr Rapa added that with the general elections just around the corner, security at all ports should be stepped up to prevent criminal elements transporting weapons up to the highlands to hijack the democratic process.

Report on Electoral Boundaries before Parliament Port Moresby Post Courier (Internet Version-WWW) in English 21 Feb 06

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Unattributed report: "New electorates before House"

The Electoral Boundaries Commission has recommended the creation of 26 new open electorates in Papua New Guinea. But it has urged Parliament to sot out the future of provincial seats as the countdown begins to the 2007 general elections -- when provisions in the Organic Law on Provincial and Local-Level Government that enabled the existence of provincial seats will be removed after the return of the writs.

Presenting the report to Prime Minister Sir Michael Somare in Port Moresby yesterday, Electoral Commissioner and Electoral Boundaries Commission chairman Andrew Trawen said the new electorates -- pending Parliament approval -- will result in the country having 115 Open electorates. "Each province is proposed to get at least one new open electorate to compensate for the disappearance of the provincial electorates. The commission is fully aware of the existence of the constitutional provisions creating the provincial boundaries and is also aware of comments and sentiments of debate on whether provincial electorate boundaries will remain or will cease to exist. This is a pertinent issue of which I urge Parliament to urgently address," Mr Trawen said.

ir Michael assured Mr Trawen that the report will be tabled in Parliament when it sits this afternoon and will be studied by parliamentarians for seven days before they made a decision to accept or reject it. Parliament cannot amend parts of the report, a fact which Sir Michael alluded to yesterday. "Members of Parliament don't make any amendments to the boundaries, members of parliament are only recipients and custodians and of course that's what will happen tomorrow (today) . . . give us an opportunity for members to debate and you can be rest assured that the report will be dealt with thoroughly," he said. The report has recommended the creation of six open electorates in the Southern region (from the current 18), eight in the Highlands (from 34), six in Mamose (from 25) and six in the New Guinea Islands (from 12). Mr Trawen said no changes were recommended to 28 open electorates during the commission's extensive travels nationwide last year to gauge views from the community.

Editorial on Problems Facing PNG Police Port Moresby The National (Internet Version-WWW) in English 21 Feb 06

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Unattributed Editorial: "Police need support"

Events in the Highlands have thrown into sharp relief the problems faced by many of our serving policemen and women. The once peaceful and picturesque town of Banz in the Western Highlands province has become the centre of a disgraceful attack upon the locally-based police force, with injuries to 10 of their number stationed there. While in their barracks, the police were attacked by a gang of local youths believed to have numbered more than 30. The behaviour of the attackers cannot be condoned under any circumstances. To have what appears to have been an organised rabble descend on a small contingent of police who are stationed in the town for the benefit of the surrounding population is simply unacceptable. Papua New Guinea has a well-established law and order system.

Problems arise when people seek to short-cut that system, and achieve their ends through violence. To the best of our knowledge, the incident erupted when police sought to extend a measure of protection to a man who was being chased by a mob from the local football ground, and who sought safety at the police station. There has been much that is negative written about the behaviour of the police throughout our country in recent years. Many reports of police brutality have reached our newsroom, and many of these have proven to be accurate. But there is another side to the coin. The Banz police contingent has reportedly been living in barracks that have been condemned as unfit for human habitation for the past six years. It is appropriate that provincial authorities should now explain to these men, their families, and the general public how and why that situation has been allowed to perpetuate itself for so long. Members of any disciplined force have a right to expect at least basic comforts when they are stationed in small towns. If they are seen to be forgotten by authorities, and if those authorities appear to regard them with contempt, then the message to the local population is perfectly clear.

Many will take their cue from that apparent contempt and neglect, and cease to hold any respect for the police, or their role in the community. This is far from being an isolated incident. Small contingents of police stationed in relatively isolated towns such as Banz, find themselves exposed to these threats on a regular basis. Similar reports have appeared in the past two or three weeks in The National. The public has every right to expect the police to behave appropriately towards them. And policemen and women have the same right to expect reasonable behaviour from the public. Provincial Police Commander Winni Henao, who is an officer with many years of experience, has said that failure of the local population to hand over the thugs who mounted the attack will result in him issuing orders for the closure of Banz police station, and the removal of the men and their families from the district. The National would support PPC Henao, if that proves to be the case. We have made our standpoint clear over many years. Remove public services and facilities from areas where the people by their actions show that they refuse to support and safeguard those services and the staff that operate them. At the same time, we ask a now familiar question. Where is the local Member of Parliament, and the Governor for the Western Highlands? The kind of problem experienced at Banz does not explode overnight. It is normally the result of a build-up of aggression on the part of a minority of the local people, one that is ready to erupt at the slightest provocation. If those politicians responsible for the Banz area had taken action earlier, it seems at least possible that the events of last weekend would not have occurred; possible too, that the appalling living conditions allegedly suffered by Banz police force for six years would long since have been eliminated. We cannot expect our police force to perform according to their rules and regulations when the larger society treats them with apathy or contempt. Immediate action must be taken to rectify this, and all other similar situations throughout the country.

Emperor Gold Mine to Invest US$15m in New Exploration Port Moresby Radio FM 100 in English 21 Feb 06

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Unattributed report: "Fiji's Emperor Gold Mine will invest US$15-million in a new program of gold exploration in PNG & Fiji "

Fiji's Emperor Gold Mine will invest US$15m in a new program of gold exploration in Papua New Guinea and Fiji. This was confirmed after a shareholder meeting in Sydney which approved Emperor's takeover of DRD Gold, owner of Tolukuma Mine and a 20-percent stake in Porgera. The deal sees DRD Gold become the major stakeholder in Emperor with Emperor becoming the largest gold mine listed on the Australian Stock Exchange. Managing Director Mark Woods says they'll be a new exploration program.

: As a result of this consolidation we're now able to focus on a forward book, building up our resources on the ground. We own 500-km in Fiji which is heavily under explored. In PNG we've been flying, air borne been looking at seismic. We've done all the ground work and now putting this together we pop out 10 really perspective targets.

POLYNESIA

Tonga Tongan Court Fines Former Noble $9780 Nuku'alofa Matangi Tonga WWW-Text in English 16 Feb 06

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Unattributed report: "Tongan Court Fines Former Noble $9780"

Siosifa Fatafehi Fuatakifolaha, the former holder of the noble title Veikune, was reprimanded and fined 20,000 pa'anga (US$9,780) this morning by the Chief Justice in the Nuku'alofa Supreme Court, after being found guilty by a jury on 25 January of the offence of attempting to evade customs import duties on 600 cartons of Bounty rum and for bribery of a customs officer. In passing his sentencing decision, Chief Justice Robin Webster fined Veikune only for bribery and stayed the conviction for the evasion of customs duty. He ordered him to pay all his fines by 16 May 2006 and a default in payment would mean an imprisonment term of one year at Hu'atolitoli Prison. The co-accused, 'Amini Tu'ivai, a lawyer, who was found by the jury guilty of customs duty evasion was also fined 20,000 pa'anga, to be paid before February 16, 2007, or face an imprisonment term of one year.

Chief Justice Webster said that Veikune was a first offender and one who had already suffered considerably from his conviction. "I take into account the effect of your conviction on your family and extended family, upon whom it has unfortunately to be said that you have brought great shame. That is shown by the loss already of your position as Speaker of the Legislative Assembly and a Noble's Representative and the prospective loss of your noble title and estates. I accept in the sense that you have been penalized before the Court passes sentence, though that may be an inevitable consequence of your conviction." The Chief Justice said that he had received the medical report on Veikune from Dr. Sione Talanoa Latu, which showed that following a heart attack and a triple coronary bypass in recent years; he was still regarded "as a high risk patient requiring regular monitoring." Therefore, it would not be appropriate to, "impose either an immediate or a suspended prison sentence in a Tongan prison. I shall therefore impose a fine of 20,000 pa'anga for the count of bribery."

In passing sentence on Tu'ivai, the Chief Justice said that the penalty appropriate to the gravity of this offence of evading Customs Law in Tonga would be between 50,000-100,000 pa'anga (US$24,451-$48,903). He said that he had also taken into account that Tu'ivai's future as a legal counsel was bound to be under consideration. He said that after considering Tu'ivai's earning capacity and existing assets of which were obviously not extensive in terms of income, he therefore fined him 20,000 pa'anga (US$9,780). "Of course a penalty is meant to hurt but I believe you may reasonably be expected to dispose some of your assets such as properties in New Zealand to pay if I give it a year to do so."

Chief Justice Webster told the offenders that a country such as Tonga where government has a limited source of revenue, "it is extremely important that the government should be able to collect all the revenue due under laws passed by Parliament. The actions of Veikune and Tu'ivai, in relation to this one container, aimed at depriving the Government and the people of Tonga of a significant amount of revenue - 300,000 pa'anga (US$146,709) - and because of the quantity involved, there can be no other inference that it was a commercial operation attempted for personal gain. I wish to add that I have known you both in connection with my work for several years now, so this comes as a shock and it is a sad day for me having to pass sentence on you both for such serious offences. But like the jury, I also took an oath when I became the Chief Justice, to perform truly and with impartiality my duties as a judge in accordance with the Constitution and the Laws of the Kingdom of Tonga and I must honour that oath and put aside acquaintance and act impartially in passing sentence," said Chief Justice Webster. He then ordered that the 600 cartons of Bounty Rum be forfeited and be disposed of as the Chief Commissioner of Revenue may direct in terms of section 217(2) of the Customs and Excise Act. The Crown Counsel for the Crown was Linda Simiki. Siosifa Tu'utafaiva represented Veikune, and William Clive Edwards for Tu'ivai.

Samoa MP in Samoa Calls for Police to be Armed Wellington Radio New Zealand International WWW-Text in English 19 Feb 06

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Unattributed report: "MP in Samoa Calls for Police to be Armed"

A Samoan MP and former police officer has called on the government to pass legislation allowing police officers to be armed. Patu Ativalu says he's concerned for the safety of officers attending the increasing number of drug raids that involve weapons. The Prime Minister, Tuilaepa Sailele, says once police officers are armed it would be too easy to pull the trigger. He has told parliament that arming police would be against biblical principles, and that the present system of using fa'asamoa while on duty was working well. The prime minister said legislation was being drawn up to address the issue of weapons, and to control guns being imported into the country.

Ex-PM Asked Me to Suppress Corruption Report, Says Samoa Party Head Wellington Radio New Zealand International WWW-Text in English 17 Feb 06

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Unattributed report: "Ex-PM Asked Me to Suppress Corruption Report, Says Samoa Party Head"

The leader of the Samoa Party, Su'a Rimoni Ah Chong has revealed that the late Prime Minister had asked him to suppress details of a report on public corruption. Tofilau Eti Alesana asked Su'a, then auditor general, to suppress the names of four ministers in the ruling Human Rights Protection Party implicated in the report. At the Samoa Party weekly press conference Su'a said Tofilau had told him he wanted to deal with the ministers himself. Su'a says he told Tofilau he could not do what he was asking and made it clear that he worked for the country. Su'a claims he was later sacked, but the Prime Minister Tuilaepa Sailele says Su'a walked out because the Cabinet turned down some of his demands.

According to Tuilaepa, this included post approval of money Su'a had wrongfully spent. Su'a denied this saying the money in question had been authorised and properly spent. He said if the problems highlighted in his report had been addressed, two former ministers would not be in jail now, and another would not have been killed. The public works minister Luagalau Levaula Kamu was assassinated outside a function for the ruling party in July 1999. Two of his fellow ministers were later found guilty of plotting his murder.

American Samoa US Asked to make it Easier for American Samoans to apply for Visas Wellington Radio New Zealand International WWW-Text in English 17 Feb 06

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Unattributed report: "US Asked to Make it Easier to Samoans to Get Visas"

American Samoa's Congressman Faleomavaega Eni Hunkin has asked for the help of the US Secretary of State Condoleezza Rice to make it easier for Samoan citizens to obtain visas into the United States. At present Samoan passport holders have to appear in person at the US consulate in Auckland in New Zealand for interviews and biometrics screening.

The congressman told Secretary Rice that this placed a hardship on applicants who had to pay US$1500 for the trip to New Zealand. He asked Dr Rice if the US embassy in Apia, which is fully equipped to secure the required documentation for visa applications, could be used instead. The congressman made the request on behalf of 20,000 American Samoan constituents who are married to citizens of Samoa. Faleomavaega personally made the request when Secretary Rice appeared yesterday before the International Relations Committee, to which the congressman belongs.

American Samoa's Congressman Calls for US Investigation into Drug Trafficking in the Pacific Wellington Radio New Zealand International WWW-Text in English 19 Feb 06

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Unattributed report: "American Samoa's Congressman Calls for US Investigation into Drug Trafficking"

American Samoa's Congressman, Faleomavaega Eni Hunkin, has asked the US Attorney General to conduct a full scale investigation into drug trafficking in the territory. The congressman says that over the last two decades, the drug trade in American Samoa has escalated from small-scale marijuana importation into a network that affects not only American Samoa but the whole South Pacific Region.

He said the drug trafficking network in the territory continues to flourish, largely due to poor customs enforcement on incoming cargo. According to Faleomavaega the rise in drug use has been associated with an increase of suicides and violent crimes. The congressman referred to drug trafficking in American Samoa as a severe problem that needs desperate attention.

Tuvalu Campaigner Calls for All the People of Tuvalu to Move to a Fiji Island Wellington Radio New Zealand International WWW-Text in English 19 Feb 06

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Unattributed report: "Campaigner Calls for All the People of Tuvalu to Move to Fiji Island"

An Australian campaigner is calling for all of Tuvalu's population to move to a Fijian island. Salinity and rising sea levels caused by climate change are expected to make Tuvalu uninhabitable within 50 years, leaving the 9,000-strong population with nowhere to live.

Scientist, Don Kennedy, who is Tuvaluan himself, says a move is need to ensure the nation's culture survives. Mr Kennedy, told a climate refugee forum in Melbourne that he is negotiating with Tuvalu's Prime Minister, Maatia Toafa, to move his people to the Fijian island of Kioa. The Fiji island is higher above sea level than Tuvalu, is owned by the Vaitupu people of the Tuvaluan group. He said a mass relocation would ensure the Tuvaluan language and culture is preserved instead of being scattered to the four corners of the earth.

PNG & BOUGAINVILLE

PNG: Western Highlands Locals Attack Police Barracks, Slash Policeman Port Moresby The National (Internet version-WWW) in English 20 Feb 06

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Report by James Apa Gumuno: "Locals attack police barracks, slash cop"

Policemen based in Banz, Western Highlands province, were attacked with knives by locals last week. One policeman is seriously injured after he sustained deep bush knife wounds to his elbows and right shoulder, while 10 others received bruises and cuts to their faces and other parts of their bodies. Fifteen policemen are based at the police station.

Provincial police commander Wini Henao yesterday said locals numbering more than 30 attacked the policemen while they were in their barracks last weekend. The policemen were attacked in front of their families after they tried to stop the locals from attacking a man, who had been chased from the rugby field and had run into the police station to take refuge. Mr Henao condemned the attack and issued an ultimatum to the locals to hand over the suspects involved within three days. Failing that, he would close the Banz police station at close of business today and transfer the 15 policemen and their families out. He said this would leave the people to deal with their own law and order problems. He said the attack showed that people no longer have respect for law enforcing agencies.

The attack comes only days after people in the Nebilyer district open fire on a police vehicle patrolling their section of the Okuk Highway. Mr Henao identified the seriously injured policeman as Constable Johnathan Kuma from Kudjip village in the North Waghi district. He said the policemen sacrificed their lives by living in a condemned barracks to serve the people, but if the people behaved like "animals", the station would be closed down. Mr Henao said the barracks was condemned as unfit for human habitation and ordered closed by the health authorities in 2000, but due to lack of funding to renovate the houses, the policemen and their families were allowed to live there and work. He said this is not the first time lives of his men were threatened, saying his policemen and their families were always living in fear because of continuous threats issued by the locals.

NCD Police Bust K100,000 Phone Card Racket Port Moresby The National (Internet version-WWW) in English 20 Feb 06

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Report by Clifford Faiparik: "NCD police bust phone card racket"

Police have busted a racket that deals in illegal selling and buying of telikads and pre-paid mobile phone cards in Port Moresby. Police swooped on the illegal venture, believed to have been going on for four months, last Friday. It is believed that the racket, which involved some Asian business houses, had fetched a total of over K100,000 for both the supplier and the buyers before it got busted with the help of the Crown Security Company.

Police raided a store at the Koki suburb last Friday, suspected to be an illegal buyer, and confiscated K1,550 worth of pre-paid mobile and Telikad cards. Police had earlier received information that cards were sold for K800 in cash on Tuesday. Police, however, could not raid other outlets because they had already sold the cards that they were given. Police have charged one Taugaro Namara, 21, from Gabagaba village in the Central province with stealing goods. Police also charged Lun Wan Mian, 46, from the Fujian province in China with buying stolen goods. Namara, a former employee of Nambawan Trophy Haus in Boroko, is out on a K300 bail and will appear before the Waigani Committal Court on 06 March. Lun, who is the manager of the shop, is also out on bail and will appear before the Waigani Committal Court today. Nambawan Trophy Haus managing director Allan Gui said they employed the suspect six months ago as their purchasing officer.

"For the past four months, he has been buying stocks of pre-paid and Telikad cards from the company after ordering it on behalf of the company from our licensed supplier at half price. He then resells them illegally at full price to numerous business houses in the city. These boxes of K50, K20, K10 and K5 have 250 cards in them. He does not have the license to buy them from the suppliers." Mr Gui said they discovered this illegal dealing on Wednesday when auditing their stocks and sales for the month of January. "We were surprised when obtaining various evidences in our stock transfer sheets that had figures changed with the correction fluid. Although it was changed on white paper, the carbon copy had the actual figures. We then questioned the suspect and he admitted his involvement in stealing these cards and reselling them to these outlets for the past four months. "We also discovered some batch of K50 Telikad cards in his pocket. We referred him to the police. "We have yet to audit the other four-month period. It will be over K100,000 worth of cards that had been sold," Mr Gui said.

Two Ethnic Groups Clash at Port Moresby's Koki Markets Port Moresby The National (Internet version-WWW) in English 20 Feb 06

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Unattributed report: "Several hurt in Koki clash"

Port Moresby's famed Koki market was a scene of running battles yesterday as a fight erupted between two ethnic groups. One person was hospitalised and many others received injuries in the clash between Highlanders and and Central province people. Properties worth an unspecified amount were also destroyed.

According to eye witnesses, a drunken brawl inside the Koki market turned nasty leading to a fight involving scores of people hurling missiles at each other. Bush knives were also used in the clash. One eye witness, speaking on condition of anonymity, said the clash involved two groups from the Southern Highland and the Wanigela Koki settlers of the Central province origin. He said a Wanigela man received serious knife wounds to his head and was rushed to the hospital while others sustained minor injuries from sticks and stones exchanged during the clash. He said the fight started among the Wanigelas initially but later, for some unknown reason, the Southern Highlanders got involved. He said the Wanigelas were stoned and chased into their Koki village but upon discovering that one of their numbers had sustained serious injuries to the head, the Wanigelas rallied and rushed back out, armed with whatever they could lay their hands on including bush knives, and destroyed properties including a snooker table, belonging to the Southern Highlanders.

Police were called to scene of the clash and with the help of community leaders, managed to get the situation under control.

Police Find War-Time Explosives and Ammunition in Morobe Village Port Moresby Post-Courier (Internet version WWW) Text in English 20 Feb 06

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Unattributed report: "Police find explosives"

A Police raid at a village in the Salamaua area of Morobe Province at the weekend resulted in the confiscation of war-time ammunition, explosive powder and home-made brew. The dawn raid on Sailus village near Salamaua on Saturday was at the request of local leaders who were concerned about the rise in criminal activities, especially the use of illegal firearms. It was also the result of the killing of a leather-back turtle last month by youths of the village. Six suspects were arrested and taken to Lae where they are in police custody. The turtle, named Labaks, was killed and eaten by youths from the village, causing an uproar in the conservation world. Labaks was best known in the turtle trekking work. It was among the leather-back turtles that were tagged for research purposes and its movements traced via satellite technology. It had been the "king-pin" for the scientists for the last six years.

When villagers involved in the conservation program demanded compensation for the dead turtle, Sailus villagers mobilised and fought them with guns. This prompted the leaders of Lababia to seek police assistance. Lababia councillor Giling Bugang said research activities to preserve and conserve the leather-back turtle has been on-going for two decades. He said the turtle that was killed and eaten by the Sailus villagers was one of the biggest and had been trekked by radio for six years. Police confiscated two 25-litre drums of home-made beer, 120 rounds of World War II 7.62mm live ammunition and explosive powder. The ammunition was being used in both factory-made and home-made guns. Labaks was the biggest of the 25 turtles under surveillance. She was 180cm long and 150cm wide. Labaks had travelled around the world and was in Lababia to lay eggs when it was killed and eaten. Local scientists kept track of it until they found the remains of the slaughtered turtle at Sailus village. Three members of Mobile Squad 15 from Bulolo assisted police officers from Nadzab, Chivasing and Erap police stations to carry out the raid.

US Military to Help PNGDF to Set Up Anti-AIDS Program Port Moresby Post-Courier (Internet version WWW) Text in English 20 Feb 06

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Unattributed report: "US military to set up anti-AIDS program"

The United States Defence Department is helping the Papua New Guinea Defence Force to respond to the growing HIV/AIDS epidemic within the force. Two US military officials will be in Port Moresby this week to begin the process of setting up a HIV/AIDS comprehensive program in all the barracks in the country. This week's program will centre mainly in Port Moresby and is part of an agreement signed by the US Defence Department and PNG Defence Force last year in which the US military had made a commitment to help set up the HIV/AIDS program at a cost of $US360,000 (K1.15 million) over a two-year period.

Dr Scott Giberson, medical director and senior program officer with the Centre of Excellence in the US Pacific Command in Hawaii, arrived in Port Moresby yesterday. Another colleague will arrive later in the week. Dr Gilberson was met on arrival at Jackson's Airport by PNGDF director for Health Services Lieutenant-Colonel Dr Gideon Kendino and US embassy representative and political and economic officer Jonathan Ward. Dr Giberson said the US Defence Department had a two-year agreement with PNGDF to collaborate on a prevention program, adding it was the second of three trips he would be making as a result of that commitment the department had made with PNGDF.

The program will comprise four areas such as policy development; capacity building; laboratory equipment and communication equipment. "We are trying to build capacity in the main barracks within the Defence Force. The real success of the program is the fact that PNGDF has made a commitment to improve the HIV/AIDS situation and I am here to work with Lt Simin and Lt Kendino," he said on arrival yesterday. He said the US Defence Department had similar bilateral programs with eight other different countries in the Asia-Pacific and had a regional office in Bangkok, Thailand. "The US Defence Department is fortunate that our prevalence rate is still low," he said. "There is anecdotal evidence that the prevalence rate within PNGDF is increasing and we are here to mitigate that," he said. Lt-Col Kendino said the equipment to be set up for the HIV/AIDS program would include voluntary counselling and testing sites in all military sites, fully equipped with computer, fans, photocopiers and the internet service. This is also the first phase of the implementation process of the agreement.

Legal Tangle Over Appointment of Attorney-General Port Moresby Post-Courier (Internet version WWW) Text in English 20 Feb 06

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Unattributed report: "Legal tangle over A-G post"

A National Executive Council decision on a submission over the Attorney-General's post may now be the subject of a court proceeding. Public Service Minister Sinai Brown made the submission to the NEC on 15 August last year recommending former Solicitor-General John Kawi be considered for the post. This was revealed by lawyer representing the minister Dick Korowa on Friday after the Waigani National Court had asked parties involved in a court proceeding if they were ready to proceed. Mr Korowa said he was not ready because the response from the NEC would determine the next course of action for his client. He told the court he was not sure if the NEC had sighted the submission and reached a decision, saying he would be ready by Wednesday.

The proceeding, initiated by Mr Kawi, stems from a court order he obtained on 15 December restraining the minister and the commission from submitting a shortlist of candidates to the NEC, pending the determination of the judicial review. Mr Kawi wants the court to review the PSC's decision to exclude him from a shortlist of candidates. On Friday, Mr Kawi's lawyer Bill Nouairi, although ready to proceed, arrived about 10 minutes after Deputy Chief Justice Sir Salamo Injia adjourned the matter for 09 March. Mr Nouairi told the court he had nearly lost his vehicle to thugs outside his Konedobu office resulting in his late arrival before the court.

Police Commissioner Says Mobile Squads Will Not Be Disbanded Port Moresby Post-Courier (Internet version WWW) Text in English 20 Feb 06

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Unattributed report: "Mobile squads will remain, says Inguba"

THE Royal Papua New Guinea Constabulary will not disband its mobile squad, says Police Commissioner Sam Inguba. Mr Inguba said there was no intention of disbanding any of the mobile squads as they served a useful purpose in police operations. In relation to the mobile squad standoff at the Bomana Police College, Mr Inguba said the members singled out as instigators of the "unfortunate" incident would be removed and punished.

"A full and thorough investigation was carried out into the incident. Members identified as responsible for the unlawful action would be dealt with under the provisions laid down in the Police Force Act," Mr Inguba said. Mr Inguba was responding to concerns raised by former prime minister Sir Julius Chan. Sir Julius had written to Mr Inguba urging him to seriously consider the security implications of disbanding the police mobile squads before the next general elections. "I am sure Sir Julius will agree that it is unbecoming of members of a disciplined organisation, especially the police force, to take the unlawful actions as they did, including assaulting senior officers of the constabulary,," he said. "Their behaviour bordered on mutiny and will not be tolerated under any circumstances. "Those that took part in the incident will face the full brunt of the law."

AGL Seals Deal to Become Partner in PNG Gas Project Port Moresby Post-Courier (Internet version WWW) Text in English 20 Feb 06

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Unattributed report: "AGL seals deal"

Australian Gas Light Company is now a partner in the PNG Gas Project, petroleum development licence (PDL-2) and PDL -4 joint ventures. This follows the successful completion of sale of assets to AGL by Oil Search Limited for $US427 million (K1.32 billion) on Friday. Oil Search received an initial payment of $US395.6 million (K1372 million) on Friday. The balance will be received progressively at the date of the gas project sanction and gas project financial close. Under the pricing formula, the total sale price has been determined at around $US427 million (K1372 million). This figure is higher than the indicative price of $US400 million (K1286 million) when the transaction was announced last month primarily due to favourable oil price movements during the pricing period.

The State received an added boost to its coffers as AGL paid K19,845,264 to the Internal Revenue Commission as stamp duty. AGL general manager gas development Mike Moraza said on Friday the gas project would be a foundation for the company in the country. He said AGL had not ruled out looking at other downstream processing options in-country in the future. Oil Search managing director Peter Botten said the stability seen in Government and the good management of fiscal regime had created an economic climate that allowed for this transaction to take place. He said in order to protect the company from a fall in oil price during the pricing period, a hedging program which provided full downside oil price protection while not limiting the upside was put in place on the date the AGL sale was executed at a total cost to Oil Search of $US3.4 million (K10.93 million).

Oil Search interest in PNG oil fields and the PNG Gas Project is now Kutubu (PDL-2) 60 per cent, Gobe main (PDL -4) 10 per cent, Southeast Gobe unit (PDL-3/4) 49.4 per cent, South east Mananda (PDL-2 72.3 per cent and PNG Gas Project 37.2 per cent. "AGL is entering the PNG Gas Project at a very exiting time and we welcome AGL's future involvement in both the gas project and the PDL-2 and PDL -4 joint ventures," Mr Botten said. "The cash raised by the sale will be used to fund a very active program of exploration and development drilling and early works expenditure on the PNG Gas Project."

Editorial - Homebrew, Marijuana and HIV/AIDS = Disaster! Port Moresby Post-Courier (Internet version WWW) Text in English 20 Feb 06

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Unattributed Editorial: "Homebrew, marijuana and HIV/AIDS = Disaster!"

IT'S bad enough that we have to put up with the unwanted world epidemic of HIV/AIDS, a disease that seems almost unstoppable. Yet a less obtrusive attack is being made on our society from within. This is the cult of home-made alcohol, known generally as "homebrew" or "steam". Couple it with the easy access to locally grown marijuana and we are staring at a disaster for the current generation of young people. Both home-grown products are strong, cheaply produced and easily available in villages and settlements. We are seeing devastating results in many parts of the country. People are combining the two drugs and doing terrible things. The report on our front page today is just a sample of what is happening in less obvious places around the country every day. A mother bashed and her seven-month-old baby badly hurt, all because a man had a "steam" drinking bender. In the formerly highly respectable outpost of Salamaua, in the Morobe Province, news comes of a raid at dawn which netted home-made illegal alcohol, wartime ammunition and explosives powder.

The Salamaua activities were also linked to the recent killing of an internationally known, protected leatherback turtle, which had been tracked by satellite for six years for environmental studies. We know young people in villages all over the nation are getting caught up in the homebrew "industry". If only law-abiding, respectable cottage industries were as profitable, we would have thriving local communities. Unfortunately, homebrew combines the attractions of undercutting legal alcohol and of being available right in the village. Much more unfortunately, the potent homebrew does terrible things to those who drink it. Village concepts of respect to elders, to in-laws, to women and children, are fast disappearing out the window. And what can be done about it? Police are mostly pinned down in provincial capitals. Occasional raids seem to do little to persuade the bootleggers from producing their "jungle juice". Youths are lounging around the village and looking for marijuana and grog, instead of following past daily practices of making gardens and catching wild animals or fish for the nightly meal. Unemployed young people in settlements, with little hope of finding a regular job, are blotting out their minds with "steam" and marijuana. National and provincial leaders are seen to be doing little or nothing to stem the tide of grog and its destructive effects. With HIV/AIDS on one side and the twin temptations of homebrew and marijuana on the other side, what kind of a future are we looking at for PNG?

SOLOMON ISLANDS

Solomon Islands Caretaker PM Reshuffles Cabinet Wellington Radio New Zealand International WWW-Text in English 17 Feb 06

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Unattributed report: "Solomon Islands Caretaker PM Reshuffles Cabinet"

The Solomon Islands caretaker prime minister, Sir Allan Kemakeza has reshuffled six of his cabinet ministers.

- Sir Allan has moved Basil Manelegua to the Reconciliation portfolio.

- Augustine Taneko becomes Telecoms minister.

- James Tora now becomes Energy minister.

- Simeon Bouro becomes Minister of Police.

- The last two changes see the Fisheries Minister, Mathias Taro and the Minister of Forestry, David Holosivi swap portfolios.

The Prime Minister says all the changes are to ensure the ministers' capabilities and capacities are optimally utilised. A general election is set to be held in early April.

Former Government Minister Alex Bartlett Facing Criminal Charges Released on Bail Wellington Radio New Zealand International WWW-Text in English 17 Feb 06

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Unattributed report: "Former Solomon Islands Government Minister Finally Released on Bail on Fourth Application"

A former Solomon Islands cabinet minister facing a number of serious criminal charges has been granted bail for the first time on the fourth application. Alex Bartlett, a former foreign and agriculture minister, was arrested in September 2004 on a raft of charges including arson, forgery, possession of firearms, and receiving stolen property. The charges relate to the era of ethnic tension in the Solomons during which Mr Bartlett was closely linked the Malaitan Eagle Force.

Our Honiara correspondent, Dorothy Wickham, says Justice Frank Kabui felt Mr Bartlett had been detained long enough. "He based most of his judgement on Mr Bartlett's health. There were very strong recommendations made by the prison doctor that Mr Bartlett was unwell, that he has high blood pressure and there was a threat of a stroke or heart attack. And the three previous judgements had been based on the fact that he was still a risk and that he would interfere with witnesses. Justice Kabui said that the circumstances had changed. All the cases now have been prepared in such a way that all the statements and everything had been done for his committal. So he felt that it wouldn't have any effect on his release." Mr Bartlett's trial has been set down for September.

Electoral Commission Chairman Called On To Resign Honiara Solomon Islands Broadcasting Corporation WWW-Text in English 20 Feb 06

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Unattributed report:

A former chief Electoral Officer, John Babalu has called on the Chairman of the Electoral Commission Sir Peter Kenilorea to resign. Mr Babalu says Sir Peter cannot be seen by other parties as a neutral person by being the President of the United Party which launched its manifesto last Friday. He says being the President of a political party puts into question Sir Peter's neutrality as the Chairman of the Electoral Commission which should be held by a person not affiliated to any political party. Mr Babalu says the Governor-General should intervene and choose a more neutral person than those who hold interests in political parties. He says the Chairman of the Electoral Commission being the President of a political party breaches the constitution.

But Sir Peter says his position as President of United Party is legally within provision of the constitution which allows for free association. Sir Peter says he is fully aware that section 49 of the constitution does not allow him to contest the General Elections while in his capacity as Speaker of Parliament and at the same time Chairman of the Electoral Commission. Sir Peter says since he does not intend to contest the General Elections, he is not obliged to resign from his position as Speaker of Parliament and Chairman of the Electoral commission.

Media Association of Solomon Islands (MASI) Elects New Office Bearers Honiara Solomon Islands Broadcasting Corporation WWW-Text in English 20 Feb 06

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Unattributed report:

The Media association of Solomon Islands, MASI has elected a new executive. The election of Solomon Star publisher John Lamani as the new President has been described as a fitting one as MASI prepares to host regional media representatives in Honiara next year. Walter Nalagu reports:

"John Lamani's unopposed nomination and subsequent election to lead the new executive is a clear indication of the confidence in his leadership. Others in the new MASI executive include Julian Maka'a of SIBC as vice president, the manageress of National Express Pamela Zoleveke as secretary and PFNet news editor Nina Tuhaika the treasurer. Two ordinary members are SIBC's manager broadcast and operations David Palapu and program director of Christian FM Tina Lemazi. Among others, one of the main tasks of the new MASI executive is to set in motion, arrangements to host the convention of the Pacific Islands News Association PINA in Honiara next year. The convention is expected to coincide with the 25th anniversary of Solomon Star in May next year. The new President, Mr Lamani appeals for hard work and co-operation amongst MASI members and the executive in preparation for next year's PINA convention in Honiara".

Russellese Called on to Work Together Honiara Solomon Islands Broadcasting Corporation WWW-Text in English 20 Feb 06

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Unattributed report:

The provincial member for Lavukal ward of Russell Islands, Mathew Sale has described comments by the Secretary of Pavuvu Resettlement Committee, Robert Lifa as confusing. Robert Lifa had praised the work done so far in resettling indigenous Russellese on the logged out land on Pavuvu but Mr Sale says he is concerned about the transfer of land titles to original land owners. Mr Sale says of all the plots allotted to indigenous landowners, none of the titles have been returned to the land owners. He says this is concern he raises occasionally with the government. Meanwhile, another Russellese Simon Geatavem had cautioned any developer to follow procedures before establishing any project in the Russells. He says applications must be approved by the Lavuka trust board and not by individuals who may cause disputes in the future.

Mr Geatavem says the Lavukal trust board was established to make sure developments are procedurally approved and landowners are satisfied about the benefits they may be getting. But a settler in the Russells, Eddie Grant Suku is calling on Russell Islanders to sort out their differences. He says the continuing argument over land and development is causing uneasiness among other people residing in the area. Mr Suku says the Lavukal Trust Board and the individual landowners and chiefs must be seen to be working together to attract investors in the area.

Settler Warns against Logging after Landowners Negotiate Logging Rights Honiara Solomon Star (Internet Version - WWW) in English 20 Feb 06

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Unattributed report: "Settler warns landowners against logging"

Russell Islands' landowners were reportedly negotiating with a logging company to operate on their land. Details of the negotiations were sketchy but an insider claimed that landowners have given the green light for the operation to kick start. Whilst negotiation is in progress, a naturalised Russell Islander cautioned landowners to be cautious not to repeat those problems encountered during the Pavuvu Island operation. Eddie Grant Suku warned that allowing another logging company to operate would trigger already existing and unresolved problems. "These problems relating to the Pavuvu operation by the Mavingbros Company should be resolved before a new move is considered. For example, there are unfulfilled promises and the promised secondary school, clinic and road and wharf infrastructures are still pending," he said.

Even the royalty to landowners, he said, is yet to be disbursed. "It's futile inviting another logging company when the initial problems have not been resolved." He appeals to concerned landowners not to create further problems for the people but embark on proper consultations among landowning groups. There are already land disputes, not to mention the row within the Russell Islands Plantation Estate Limited, he said. "If another problem is created, our future generation will suffer. We need to scale down these problems for the benefit of those who are coming after us." Mr Suku added that the landowners should be mindful about their motive of inviting a company to undertake commercial activities in Russell Islands. As a person who marries and resides in Russell, Mr Suku said he has concern for the people socially and politically. "As settlers, we respect the tradition and culture of Russell Islanders. We are part of this big family. Thus, we need to share our concerns for the benefit of our families," he said.

PAP Launches Fundraising Drive Honiara Solomon Islands Broadcasting Corporation WWW-Text in English 20 Feb 06

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Unattributed report:

Parliamentary Wing leader of the Peoples Alliance Party, Prime Minister, Sir Allan Kemakeza appeals to all party members and supporters to help finance the party contest in this year's general election. Sir Allan made the appeal yesterday at the first of PAP's fundraising drive in Honiara. He says the party needs to raise enough money to finance its official candidates contesting in the general elections.

Sir Allan said that since PAP was formed in the early 1980s, it has been a thriving force in Solomon Islands politics. He says whilst some people joined and left the party to form new political parties, the loyalists remained solid. Sir Allan praised party loyalists whose solidarity helped him lead the last government for a full term of four years in office. He says the party motto then was vote the Alliance Party to rescue the nation. He says they have truly lived by their word by rescuing Solomon Islands recover through restoration of law and order and peace. He says the new motto is vote PAP to rebuild the nation. The Peoples Alliance Party expects to hold three more fundraising events before the general elections which are expected in early April.

Civil Society Network Discuss Logging, Casino Licence Honiara Solomon Star (Internet Version - WWW) in English 20 Feb 06

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Unattributed report: "Casino, logging top discussion"

Casino and logging topped the agenda of the Civil Society Network Meeting in Honiara recently. The network members objected the government's decision to issue the third casino licence and are concerned with the numerous operations through out the country. As far as the Casino issue is concerned, the Network Coordinator Andrew Gegeu said the society, which comprises of majority of Solomon Islands population, objected the government decision to issue the third casino licence. He said the society believes there are already two existing casinos and the government have heard and received reports on their - social and domestic problems.

"Addiction of members who regularly visit these operations becomes so obvious and poses threat to normal family and community living. There is no established institution to help rehabilitate effect of addiction in various aspects of social life like alcohol, gambling, prostitution and harassment. These social problems are elevating in relation to how long the operation last, how many casino we have and how many yet to issue license," the network members said. The members resolved that a petition be sent to the Prime Minister's Office to divert government attention not to issue a third license.

With regards to logging, the society congratulated the new Commissioner of Forests for his efforts to control logging activities. But at the same time, they questioned why there is no strategies made by Commissioner of Forest on how to address the issue of logging. Gueora Youth coordinator reported the threat of such practices (logging) to Lungga and Kongulai water sources on Guadalcanal. It is understood that in the Logging Act, any logging activities are prohibited near a water source. The members insisted the government strengthen measures to monitor logging operations in due respect to its Civil Society. Additionally, suggestions have been put forward to educate people of the consequences of logging practices. It was made clear during the meeting that majority of the population are still to be reached and educated on how to effectively manage their limited resources and harvest them in a sustainable manner. Political leaders were also asked to be mindful of their decisions with regards to exploitation of land resources. Other issues discussed are the World Heritage project on Rennell Island, disruptions to water and electricity supplies, the tailing dam at the Gold Ridge mine site, over prices of goods in shops, woman candidate in parliament, gross spread of Chinatown and Rainbow Youth Project at Lawson Tama.

Global Cooperation Key to Fighting Financial Crime in Solomons Honiara Solomon Star (Internet Version - WWW) in English 20 Feb 06

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Unattributed report: "Cooperation needed to rid financial crime: Ha'apio"

A Financial Analyst says cooperation with the global community is important to rid Solomon Islands from financial crime. Michael Ha'apio from the Financial Intelligence Unit within the Central Bank of Solomon Islands (CBSI) said one of the emerging issues today has been the rising and increasingly complex nature of money laundering and financing of terrorism. "Cross border cooperation is the only way forward for combating this transnational financial crime. Hence, it is very important we work together with global communities to rid Solomon Islands from this financial crime," he said.

Mr Ha'apio said the Financial Intelligence Unit (FIU) will be conducting a two-day workshop on Anti-Money Laundering and Combating the Financing of Terrorism in Honiara on 22-23 February. Among others, the objective of the workshop is to educate participants about money laundering, its trend, regulatory framework and the role and functions of FIU in combating money laundering and other international financial crime. Participants from various organisations such as the commercial banks, financial institutions, immigration, departments of finance, forestry and foreign will attend the workshop. Money laundering is a global issue of concern because it provides opportunities and incentives to perpetrators of crime and corruption. A number of Pacific Islands states have been targeted by segments of international community for alleged vulnerability to money laundering.

The caretaker Minister for Police, Justice and National Security, Augustine Taneko, will open the workshop in Honiara. Various speakers have been invited to make presentations on different topics relating to money laundering. Pacific Adviser from the Australian Attorney-General's Department, Paul Whitaker, will present introduction to money laundering and terrorist financing. Asia Pacific Group on Money Laundering Bronwyn Somerville will talk on international standards; other speakers will include the Attorney-General of Solomon Islands, Primo Afeau, and Andrew Milford from Pacific Financial Technical Assistance Centre (PFTAC).

FIJI

Monitor Group Says Fiji News Media Marginalising Women Wellington Radio New Zealand International WWW-Text in English 19 Feb 06

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Unattributed report: "Monitor Group Says Fiji News Media Marginalising Women"

A media monitor group in Fiji says only one in five people featuring in national newspapers and news broadcasts is a woman, and too often women are portrayed as a victim stereotype. Fiji Media Watch surveyed 94 news items from both print and broadcast media. A spokesperson for one of the joint survey-takers, Sharon Bhagwan-Rolls, said when the media type-casts women as victims, it becomes hard to engage with them as decision makers. But the report said that contrary to global trends, Fiji women appeared to be at the forefront of hard news journalism and were not solely assigned softer stories such as celebrity news.

Repeal of the Liquor Act receives mixed reactions Suva Fiji Times text in English 18 Feb 06

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Unattributed report: "Law change no big deal"

A Bill to repeal the Liquor Act has received mixed reactions, with some questioning how effective the legislation will be. Foster's Group Pacific Limited marketing manager, Joe Rodan said while his company supported any decision made by the Government, it could not yet be determined how effective the enforcement would be. "With marijuana, it is still available and you can get it in most places in Fiji; so as far as alcohol is concerned, people will still consume liquor because it is legal after all," Mr Rodan said. "I doubt it will have a major impact on sales. I don't know how effective the act will be but only time will tell."

A Bill to repeal the Liquor Act (Cap.192) and to make provision for the control of the sale, supply and consumption of liquor, and for related matters (Bill No.19/2005) was tabled in Parliament on Thursday. When enacted, the Bill will repeal and replace the existing Liquor Act. One clause of the Bill proposes to make it illegal for people under 21 years of age to buy or drink alcohol in a public place. A 20-year-old tertiary student, Akanisi Biumaiwai, said if passed, the Act would be of no use, as those under the age of 21 would still find a way to drink. "Some have been drinking since they were 18 and this won't be able to stop them. "I'm sure there will still be a black market around where kids can buy liquor," she said.

Military defends its honour over Audit complaints Suva Daily Post text in English 18 Feb 06

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Unattributed report: "Military defends its honour"

The military defended itself against criticism that it had not revealed all to the Auditor-General's team looking through their books. Military spokesman Lieutenant-Colonel Orisi Rabukuwaqa said the military had been fully accommodating with the Office of the Auditor-General (OAG) office when they visited the Queen Elizabeth Barracks (QEB) to review all its accounts from early this year in accordance with the Supreme Court's decision.

"The team spent three months in QEB and to the best of our knowledge, everything they had requested had been presented to them," he said. "If they had not received everything in that time one would have to question the necessity of spending three months and griping about it after the fact as it were." Lt-Col Rabukuwaqa said the military had written to the OAG questioning what information it withheld during their stay in QEB last year since the media reports on the OAG and Fiji Peacekeepers Association was highlighted again.' He said the military's finance section had fully cooperated in the preparation of the required accounts and were only too willing to provide further information if required. On the issues raised by the Association on the allocation of funds, Lt-Col Rabukawaqa said they were non-issues as the funds had been provided by the members of the regular force to cater for regular activities.

Fijians top list of infant mortality - deaths mainly due to ignorance Suva Fiji Sun in English 18 Feb 06

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Unattributed report: "Fijians top list of infant deaths"

Ignorance to blame as 236 babies die - Of the 338 infant deaths last year, 236 or nearly 70 per cent were indigenous Fijians. And the main cause is ignorance. Ignorance among Fijians towards illness is the main factor that contributes to death. This was a revelation made by the Ministry of Health after queries were raised about Fijians topping the infant death rates. The adviser for family health, Dr Josaia Samuela, said if Fijians could change this attitude towards health issues, there would be a huge reduction in the infant death rate. An annual report by the Ministry of Health stated that out of 338 infant deaths, 236 were Fijians. It also stated certain conditions in the perinatal period as the main cause of infant deaths. Dr Samuela said this was due to health care service delivery.

"A lot of mothers attend one antenatal clinic and that is at the Colonial War Memorial Hospital. Sometimes the doctors and nurses don't have enough time to educate the mothers on how to take care of themselves before and after giving birth," he said. The other factor, he said, was culture. "It has become somewhat of a norm for Fijians to ignore illness when it's at its early stages. When things get serious, then they decide to go to the hospital and sometimes it is too late," he said. He said the Ministry had adopted a programme, the Integrated Management of Childhood Illness, in 2004 to assist in curbing the increase in infant death rates. He said sometimes mothers suffered from certain health conditions that were unknown to health authorities and this often affected the unborn child thus causing death during the perinatal period. He advised all mothers who have certain medical conditions to inform the doctors or nurses during their clinic appointments.

Government has no intention of legalising abortion (RU486) Suva Fiji Sunday Times in English 19 Feb 06

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Unattributed report: "No to abortion: State"

The Government has no intention of legalising abortion. The comment was made by the Minister of Health Solomone Naivalu in light of proposals for abortion pills to be made available over the counter in a neighbouring country. "Abortion is still illegal in Fiji," Mr Naivalu said. The Australian newspaper website said the Australian parliament for the past weeks has had heated debate over a proposal for women in Australia to have access to abortion bills over the counter. The website stated that in the final day of the debate the Prime Minister, John Howard confirmed his opposition to the bill, saying he believed parliament should retain scrutiny of "difficult decisions". There are talks to make the abortion pill RU 486 available in Australia.

Speaking on local travellers getting the tablets for their own use or for other people, Mr Naivalu said there was no regulation against it because people get the tablets for their own medical use. He said this applied to other medication that locals can get from other countries. President of the Fiji College of General Practitioner Doctor Khan Abdul Wahid said people should always get a prescription from the doctor if they needed abortion pills. "All abortion pills have side effects and to be on the safe side it is always safe to get a doctor's prescription before taking them," Dr Wahid said. He said it would still be wise to get a doctor's prescription if such pills are to be sold over the counter locally. Meanwhile, the Fiji Nursing Association and the Fiji Women's Crisis Centre have called for more educational awareness on values.

Editorial - We Have to Do More to Protect Our Young (RU486) Suva Fiji Sunday Times in English 19 Feb 06

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Unattributed Editorial: "Protecting our young"

The possibility that Fiji citizens may have unlimited access to abortion pills in Australia is a scary notion that could lead to an unending moral and religious debate in our country. This week the Federal Parliament in Australia voted to lift a ban on the abortion pill, named RU486. The MPs also voted to remove Health Minister Tony Abbott's veto on this controversial matter. They have now decided to refer the matter to a bunch of scientists, who will ultimately decide when and what form of abortion pills will be available over the counter in Australia. When the vote was passed, it was hailed as a victory for all women but mourned as a loss of life by others. The debate in the Federal Parliament and the ensuing reactions were emotional and fierce. One reaction that echoed through the halls of Parliament was: "Women could die but it's worth the risk."

Another by Defence Minister, a former GP, Brendan Nelson was: "I have looked after and cared for women who have had terminations . . . with perhaps a few exceptions, there is not a woman who has had a termination of pregnancy who is not emotionally affected by it." The abortion pill could cost as little as A$16 each and could be available by the end of the year. Already several Australian drug companies have expressed an interest in importing them. Once this is available on shelves in pharmacies around Australia, there's no denying the easy access Fiji citizens will have to abortion pill RU486. Many of us travel regularly to Australia for business and pleasure. We also have many single mothers and unwanted pregnancies. The baby found in the USP toilet this week is a fine example of that. It only takes a few unscrupulous people to feed on the fear and insecurities of our young people before this drug is sold readily on the black market. Although it will be illegal, just like abortions, it will be on hand when needed. The Government needs to protect our young people now. The dangers of using the drug without medical supervision are bad enough. Let's not make matters any worse by letting people exploit our legal loopholes and our closed societies by flaunting this drug in Fiji.

Three Ghanaians, Without Return Tickets, Deported Suva Fiji Sun in English 18 Feb 06

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Unattributed report: "'Aliens' finally leave country"

The three Ghanaians who were said to have entered the country with fake passports flew out yesterday morning for Accra. Director of Immigration Josefa Ravatudei said the three were not found with fake passports but were rather without return tickets after they arrived into the country in late January.

"They arrived in the country with proper passports and not faked as alleged. They arrived with no return ticket which was the fault of the airline," he said. The three were detained by the Immigration Department after they were found to have entered the country with no return tickets. They were kept at the Kennedy Hotel in Nadi where they had escaped twice and were later caught and detained awaiting deportation. The fake passport claims by police sparked outrage against the Immigration Department for its laxity in allowing the three to escape while they were in detention. The Fiji Labour Party had called for an investigation to determine how officials had allowed the three to escape twice from custody and had been left unguarded.

'Neglected' Western Division Fijian Parties Will Support Labour OSB Report in English 20 Feb 06

Compilation from two unattributed items "Western Fijian parties support Labour" from the Suva Sunday Post in English 19 Feb 06 and "We have been neglected: Senator" from the Suva Sunday Sun in English 19 Feb 06

None of the Fijian political parties in Western Division will be part of the grand Fijian coalition for the forthcoming general elections. . The coalition of Fijian parties is believed to have met in Suva yesterday and according to Fiji Labour Party deputy leader Poseci Bune all this is to ensure that the FLP doesn't get back to power in the next general elections this year. "But I am glad to tell you that no western based Fijian party will be among them which is a good sign," Mr Bune revealed. He said the Fijian parties in Western Division were wholeheartedly supporting Labour Party in its quest to form the new government. Party of National Unity general secretary Senator Ponipate Lesavua said during the FLP rally in Nadi yesterday that the SDL Government had practised discriminatory policies against the people of the Ba Province. Mr Lesavua stressed that none of the SDL MP's from the Ba Province hold full flesh ministerial posts in the 'government. "When the People's Coalition Government-was in power, we had three ministers who came from the Ba Province "and despite being the core of Fiji's economy there has been no respect shown to the province by this current government," he added.

Party of National Unity general secretary, Senator Ponipate Lesavua said the people in the whole Ba province have been neglected for far too long by the ruling government and they will never stand by and see their people suffer. "We have not had any fair share of the cake, the Ba province is the economical power base of Fiji with the sugar industry, where they have the goldmine and where landowners own 80 per cent of ALTA land but we are still forgotten from the beginning until today," said Mr Lesavua. He said the Ba province was not given any ministerial post in the past election, five years ago, while in 1999 the FLP government gave them three fully-fledged ministerial posts.

"The Ba province was a party initially formed by the Ba Provincial Council so that the people of Ba could also have a say in parliament. The chairman of the Council at the time was the present President, Ratu Josefa Iloilo," said Mr Lesavua. He said the current SDL government made continuous statements that it championed the indigenous Fijians, but until today, the Ba Province is still forgotten. "I wonder how many people in the Ba province have been assisted by the blueprint, which is in other words operated by the Fiji Development Bank. They have criteria to follow but this has never assisted the grassroots people who are still living in poverty," he said.

Seasonal Worker schemes open to agent abuse OSB Report in English 20 Feb 06

Compilation from two unattributed items: "An Economic Issue Now Open to Abuse" from Fiji TV One text in English 17 Feb 06 and "Agent has okay for NZ jobs" from the Fiji Times text in English 18 Feb 06

NEWSCASTER: The Labour Ministry has asked police to investigate local agents promising seasonal employment overseas for fruit pickers. And the continued abuse by private agents of work schemes overseas could affect ongoing talks with New Zealand and Australia to revive potential seasonal employment. It's become an economic issue now open to abuse. Police have been roped in by the ministry to look into this operation after being told by New Zealand Immigration that no such scheme exists. But its not all bad news Foreign Affairs says there's still a glimmer of hope although far from final. Foreign Affairs are also pushing hard the economic argument of the importance of seasonal overseas work schemes in terms of remittances. This in turn has led to abuse Foreign Affairs assuring their long drawn out negotiations could soon bear fruit.

A Local travel agent arranging seasonal work in New Zealand for a fee says it has received confirmation for employment from companies there. Pooz Travel World Ltd consultant Manor Sami said the jobs on offer were not for fruit picking but for farm workers, of which there was a shortage in New Zealand.

"Now we have some confirmation on employment," Mr Sami said. "We have the company contracts to further process the visa applications." Mr Sami said this was the first time the company had undertaken such a task and like any company, it needed to make a profit. We don't charge for nothing. "We're doing everything at our own expense. "If anything goes wrong we return the money," he said. He said they were willing to refund the money to those who thought they were not genuine because they had no obligations to keep it. He said this principle applied to everyone who had put their applications to the company. "As a travel agent we know all the policies of Immigration to arrange for work visas. Whatever we do will be done in the legal process and within the boundaries of the law," he said.

However, Mr Sami said he was unable to release neither the number of contracts the company had received nor the number of applications to be processed, except that they were in the hundreds. Mr Sami said only one person had complained from the hundreds who had lodged their applications with the company. "People can judge from that," he said.

Poscei Bune alleges SDL 'buying' votes with borrowed money Suva Sunday Post in English 19 Feb 06

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Unattributed report: "'Watch your mouth'"

Poseci Bune should watch his mouth, the ruling Soqosoqo Duavata ni Lewenivanua warned yesterday. Its campaign director, Jale Baba issued the warning after Mr Bune publicly alleged that Government had borrowed a large sum of money from a profitable Fijian financial institution to buy the support of the 14 provinces, towards the controversial Reconciliation, Tolerance and Unity Bill. Speaking at a rally in Nadi yesterday, Mr Bune alleged that after the proposed bill suffered widespread rejection from all quarters of the society, the Laisenia Qarase-led Government "bought the provinces to endorse the reconciliation Bill".

Mr Baba slammed Mr Bune's comments last night saying he had better be prepared to face legal action. The former national director of the party said Mr Bune's allegations were baseless and were made only to malign the Prime Minister and his Government. "Surely Bune is now speaking out of the same agenda as his master Chaudhry and both of them are definitely totally incapable of coming up with any constructive policies," Mr Baba said. "I don't know how this guy goes to sleep at night He has no morality, no values and no standards." He added Mr Bune's accusations were nothing more than gutter-level politics. Mr Bune had told the Nadi rally that prime minister requested the financial institution pay $10m, which had been kept in trust for the Fijian provinces to buy support. "So each of the 14 provinces were given around $750,000, each plus their dividend, which was shared around them," Mr Bune said. "And, which province will be silly enough to reject the Bill after having received more than $750,000 in their coffers. So after this all provinces said yes to the Bill, Mr Qarase went live on television saying that all the provinces had endorsed the PRTU Bill." Mr Bune said Mr Qarase then sought the blessings of the Great Council of Chiefs. "Many of those provinces and many of the provincial representatives are also members of the GCC so Qarase came back to the GCC saying that the province have already endorsed the Bill and received their blessing," Mr Bune said. Mr Bune also alleged the President, Ratu Josefa Iloilo was being emotionally blackmailed over the bill issue by the Government.

Military wants census to be conducted for there to be a fair election Suva Fiji Times text in English 18 Feb 06

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Unattributed report: "Military wants census for a fair election"

A census should be conducted to ensure constituency boundaries are updated and that elections are fair, the military said yesterday. Army spokesman Captain Neumi Leweni said a census was long overdue because the last one was done in 1996. "This also raises the issue of whether the conduct of an early election without census will be a free and fair one," said Captain Leweni in a statement yesterday. He said the onus was on those in authority to ensure the Constitution was upheld by ensuring that a census is conducted. "We can call whichever government that will be formed as an elected one," he added.

A report by the Constitutional Boundaries Commission that merges submissions from political parties and individuals on constitutional boundaries is expected to be released, in two weeks. However, the commission said there was a possibility that because the election was near, it might be too late to make changes to boundaries. "Because the election is near, it may be too late to start with the changes now," said commission chairman Barrie Sweetman. Meanwhile, Captain Leweni said the army saw no reason why the Reconciliation, Tolerance and Unity Bill should be an excuse for an early election. "As far as the RFMF is concerned the RTU Bill is a non-issue as we have promised it will not eventuate," he said.

"It is a clear indication of a political party hell-bent on trying to force its agenda and using an excuse that is totally wrong and misleading. "It is holding the country to ransom and a threat to the freedom and right of every citizen in this country," he said. "As the institution charged with the well being of the people of Fiji this has become our responsibility." The spokesman said Fiji citizens were duty bound to assure the country that "no political party will hold the country at ransom and force its hidden agenda to all its citizens."

Labour Party (FLP) casts doubt on Election Office voter awareness Suva Fiji Sun in English 18 Feb 06

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Unattributed report: "FLP casts doubt on voter awareness trips"

The voter education trips by the Elections Office could be a vote-buying scheme by the Government, the Fiji Labour Party said yesterday. Party leader Mahendra Chaudhry said the Government would not have needed to embark on voter education trips if it had made changes to the Electoral Act. "Who knows? Maybe these people involved in the trips are all pro-SDL and they are visiting these rural areas under the guise of promoting voter education in order to decrease the number of invalid votes," said Mr Chaudhry. Mr Chaudhry also said the programme was a waste of money, which could have been avoided through electoral changes. The voter education programme is still under way and only four provinces have yet to be covered. Supervisor of Elections Semesa Karavaki said the objectives were to decrease invalid votes and to improve voter turnout during the General Election. The $2m programme is expected to be completed before the election.

Election Office not ready for early election according to Labour Party leader Suva Sunday Post in English 19 Feb 06

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Unattributed report: "Elections Office not ready: Chaudhry"

Opposition leader, Mahendra Chaudhry reiterated his calls yesterday that the Elections Office was not ready for an early general election. Speaking at the FLP rally in Nadi yesterday Mr Chaudhry said there was some speculation that there might be an early election, as early as the last week of April when the school holidays begin.

"Others say it might be in August during the second school holidays. Well as far as an early election is concerned, which said had to be during the first school holidays, the machinery of the Elections Office is not ready to take that. We all know it is being rushed and I have been in touch with the electoral commission, we have been writing to them about the problems we faced during registration process. There are a lot of loose ends to tie up and so far we have only had one session of dialogue with political parties and with the electoral commission. "More such dialogues have been planned but are yet to be held and we would like to see that all logistical details are worked out and spelt out on paper for the conduct of the election, "These have not yet been done and I doubt very much if they will be satisfactorily completed by 29 April. We are registering our concern about this matter with the electoral commission and we will also do so with the office of the president." Mr Chaudhry added that the President, Ratu Josefa Iloilo must know that any election held had to be both free and fair and must not be rushed as this would' cause complications as well as disenfranchise a lot of people.

Exports drop and trade deficit widens according to the latest trade figures OSB Report in English 20 Feb 06

Compilation from two unattributed reports: "Trade deficit widens" from the Fiji Times text in English 18 Feb 06 and "Exports drop, stats show" from the Daily Post text in English 18 Feb 06

Fiji's trade deficit grew by F$233.9m from F$1.3b to F$1.53b last year, the Bureau of Statistics has revealed. Higher prices for fuel imports bumped up our import bill with Singapore alone by $332.9m to $812.9m. Total imports increased $221.1m (8.8 per cent) compared to 2004. The Bureau said a drop of $109.9m in textiles and footwear exports drove a significant decrease in domestic exports. Total exports fell by $12.7million compared to 2004. Provisional data put Fiji's imports last year at $2.7billion while domestic exports stood at $841.8million. Domestic exports decreased by $103.9m (11 per cent) whilst re-exports increased by $91.2m (35.8 per cent).

The increase in imports was due to higher import prices paid for mineral fuel. Since a significant amount of mineral fuel was re-exported to the neighbouring Pacific Island countries and visiting ships and aircraft, the re-exports for 2004 also showed an increase. Compared to 2004, the export Harmonized System (HS) sections recording notable increases were: live animals, animal products (up by $2m to $91.3m due to increased exports of albacore and long-finned tuna, fresh and chilled fish fillets and other fish meat); prepared foodstuffs, beverages, spirits and tobacco (up by $38.6m to $368.8m due to increased exports of sugar, mineral water, sweet biscuits, uncooked pasta, prepared food obtained from roasting and swelling of cereal and cereal products); mineral products (up by $1.6m to $3.1m due to increased exports of medicaments and cosmetic powders and wood, cork and articles thereof and plaiting material (up by $3m to $45.1m due to increased exports of woodchips, virola, mahogany and sawn logs. For 2005, decreases in exports were recorded for vegetable products, textiles and textiles articles, footwear, headgear and umbrellas, pearls, precious and semi-precious stones and metals, vehicles, aircraft and associated transport equipment. Increases in imports in the year were noted for vegetable products, animal or vegetables oils and fats, prepared foodstuffs, beverages, spirits and tobacco, mineral products, plastic, rubber, machinery, mechanical and electrical appliances, photographic, optical, medical and surgical goods.

(passage omitted on superfluous details) Re-exports, which formed the remaining part of exports, totalled $346m. Petroleum products sold to visiting ships, aircraft and to the neighbouring Pacific Island countries earned $279.2m.

While increases were recorded in a few domestic export commodities, general statistics provided by the Fiji Islands Bureau of Statistics revealed a decline in total exports totalling millions of dollars. Statistics released by the bureau earlier this week recorded domestic exports for last year earned Fiji $841.8m and total exports $1l87.8m. Government Statistician Timoci Bainimarama said compared to 2004, domestic exports decreased by $103.9m (11.0 per cent, while re-exports increased by $91.2m (35.8 percent).

(passage omitted on superfluous details) Mr Bainimarama said. Fiji's imports for 2005 were $2,722.8m. Mr Bainimarama said the major export destinations for Fiji's goods were:

oAustralia: down $44.6m (17.4 per cent) to $211.0m due to decreased exports of gold, footwear, sweet biscuits, uncooked pasta, tuna and sugar confectionery;

oUnited Kingdom: down $5.0m (2.7 per cent) to $179.4m due to decreased exports of sugar;

oUSA: down $84.9m (33.3 per cent) to $169.9m due to decreased exports of garments, beams, planks, boards, laths and the like, wooden boats and furniture;

oNZ: down $1.9m (3.4 per cent) to $52.8m due to decreased exports of footwear, pile-drivers and pile extractors, and as a result of the return of a leased helicopter in September, 2005; and

oJapan: up $22.2m (50.7 per cent) to $66.1m due to increased exports of non-coniferous woodchips, tuna, Skipjack and Stripe-Bellied bonito.

He said performance of Fiji's major export commodities recorded growth if the export of sugar (6.7 per cent); molasses by 2.8per cent; mineral water by 29.7 percent; textiles yarn, fabrics and made up articles by 107.9 per cent; timber, cork and wood by 8.2 per cent due to increased exports of woodchips; fish by 1.8 per cent; yaqona by 15.8 per cent; and copra by 100 per cent. Decreases were recorded in exports of garments by 46.8 per cent; gold by 32.9.per cent; footwear by 5:5.9 per cent; fruits and vegetables by 6.9 per cent and coconut oil by 2.2 per cent.

Commentary Crime and Politics: Pointing solutions to fight crime Suva Fiji Sunday Times in English 19 Feb 06

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Report by Dorine Narayan: "Commentary Crime and Politics: Pointing solutions to fight crime"

This issue we look at the crime situation in the country and what the Fiji Police Force lacks and needs. We also talk to the major political parties and ask them what their party will do, if elected into power, to deal with this problem. IN Nasinu a small community lives in constant fear of their lives. They are the victims of a gang of thugs who terrorise the neighbourhood, demand from residents, food and money and assault and rob at will. Brave resident Aborosio Toronibau says they are sick and tired of being victims but they are helpless at the same time. No one in the community wants to confront the terrorists. No one wants to be victimised. The residents of Kalabu Stage 3 are echoing the fears many of our citizens have. They no longer feel safe in their homes. Those who have been attacked and robbed know the trauma and stress of being violated.

According to the Police commissioner, Andrew Hughes, there was a 12 per cent increase in crimes in the first nine months of last year compared to 2004. During this period for 2005, a total of 13,824 crime cases were recorded compared to 2004 from January to September, in which 12,336 crimes were committed. For the same period in 2005,13,824 crimes were committed - and increase of 1478 cases. But Mr Hughes says the increase was caused by:

- An increase in the number of sexual offences committed, and

- False and inaccurate recording of cases.

In the nine months last year, 101 cases of rape and attempted rape were reported compared to 47 in 2004. For indecent assault, 111 cases were reported last year compared to 76 in 2004. The southern division recorded the highest number of crimes (5725 cases) in the nine months to September last year. This was followed by the western division (4806 cases), the eastern division (1727 cases) and, lastly, the northern division (1566 cases).

Offences against property dominated last year with 8011 cases reported followed by offence against the person (3466), offences against the penal code (1366), offences against public morality (535) and against lawful authority (446). According to the police, crimes against property include burglary, robbery with violence, theft, damaging property, injuring an animal and stealing from a person or a car. Crimes against the person include murder, manslaughter, assault and killing a person in a road accident. Offences against the penal code include forgery, criminal trespass and possession of drugs. Robbery with violence also increased from 612 cases in 2004 to 683 last year. House break-ins also rose from 867 in 2004 to 881 in 2005. Mr Hughes is quick to assure that the crime rate in Fiji is relatively low compared to other countries in the region and beyond. He says they have enough manpower of 816 regular police officers to fight crime in Fiji. But it is the lack of equipment such as vehicles that affects the police force's fight against crime. Mr Hughes says they need 111 vehicles and want better equipment to go with it. He also wants to develop the force's IT, technology and electronic device resources to investigate more complex drug and other serious cases. He also needs better forensic experts and training for his officers in this field. When asked if he needed more police posts, Mr Hughes said yes, but for rural areas. He said they were working on community policing to better maintain law and order in the country.So what do the political parties have to say about crime? Read on. Fiji Labour Party (FLP) spokesman Lekh Ram Vayeshnoi: "I think the commissioner is doing all his best and has done a very good job so far. What needs to be done is for the Government to resource the police force based on their request so that crime can be resolved in this country. When we were in government we were going to resource the police and equip them with professional equipment, which badly needs to be upgraded. We would like to see this country crime-free and Fiji has a lot of potential. If the crime rate is brought down, then a lot of people will take interest in visiting our shores. As far as our party is concerned, we are going to look into the problems the police is facing and we are going to equip them with the resources they need. Once we are in government we will know how to deal with it and given a chance we will prove ourselves once again". Soqosoqo Duavata ni Lewenivanua spokesman Jale Baba: "We have promised the nation to uphold the law and have also been increasing the police budget since we got into power. We are grateful to Hughes for bringing in new techniques and technology to fight crime better. We congratulate him on what they have achieved. The community at large has to act more responsibly as well and that's why our party has been visiting different villages to set awareness programs on how to bring down crime levels. We are also thankful to the different communities for fighting against crime. We have also been setting awareness on the illegality of marijuana planting and basically the community should be working together with the police to bring down crime and make Fiji a better place to live in."

National Alliance Party of Fiji (NAP) president Ratu Epeli Ganilau: "I think it is always good to listen to the people doing the job. Our leaders should have a closer link with the police force to operate successfully. If we are to bring down the crime rate, then we should find employment because people who are unemployed are the ones who are engaged in criminal activities. Our party conducted a survey last year to find out what the people need the most and the result was that the top priority was unemployment. No one fully employed would resort to crime but it is the unemployed ones (who resort to crime) so this problem should be addressed first".

Soqosoqo ni Vakavulewa ni Taukei (SVT) spokeswoman Ema Druavesi: "Hughes' concern is important and yes there has been a rise in crime. The Government should give out more portion of the budget and the police should have all the required equipment, for example vehicles, to serve the public. People sometimes wait for hours for the police to arrive. We cannot blame the police because it's the responsibility of the Government to assist the police. It is the Government's job to train the police to enable them to be experts in investigation. If we want to live in a place free of crime, then we should look after the people who carry out the job. Police should also be trained in specialised areas instead of getting experts from overseas. Why can't the Government provide the same training for the locals here. The excuse of lack of funds cannot be accepted anymore but it's the responsibility of the Government to find the funds. If the Government can waste funds in so many other things like overseas trips, then why not give more to the police force".

United Peoples Party (UPP) president Mick Beddoes: "Commissioner Hughes has done a commendable job since he arrived and I have no doubt that citizens have noticed what I have seen around the country - well dressed and visible police officers. I can feel the new sense of pride and commitment with the police officers, and from my own experience the police actually call back and follow up on questions and queries. Commissioner Hughes inherited a divided, damaged and demoralised police force and has managed to turn it all around and has started the momentum forward, but this alone will not make the difference. The ever-increasing levels of poverty, the squatter settlements and the high levels of unemployment continue to push the levels of desperation higher and so to crime. We need to modernise and adequately resource our police force and that will cost of $20-$30m in addition to the current police budget. We need to ensure up to date state of the art technology and communications, a new fleet of vehicles to cover all types of terrain, a new HQ for the police force, state of the art forensic equipment and a special fund to provide specialist training for all facets of crime prevention and detection".

National Federation Party (NFP) spokesman Prem Singh: "Crime has increased in every phase. We rely solely on the police to see that security is addressed when our police force is ill equipped. Commissioner Hughes has done his best but I think the whole program needs to be improved. As a political party we have to put in strengthening measures for the police. It is no use strengthening the force without tying it up with other factors like infrastructure development and uplifting the force. Our border control has to be strengthened and the detection rate has to be improved as well. We must be defined in what we do. We are very much aware of the need of the police and to maintain security and stabilisation, the Government should see that the people live fearlessly in their houses. We want a crime-free country. We feel a lot of resources are needed in the police and this can be funded by the wastage in the Government. There are a lot of holes in the Government system and there is a need to put a stop to this wastage. We have to get our priorities right and it is a matter of choice and good governance".

Commentary Serevi for politics - But who will become PM? Suva Fiji Sunday Times in English 19 Feb 06

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Report by Robert Keith-Reid: "Serevi for politics. But who will become PM?"

At the far left, sneering at his enemy to the far right, Mr M. Chaudhry. Somewhere in the middle, hovering strategically above, the maverick Commodore F. Bainimarama. As Rotfi lurches towards an election at an exact timing (one in May, more and more Rotfians expect) that the PM has clutched to his heart, little wonder that Rotfi's masses prefer to fixate on the successes and defeats enjoyed and suffered by the boyce on 7s fields around the world. Last week stuttered off with our two heroes, Lai and Mahen I mean, not Serevi and that new young bloke, accusing each of being terrorists. Mr Chaudhry accused Mr Qarase of having done nothing, nothing, as PM that is. That was not quite fair. Mr Qarase works very hard, too hard. Although some of the things he's done have gone wrong at least he's been trying hard. Mind you with a lot of the backup he gets it's no wonder he's had a few disappointments. His social round, opening this and that and, out there in the bush, delivering campaign promises, is a truly killing one. Nowadays I can barely manage a pub crawl more than four nights a week. I reckon I'll soon be down to just three, the crawling round that is, it being terrible hard on the knees. If I were PM, perish the thought, I couldn't emulate Mr Qarase. Out at some cocktail party nearly every night besieged by the same old crawling Furopean and Findian bizmen anxious to protect their tax-free holidays and wotnot! If it were Mr Chaudhry it would be just the same! It's amazing, over the years, how many of Rotfi's bizblokes instantly swarm to smarm up the incoming PM. In June or July Mr Chaudhry may again be a target for smarm attacks from some of the very Findians who hate his guts! It's only natural for Rotfians, in between worrying about Serevi, to wonder what the election will produce. Mr Qarase, again? Or Mr Chaudhry, again?

Could it be someone who will be a complete shock? Like Serevi? He'd be sure to win a seat and would be too valuable as a unifying force to be wasted as Sports Minister. What about Frank? Again, of course, Well, that wouldn't be a complete shock. Government hopes of getting rid of him with the help of a friendly President appear to be fading now that the President has changed his mind about retiring and agreed to the army's suggestion that for a few more years he should stick around Government House, in between hanging out at Vuda and overseas rejuvenation trips. If some other bloke gets picked as prez by the chiefs in March, and he's not pro-Frank, it would be interesting to watch how long he'd be accepting advice from the Home Affairs Minister about appointing someone to take over Frank's job. Even more interesting would be Frank's reaction.

On Friday, a day after the army said reporters who had been reporting that Frank was gonna take over, were reporting complete rubbish, Frank was reported to have said that the army would definitely not let the unity bill be okayed by Parliament. How could he do that without fixing Rotfi up with a coup he says very definitely is not going to happen, no, not never ever until the next time? Could it be that he knows things that Mr Chaudhry would like to know about but that the Government wouldn't want Rotfians to know about?

Labour Party considers 'mergers' and 'coalitions' OSB Report in English 20 Feb 06

Compilation from several items: "Labour offers invite to NFP" from the Fiji Sun in English 18 Feb 06, "FLP, NAP merger likely" from the Sunday Sun in English 19 Feb 06 and "FLP, NFP tussle" from the Sunday Post in English 19 Feb 06

The Fiji Labour Party has extended an invitation to the National Federation Party to join its coalition. FLP leader Mahendra Chaudhry said they had replied to a letter from the NFP when they first wrote to FLP last year.

The FLP had then replied and informed them they would put the invitation to the FLP's management board for advice. "We had, however, requested they inform us of the subjects of discussion that they had invited us to meet on. We were still awaiting notification when we received another letter on Wednesday, it appears more to be a circular because it was not directed alone to us," said Mr Chaudhry. He said they were welcome to join the FLP, UPP and PANU coalition but advised they make up their mind first on their intentions. He said time was running out and the NFP should make an early decision because of the possibility of an early election. Mr Chaudhry said although the FLP had sufficient members to contest on its own, the smaller parties also played a significant part in making up the party numbers. He said the parties that were currently in coalition with the FLP were the more significant of the smaller parties and was confident they would be successful in this year's elections.

There are possibilities that the Fiji Labour Party coalition and the National Alliance Party will merge just before the coming general elections. Executive members of the coalition partners of Fiji Labour Party, United People's Party and the Party of National Unity will have a special meeting next week to decide on their merge with the National Alliance Party. FLP leader Mahendra Chaudhry said the merge has been on the pipeline for the past few months and the meeting next week will decide on their merge with NAP.

"We will discuss the issue with the executives of the UPP, PANU, FLP and the President of the National Alliance Party, Ratu Epeli Ganilau will also be present," said Mr Chaudhry. There were speculations earlier in the year that NAP will share first preferences with the Fiji Labour Party, but now there is a possibility that the two parties will also merge. Mr Chaudhry said the merge would have to be decided before the next general elections. "The Fiji Labour Party believes it could be early as April during the first term school holidays or in August during the second term school holidays, therefore it is time that we are prepared for it," he said.

He added the party was forced to fall twice but they will still stand up and continue with what is still to be finalized. Mr Chaudhry said on Friday that there is also a possibility of the National Federation Party joining the FLP coalition party. He said the NFP should make up its mind because the general election is just around the corner and that time was running out. He added the FLP had sufficient members to contest (the elections) on its own and the smaller parties also played a significant part in making up the party numbers.

Fiji Labour Party leader Mahendra Chaudhry said the National Federation Party never gave a clear indication of what national issues it wanted to raise during their proposed coalition talks. Mr Chaudhry said in any coalition talks between parties, the issues of concern to the party must be outlined before any dialogue could progress.

"Now Labour has made its stand very clear on all major issues but until today the NFP has failed to inform us of what their stand on issues were," he said. His comments came after criticism by the NFP of rejection of an offer by labour to work together if they could put aside their differences. NFP labelled this as a deliberate tactic designed to mislead the supporters of both parties and strongly denied Mr Chaudhry's claim that the NFP leader failed to appear at a scheduled meeting in late 2005. Mr Chaudhry said the NFP had invited Labour for coalition talks in December last year but had failed to highlight what issues it wanted to discuss. "I wrote back to the party saying that I will take the matter up to the party's executive board but asked them to, in the meantime, indicate if it wanted to discuss any specific matters," he said. "There was no reply to this letter until February 15 when the NFP wrote to us on media speculations of a coalition." Mr Chaudhry said he was not saying that the NFP should not contest because that was something for the people to decide but it must make up its mind on whether it wants to join the FLP or the Soqosoqo Duavata ni Lewenivanua party. "The choice is clear, either FLP or SDL," he said. His word of advice to NFP: "They better make up their mind soon because the elections might be held in May. The lines are clearly drawn between SDL and FLP with its coalition partners," he said. FLP has fanned a coalition with the Party of National Unity and United People's Party and will hold coalition talks with the National Alliance next week. The ruling SDL party and its coalition partner Conservative Alliance Matanitu Vanua party merged as one on Friday.

Political Manoeuvrings over the filling of President's and Vice President's positions OSB Report in English 20 Feb 06

Compilation of several unattributed items in English: "Chaudhry supports army views on coup perpetrators" and "Ratu Jope 'wants to return as VP" from the Daily Post 18 Feb 06, "GCC mum on President nominee" from the Fiji Sun 18 Feb 06, "SVT fears return of coup convicts" and "Conspiracy theory" from the Fiji Sunday Times 19 Feb 06 and "SDL wants to remove commodore" from the Sunday Post 19 Feb 06

Fiji Labour Party has supported the military assertion that anyone who was involved in May 2000 coup must not be allowed to lobby for the President and Vice-President's position. Labour and Opposition leader, Mahendra Chaudhry said people who were convicted of coup related charges or serious crimes should not be allowed to hold public office.

"Fiji's image to the world is at stake and as it is we are being called the banana republic where people who are jailed for serious crimes come back into politics," he said. Mr Chaudhry's comments came amidst speculation that some public figures who were either convicted for coup-related offences or have names linked to the coup were lobbying for the position of the President and Vice President's office. The military holds similar views and said openly, that they will oppose nomination of anyone who was involved in the events of May 2000 for the presidential position. Transport Minister and Tui Cakau Ratu Naiqama Lalabalavu, who served his coup conviction extramurally last year, was one of the names that have surfaced vying for the Vice President's post. The Great Council of Chiefs will sit next month to decide on this and speculations are rife on who will accede to the highest seat of the land.

"I would have thought that they (GCC) would have left it the way it is at present," Mr Chaudhry said. "I think the Tui Vuda (Ratu Josefa Iloilo) and Ratu Joni (Madraiwiwi) should be allowed to carry on. The President has indicated he is available for another term and they (GCC) should leave it to the current arrangement until the President decides to retire," he said. "Although the laws allow for people of any ethnicity to accede to the presidential post, if was widely accepted for an indigenous Fijian to take up the position, however, it would be a magnanimous gesture for GCC to approve of a non-indigenous Fijian for the post of vice-president."

Rumours are rife that coup convict, Turaga Taukei Naua, Ratu Jope Seniloli wants to return as the Vice-President. Although there was no confirmation yesterday, there had been clear indications that there would be a strong lobby for the Great Council of Chiefs, which sits early next month, to appoint Ratu Jope. Ratu Jope lost his position when he was jailed on 06 August 2004 for taking an illegal oath in George Speight's rebel government as president and of illegally swearing in cabinet ministers, including George Speight, the chief instigator of the coup, as prime minister. Some reports yesterday revealed that some chiefs from Tailevu had indicated they wanted Ratu Jope to return and complete his full term, which unceremoniously ended when he was jailed. Political experts have said that Ratu Jope was appointed Vice-President in 2000 as an apparent gesture of appeasement towards the, supporters of 2000 coup. The military said it would oppose any attempts to nominate or appoint a person who was either convicted for coup-related charges or involved in the events of 2000. Opposition leader Mahendra Chaudhry expressed similar sentiments.

The Great Council of Chiefs does not want to comment on who may be nominated for the President's position. According to media reports, the military said there were rumours that people connected or linked to the 2000 coup were being eyed for the post. The military had said that it would oppose the nomination of anyone connected or linked to the coup for the President's position. When contacted at Tavualevu Village yesterday, GCC chairman Ratu Ovini Bokini declined to comment on the nomination issue. "I have no comments to make on that," he said. "Only the members of the GCC will decide on who the President will be." Ratu Ovini said he had not received any indication from members on who would be nominated for the post. He said the issue of who would be nominated as the President would only be known at the GCC meeting on 08 March.

A political party said it would not be surprised if Ratu Jope Seniloli returns as the Vice President. Soqosoqo ni Vakavulewa ni Taukei Party general secretary Ema Druavesi said they are concerned about the Government's decision to return those who have already been removed from their positions. Ms Druavesi was responding to rumours that coup convict Ratu Jope wants to return as VP.

"It is too bad to see convicted people put back in their positions because it will take away the most respective status of the country," Ms Druavesi said. She said this is what the Government likes because they know that they would rule everything. "Government will put them in those positions to weaken the military's power," she said. Ms Druavesi said this was a political motive and the party has asked the Government to base its leadership through transparency, honesty and always come up with clean ideas. "What they are doing it's just like they want to go against the military. And if something happens, they should be ready to answer." She said the Government should work according to the law in order to achieve unity in the country. Ratu Jope lost his position as VP in August last year for taking an illegal oath in coup leader George Speight's rebel government as president and of illegally swearing in cabinet ministers.

There are moves to remove the President Ratu Josefa Iloilo and make way for a new president who can remove the army commander, a Labour Parliamentarian claims. Fiji Labour Party deputy leader Poseci Bune, when addressing Labour supporters in a rally at Nadi yesterday, claimed the Government was trying to remove Ratu Iloilo from his office and replace him with their nominee. Mr Bune claims the Government planned to put its nominee in office in order to remove army commander Commodore Voreqe Bainimarama. "The only person who can remove him is the President," he said. "They want someone who can remove Bainimarama." Mr Bune said the Government's hatred towards Commodore Bainimarama was now public knowledge. He said the recent standoff between the two parties made it clear that the two leaders could not work together.

Prime Minister Laisenia Qarase said Mr Bune's claims were outrageous. He said the claim was an insult to the Great Council of Chiefs and its members, who at the end of the day elect the President. Mr Qarase said the Government would not interfere with the GCC's decision. "We will leave it to the Great Council of Chiefs to decide," he said.

Great Council of Chiefs chairman Ratu Ovini Bokini said the President had indicated that he wanted another term in office. Ratu Ovini, who refused to comment further, said the outcome of their meeting on 8 March would answer everyone's queries. Mr Bune said Mr Qarase had gone against the President and failed to abide by Ratu Iloilo's instructions to remove the controversial Promotion of Reconciliation, Tolerance and Unity Bill. "He was instructed by none other than the President, but instead he went around seeking the support of the provinces and later the Great Council of Chiefs," he said. Meanwhile, military spokesman Captain Neumi Leweni said no one could remove the commander without a reason. Captain Leweni said Commodore Bainimarama had two more years to complete his term.

Government has been accused of being among those lobbying to the Great Council of Chiefs to oust President Ratu Josefa Iloilo from his office, Deputy Fiji Labour Party leader, Poseci Bune claims. Mr Bune said Prime Minister Laisenia Qarase wanted a president of his choice. Speaking at a public rally in Nadi yesterday. Mr Bune accused the ruling Soqosoqo Duavata ni Lewenivanua-led Government of pushing the President out to secure that the controversial Reconcialiation, Tolerance and Amnesty Bill becomes law and secondly, to remove Military commander, Commodore Frank Bainimarama. The deputy opposition leader added Qarase was instructed by President Ratu Josefa Iloilo to withdraw the notorious Reconciliation, Tolerance and Unity (RTU) Bill soon after the Bill was first read in parliament."

"Instead of withdrawing the Bill, Qarase decided to take it in defiance of the President's instruction and decided to take it to the provincial council for their backing. This is a leader who has always blamed the FLP for being disrespectful to our Fijian institutions and particularly to the Bose Levu Vakaturaga."

However, SDL National Director Jale Baba vehemently refuted the allegations saying that government at no point in time had ever interfered in the business of the Great Council of Chiefs. "This is a blatant lie by someone who has a habit of making such baseless accusations, which has no truth in it. Our government has never tried to interfere with any of the Fijian institution processes and that stance remains," Mr Baba said. "We greatly respect the GCC and we know our chiefs will make the right decision next month," Mr Baba stressed. But Mr Bune said the prime minister had been defiant to the President who was a nominee of the GCC. He disclosed that the prime minister had told the President that all 14 provinces were supporting the Bill. "Qarase who boasts to be the custodian of Fijian rights is the very one who is systematically undermining these very Fijian institutions," he said. "Their ultimatum objective is to remove Commodore Bainimarama which is only possible by the President and surely a president of their choice can easily do this," Mr Bune said. "That is the reason they are not happy with the present President and this is very serious and we just hope and pray that when our chiefs meet in March they will not be influenced by this so called political Fijian leaders who only want to manipulate the Bose Levu Vakaturaga so that they can get their own choice nominated as president of this country," he added.

The 'Merger' - CAMV goes into SDL - Reactions and Comments OSB Report in English 20 Feb 06

Compilation of several reports: "Partners become one" from Fiji Times 18 Feb 06, "SDL, CAMV tie knot" and "Members question merger" from Daily Post 18 Feb 06, "Conservatives lay down conditions" and "Rabuka hails united Fijians" from Fiji Sun in English 18 Feb 06, "Labour unmoved by merger" from Fiji Sunday Times 19 Feb 06, "Editorial - Bunch of hypocrites" from Fiji Times 18 Feb 06 and "PM's prison visit a mystery" from Sunday Sun in English 19 Feb 06

(passage omitted on superfluous details) CAMV leader and Tui Cakau Ratu Naiqama Lalabalavu said it was not an easy task to be present with more than 100 supporters at the ceremony. He said most of the members and supporters came to the ceremony with questions that only the SDL members and management could answer regarding their future. He said they were concerned about the freedom of political prisoners held on Nukulau and in Korovou Prison. He said his supporters and party members had faced the brunt of being perpetrators of the 2000 coup and were beaten, imprisoned and some of their supporters had died. Ratu Naiqama said they agreed to the merger because they believed there should be a united Fijian party to contest the elections, the only way to ensure leadership remained in indigenous hands. He said it was no use cursing and trying to stir up trouble after an election when a Fijian party or leader was not in power because the best thing to do was unite and fight together for the betterment of the future generation and the nation. Receiving the party, Prime Minister Laisenia Qarase said it was God's will that allowed everyone to be at the ceremony. (passage omitted on superfluous details)

At the party's Annual General Meeting at the Civic Centre yesterday morning party some members of the Conservative Alliance Matanitu Vanua party voiced their dismay yesterday to the motion to dissolve the party and join forces with their current coalition partner the Soqosoqo Duavata ni Lewenivanua party. (passage omitted on superfluous details) Party members eventually agreed unanimously to dissolve the party and join forces with SDL after receiving reassurances and valid reasons for the political marriage from the Transport Minister and Tui Cakau Ratu Naiqama Lalabalavu.

PM to study proposal - The Conservative Alliance Matanitu Vanua Party yesterday submitted a list of proposals to the Soqosoqo Duavata ni Lewenivanua party as part of the condition attached to the coalition deal. Although Prime Minister Laisenia Qarase did not disclose the content of the proposal, it is believed that it focused on a number of issues, including the number of ministerial positions offered to CAMV, and those allocated for the Senate, likewise the number of seats allocated for them to contest the General Election.

"I'm going to go through the list over the weekend. I've indicated to him (Ratu Naiqama) that we would be meeting them as early as possible next week and we are looking forward to it and I'm sure that we will arrive at a consensus so that we move forward together as one," said Mr Qarase. The meeting resolved that both parties would contest the election under the SDL banner. Mr Qarase said the merge did not come as a surprise as it was something the party had been looking forward to. "It's an objective for the last five years and we are glad today that we are uniting as one and from now on there will be an SDL party," said Mr Qarase. He added that the decision taken by CAMV was solely theirs. Mr Qarase said the merge was an historic occasion for Fiji's political life. "Definitely from today and onwards, they will be the one party to embrace all our membership for the SDL Party and CAMV," said Mr Qarase. He said this would be the first time for two Fijian political parties to amalgamate for Fijian unity. "It's not only Fijian unity but most important of all the Fijian unity is in the best interest of the entire country. I think it's important to get the Fijians united before we look elsewhere," said Mr Qarase. He said the two parties now looked forward to work with Indian political parties and consult each other on matters of national importance. He said 90 per cent of the party supporters were from rural areas while 80 to 90 per cent were from the urban areas. CAMV leader Ratu Naiqama Lalabalavu said the unification of the two parties would bring about unity for the people of Fiji.

The Conservative Alliance Matanitu Vanua (CAMV) party, which has its roots in the upheavals of 2000, has been laid to rest. This was after a motion for the abolishment of the party was unanimously supported by its officials and supporters at their annual general meeting at the Civic Centre in Suva yesterday. The motion stated that the party be liquefied (liquidated) and party members join up with their coalition partner the ruling Soqosoqo Duavata ni Lewenivanua party and contest the general election as a combined political party. The Party's Labasa members brought the motion forward citing the need for unity among Fijian political parties in order to keep the country's leadership in the hands of the indigenous people as the reason.

"We brought this motion forward because we believe that if all Fijian parties were united then there will be guarantee that the leader of the nation will be a Fijian, said Paula Gonedau, the Labasa representative for the party, "We have the same manifesto as the SDL party and we feel that we're fighting for the same cause, so why not combine and fight together as lone?"

Now they are one - Even though there were questions raised by some members of the party as to why they were not informed earlier of the proposed move, CAMV vice-president and Transport Minister Ratu Naiqama Lalabalavu put their mind at ease. "The Fijian strength is in unity, therefore we should all work together not for our sake but for our children who will be the future of Fiji. We as a party have contributed a lot to this nation and our road in the past five years has not been an easy one," Ratu Naiqama said. "We have been imprisoned, ridiculed and abused for the sake of our nation. We will have more power if we all stand together and unite." After the motion was passed by party members and supporters, a delegation from the party went to Tamavua Village to traditionally approach the SDL party officials and members with their request for a merger. About 350 people gathered at the village ground to witness what has been termed as not only a merger of political parties, but that of all Fijians. "This move augurs well for the future of the parties as one. Not only is it a big day for Fijians it is also a big day for politics," said SDL party campaign director Jale Baba. And for that we take our hats off to the leaders of the CAMV party."

Meanwhile, Opposition leader Mahendra Chaudhry has labelled the merger as a survival tactic by both parties. These parties are just doing this for their own survival. Whatever happens, it will be a different story on the ground. I also know that some CAMV party members are not happy with this merger," Mr Chaudhry said. He added that these disgruntled members will be more likely to join up with the Nationalist Party. The coalition government has six members from the CAMV party, Ratu Naiqama, Lands Minister Samisoni Tikoinasau, Sports Minister Isireli Leweniqila; Deputy Speaker Manasa Tugia and member for Bua Fijian Communal Josateki Vula. The sixth member was the jailed former deputy speaker of the House of Representatives Ratu Rakuita Vakalalabure.The Fiji Labour Party, not threatened by the merger of the two prominent Fijian parties, believes that it (union) will not unite the Fijians. Party president Senator Jokapeci Koroi said the merging of the Soqosoqo Duvata ni Lewenivanua and the Conservative Alliance Matanitu Vanua parties would not move them. The two parties merged at a traditional ceremony at Tamavua Village outside Suva on Friday. Ms Koroi said the union would not affect their preparation for the elections. She said the party was confident the merger would not unite the Fijians. "The Fijians will never be united, because the chiefs are never united," she said. Ms Koroi was one of six speakers at the People's Coalition public rally in Nadi yesterday. Other speakers included party leader Mahendra Chaudhry, deputy leader Poseci Bune, party stalwart Krishna Datt, United People's party president Mick Beddoes and Party of National Unity secretary Ponipate Lesavua. Ms Koroi said there were forces that divided us as a people, both across cultures and most importantly within the provincial divisions of the indigenous Fijian community. Ms Koroi said this was a crucially important time for the nation.

It's not good, says Nationalist - Former Prime Minister Sitiveni Rabuka yesterday applauded the move by the Soqosoqo Duavata ni Lewenivanua and the Conservative Alliance Matanitu Vanua (CAMV) to fight the General Election under one banner. "I'm happy that the two major Fijian political parties have decided to be united and I must admit that this is the way forward for the Fijian people," said Mr Rabuka. He asked all Fijian political parties to follow suit. Mr Rabuka said the move would be a big boost to the party leaders. The Grand Coalition initiated the move that has now eventuated. He urged the party leaders to promote policies for the disadvantaged groups and not specifically for the indigenous Fijians and Rotumans. A founder of the Grand Coalition, Tomasi Vakatora, in an earlier interview said Fijian political parties must unite and share preferences to maintain government leadership. He said disunity is the political sickness affecting the Fijian people and their unity would be good for the stability of the nation. Opposition leader Mahendra Chaudhry yesterday said the unity struck yesterday was not good as supporters of both parties were forced to give their support. The Constitution gives voters the freedom to join whatever party they wished. Nationalist Vanua Tako Lavo Party general secretary Viliame Savu yesterday said the party was totally against the move made by the two parties. He said they would now sit and watch developments. The Constitution allows for preferences to be shared and now that they have been united, they have also to share their preferences especially in the open seats.

Financial problems plaguing the Conservative Alliance Matanitu Vanua (CAMV) party may have led to the request for a merger with the Soqosoqo Duavata ni Lewenivanua (SDL) party. This was hinted at, at the CAMV annual general meeting on Friday at the Civic Centre in Suva. Financial reports circulated at the AGM stated the party had a little over $3,000 in the lead up to its abolishment. The report stated that the party had an opening balance of $36, 351.07 in their account in May 2004. A little over $31,000 was used for the legal fees of party members, which included sports minister, Isireli Leweniqila, former soldier Metuisela Mua, former speaker of the House of Representatives, Ratu Rakuita Vakalalabure, transport minister Ratu Naiqama Lalabalavu and their lawyers.

The AGM saw members questioning the reason for a merger with some coming up with the financial situation as a possible reason, but part vice-president and Tui Cakau Ratu Naiqama played it down saying that the sole purpose for the political communion was to ensure Fijian unity at the polls. According to the minutes of their last AGM meeting in May 2005 at Naruwai Village in Bua, some members had questioned the finances of the party and voiced the urgency of having money in the party's coffers in the run-up to the 2006 general elections. It was then suggested that each member province of the political party was to give $5,000 each to help with their election budget. The CAMV party was dissolved after members and supporters unanimously supported a motion put before them that stated that the party be abolished and party members join forces with SDL and contest the elections as one political party.

The haste in which the two Fijian-dominated political parties merged raises many eyebrows - Too sudden and totally unexpected. This rush into such a major political exercise has caught by surprise even some of the loyal followers of the Soqosoqo Duavata ni Lewenivanua Party and its coalition partner the Conservative Alliance Matanitu Vanua Party. They are as confused as everyone else as to the rationale behind the move. It would have been wiser, and they expect this much, that a major consultation process be undertaken by the parties' leaders to seek their views and if necessary take a vote on it. During traditional ceremonies organised by the parties' leaders to mark the merger, the shocked party faithful were still scratching their heads. Only time will tell how it will affect their loyalty and confidence in their leaders. And it will be interesting how the merger translates on the ballot paper. On a more serious yet sad note, the merger indicates yet again how nationalism is alive and well in the Fijian community and is going to have a big influence in the build-up to and during the general elections. The sensible and responsible citizens who have been praying to see an end to the polarisation of Fijians and Indians during general elections and major political crisis are obviously disappointed.

They see the Fijians starting to band together. The Indians may not be too far behind with the National Federation Party and Fiji Labour Party planning "unity" talks. After all the colourful talk of moving forward as one people, promoting to the world the concepts of multi-racialism and peaceful co-existence, we see this sorry political development which is against the spirit of the Constitution we accept as our supreme law. All the public displays of sincerity, goodwill, love-thy-neighbour-as-thyself and togetherness look like coming to nought yet again. We remain a divided and, sad to say, sick society. The late Pope John Paul II during his one visit was full of praise of this land and its people saying it was "the way the world should be". The words of the famous religious leader ring clearly in our ears today but do not mean much. It does not help us at all when we have leaders who lack the courage, vision and will to work together themselves and then unite the people in our collective quest for progress, prosperity and peace. We see these leaders pulling apart instead of together because they have their own selfish agendas to think about. They pull the hoods over people's eyes so that they won't see the truth, 'A bunch of hypocrites.'

A cloud of mystery surrounds an early morning visit to the Korovou Prison by the Prime Minister Laisenia Qarase yesterday. This visit comes a day after the Conservative Alliance Matanitu Vanua Party decided to cross over and join their coalition partner the Soqosoqo Duavata ni Lewenivanua Party. It is believed Mr Qarase had visited the Qaranivalu Ratu Inoke Takiveikata who has been sentenced to life imprisonment for the part he played during the event of 2000. When asked if he had gone to visit the Qaranivalu, the Prime Minister refused to comment and switched off his mobile. The Officer in Charge at the Korovou Prison, Waliki Satakala confirmed the Prime Minister had made the visit to prison yesterday morning.

"It was his private visit," said Mr Satakala, declining to give further details. Soqosoqo ni Duavata ni Lewenivanua Campaign Director Jale Baba told SUNday that the Prime Minister was planning to visit the Qaranivalu sometime in the week. "He was mentioning that he would visit the Qaranivalu sometime in the week. Maybe that's the visit he was talking about," said Mr Baba. He said Mr Qarase usually visits the Qaranivalu in prison and it was something he usually does. He did not say what the purpose of the visit was all about. Conservative Alliance Matanitu Vanua member of Parliament and Tui Cakau, Ratu Naiqama Lalabalavu said what the Prime Minister had done in private was his own and explained that the party had no idea about it. However, while presenting the tabua (whale's tooth) during the traditional handing over of the CAMV to the SDL on Friday, Ratu Naiqama revealed the members' concern for their mates who were still serving their sentences in prison. After the traditional ceremony, when the Tui Cakau was asked if there were some supporters who were not happy with the merging of the two parties, he replied it was very hard to satisfy the human want. "We all have different aspirations and plans but I think we have to make a bold decision. Do you want to lead Fijians in fragmented votes," he said.

Ratu Naiqama said it was time to come together. "Leave aside our differences, leave aside our self interest, let's put the interest of the nation at heart plus the interest of the Fijian people," Ratu Naiqama said. He said the only thing to do is for someone to take a bold step and he believes the unanimous decision was to come across and join the SDL. "We've come a long way and we have learnt a lot and it's time for us Fijians to get together. We need the numbers and this is democracy and we can only show what we want through the vote and that's the best way to do it." He asked all Fijian political parties to come forward as the door was still open. "Let's sit and sort out our differences, I think there is very little difference in whatever we stand for," he said.

Political Theory to Be Tested - Grand Coalition Deadline Looms Suva Fiji TV One text in English 19 Feb 06

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Report by Sakiusa Bolaira: "Political theory to be tested - grand coalition deadline looms"

NEWSCASTER: Efforts to unite all Fijian parties under a grand coalition, is set to be officially launch next month by the USP Vice Chancellor, Professor Anthony Tarr. But, while the people behind this move say this is a coalition open to parties of all other races, it has already rejected the Fiji Labour Party and the National Alliance Party as potential partners.

REPORTER: Grand coalition members have been holding regular meetings for the official launch on the 10th of next month. Coalition chairman, Tomasi Vakatoka says soon it will be official. So far, a committee comprising of academics and legal advisers have been able to unite four Fijian political parties, the SDL, SVT, Nationalist Tako Lavo Party, and the Peoples' National Party. An open invitation now issue to other parties irrespective of race.

CHAIRMAN TOMASI VAKATORA: "...NFP would be fine...I'm sure they will be welcomed...Labour Party, they can try...but we have to consult with our members of the grand coalition because there is certain differences between the governing party and the Labour Party..."

REPORTER: As for the National Alliance Party, the Coalition admits it has not been able to convince its management to join. Instead SDL representative in the coalition have other options in mind...

SDL JALE BABA: "...For the National Alliance Party, well they might as well go and join Labour..."

NATIONAL ALLIANCE PRESIDENT, RATU EPELI GANILAU: "...That is not his decision, not my decision as well, it's a decision that will be a collective decision by everybody...for him (Jale Baba) to say just because we do not want to go to the Fijian coalition...it's not proper, it's not a call to be made by him or anybody else, but by the party itself..."

REPORTER: If it's Fijian political unity still very much a theory at this early stage, soon to be formalized, finding common ground on a wide range of issues will remain the biggest challenge. Sakiusa Bolaira reporting for One National News

United Fijian front 'difficult' to Achieve Due to Differences Suva Fiji Sun text in English 19 Feb 06

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Unattributed report: "United Fijian front 'difficult'"

The ultimate aim of the Grand Fijian Coalition Party is for all the Fijian parties to unite which is quite difficult because of their different manifestos, said its spokesman, Tomasi Vakatora, yesterday. Mr Vakatora said the coalition's main aim was to merge the Soqosoqo ni Duavata ni Lewenivanua and the Conservative Alliance Matanitu Vanua parties.

"That is the aim of the Grand Coalition when we started over a year ago trying to get them together. "Actually, what we had hoped for is one ideal Fijian party. But that, of course, is very difficult to achieve because each political party has its own manifesto and ego that they want to satisfy," he said.

The Fijian Coalition met at the weekend to discuss its launching to be held on March 10 at the Lower Civic Centre. "The guest speaker will be the USP vice chancellor, Dr Anthony Tarr, and we be will be inviting all political parties, organisations NGOs and interested persons," Mr Vakatora said. He also said that the party was working to get seats in the next coalition to set up a government. "We are working towards that but, of course, our coalition allows each individual party to campaign and we are in the background to support them. "We hope that the voters will agree with our concept where most of the Fijian parties are working together under the Grand Coalition so that we can at least win a number of seats to enable the coalition to form a government," said Mr Vakatora. Former Prime Minister Sitiveni Rabuka has hailed the merger, saying it was the only way to keep Fijians in power. Nationalist Viliame Savu said he had doubts about the coalition. He said his party was against the coalition.

Names Not Revealed: Claim Five Labour MPs to Join the SDL Suva Fiji Times text in text in English 19 Feb 06

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Unattributed report: "Labour MPs cross floor"

Five Fiji Labour Party members of Parliament have joined the Soqosoqo Duavata ni Lewenivanua party. The Labour MPs are believed to be seeking a ticket for the election under the SDL banner, says campaign director Jale Baba. Mr Baba said three of the Labour MPs had applied for an SDL ticket last year and two more crossed over last week. "One came to us last week to bring to five the number of Labour MPs who have approached the SDL to stand for the election. They will stand for us in the primary elections," said Mr Baba. The five Labour MPs are all Indians but Mr Baba would not reveal their name because of their confidential policy. The five Labour MPs will join 43 Indians who have applied to stand for an SDL ticket in the election. "We will contest all 19 Indian communal seats, as we said before, we are a party for everyone and every race," Mr Baba said. The SDL will hold its primary election be held this week to choose its election candidates from 321 people.

Rift within Labour Ranks Emerges Suva Fiji Daily Post Times text in English 19 Feb 06

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Unattributed report: "Tension rife in Labour camp"

(With) just months to go for the national polls and a major political party seems to be heading towards a rift. A constituency meeting of the Fiji Labour Party at the weekend showed signs of a major rift and internal bickering within the party. A number of party supporters also came forward and publicly questioned sitting Labour MPs on what they described as a "total neglect" of the people. Voters present at the meeting raised concerns in the presence of party leader Mahendra Chaudhry, deputy leader Poseci Bune, Krishna Dutt and the two MPs Vyas Deo Sharma of Vuda Indian Communal seat and Vuda Open candidate Vijay Singh.

Drama started at the meeting in Saweni after Mr Chaudhry's final speech when a woman who said she was a supporter, stood up and asked the Opposition leader in very strong words to allow the people to express their views on the party's performance. Surya Kanta, a housewife of Lauwaki settlement spoke of her dissatisfaction and said she was disappointed with Vijay Singh and Vyas Deo Sharma, the parliamentary representative from her constituency. She said hardly any of the two MP's visited them since the 2001 general elections and she accused Mr Singh of failing to visit the victims of the recent floods.

There were heated arguments from both sides (Surya Kanta and the two MPs) exchanging words - firing at each other. Mr Chaudhry had to intervene to calm the situation down. Soon after the meeting proper, further criticisms were labeled against the two MPs by Labou supporters. Supporters questioned why the two MPs had failed to return to the areas after the election. Then, a faction emerged among the supporters of the two MPs. People supporting Mr Singh started condemning Mr Sharma holding him responsible for the concerns raised by the supporters. They claimed that as an Indian Communal seat MP he was responsible for the affairs of the Indo-Fijian people, however, Mr Sharma's strong supporters condemned Singh for neglecting the people of the constituency despite being the Open seat MP.

When contacted yesterday Mr Chaudhry denied any possibilities of a rift in the constituency saying that nobody has made any official complaint to him. He also stated that allegations that no assistance came from the MPs after the recent floods were false. "We are well aware that Mr Vyas Deo Sharma distributed food rations to around 20 affected families in the constituency," he added.

Labour Party (FLP) Selects Two Thirds of its Candidates Suva Fiji Daily Post Times text in English 19 Feb 06

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Unattributed report: "FLP selects two thirds of its candidates"

The Fiji Labour Party has selected two third of its 72 candidates to contest the 2006 general elections under its banner says opposition leader Mahendra Chaudhry. Mr Chaudhry said there would be changes as there were some members that would not be contesting the next' elections for various reasons therefore their places needed to be filled.

"A management sub-committee made of three members was appointed to engage in consultations on the selection and they will be coming back to us sometime next week," he said. Meanwhile, Mr Chaudhry expressed disappointment at the Cabinet decision not to amend certain sections of the Electoral Act. "The decision to bring about changes, especially to the confusing ballot paper was a unanimous one that even the SDL members agreed to," he said. He maintained that the ballot paper, which contained the alternative voting system, could be simplified in order to remove the high number of invalid votes. "This will not require the expensive voter education that is being undertaken by the Elections Office which is really propaganda by the government," he said. "The current ballot paper also facilitates cheating."

Mr Chaudhry alleged that when a confused voter seeks assistance, the officials who are at the centres tell them where to tick rather than helping them understand the system. "The government has given a very flimsy reason for not revising the ballot papers and this means that we will have to be more vigilant during election time," he said.

SVT hails the merger with CAMV Suva Fiji Sun text in English 19 Feb 06

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Unattributed report: "SVT hails merger"

The merger of the Conservative Alliance Matailitu Vanua and the Soqosoqo Duavata ni Lewenivanua parties must show real unity and not be something for political gains. Soqosoqo ni Vakavulewa ni Taukei party general secretary Ema Druavesi said this was a good sign of unity and togetherness but it must be true unity.

"I believe that if they are truly united, it would better they work together in a clean way without dirty games with bullets behind their backs," Ms Druavesi said. She said that the talk about the merger started after the CAMV party caucus meeting in Parliament which two senior members did not attend. The two were Ratu Naiqama Lalabalavu and Ratu Josefa Dimuri. She said it was heard in the meeting that Prime Minister Laisenia Qarase wanted them to dissolve the CAMV party and for them to be part of SDL. "In another meeting, some CAMV parliamentarians did not accept it and that decision must be forwarded first to its members to decide on what move to be taken," she said. Ms Druavesi said the party was quite happy about the stand taken by the two Fijian political parties.

NFP Secretary General says: Too Early to Comment on SDL/ CAMV merger Suva Fiji Daily Post Times text in English 19 Feb 06

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Unattributed report: "It's wait and see"

People will just have to wait and see where the recent merger of two political parties is going to lead. The National Federation Party's general secretary, Parmod Rae made the remark following the political marriage of the Conservative Alliance Matanitu Vanua (CAMV) and Soqosoqo Duavata ni Lewenivanua (SDL) parties on Friday at Tamavua Village. "It is still too early to comment on the recent merger, let's just see where they will go from there," Mr Rae said. Some political parties have labeled it a bad move with Fiji Labour Party leader Mahendra Chaudhry labelling the merger, as a desperate move by the two parties. "The two parties are just doing this for the sake of their survival in the political arena. I know that there are some disgruntled CAMV party members and they don't support the move," Mr Chaudry said. "Even if the two parties merge now, they will still need to go into coalition with another party in order to form a Government."

Meanwhile, former prime minister Sitiveni Rabuka said the merger was inevitable, seeing the length of time the two parties have been part of a coalition. "What else can we say? I think after five years of working together it is only natural that they go into a merge," Mr Rabuka said. CAMV approached the SDL with the offer of contesting the general elections as one political party. CAMV vice president Ratu Naiqama Lalabalavu said that they made the move for the purpose of unity. "We need to unite in order to ensure that the leadership of the country stays with the Fijians," he said.

SVT rules out merger with SDL Suva Fiji Sun text in English 19 Feb 06

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Unattributed report: "SVT rules out merger"

The Soqosoqo Vakavulewa ni Taukei party has no intention of merging with the Qarase-led Soqosoqo ni Duavata ni Lewenivanua party. SVT president Sitiveni Rabuka said they had no mandate but would have to talk to members because a merger would kill the identity of the party. "What we may do is to call a meeting in April when the constituents council will come up with its feelings on the possibility of such a merge," he said. However, he said what the party might do is to either stay as a party and join the coalition, abolish the merger and retain a coalition or abolish and independently decide to deregister the party. Mr Rabuka had earlier said at the beginning of the year that the party had yet to decide whether to disband and join another party or to carry on. "What we may have to do is see if we can call together a group of representatives later this month or early next month when we will finally decide how to look at the future," he said. "We had a few discussions with our brainstorming team of the senior members who are left in the party but we have not made any activation. Whether to go in the general election as a single entity or whether we become a component of that grand coalition or we just disband our party and go with the mainstream parties." The party, he said, had already met four other parties on its election preparations.

National Party says Labour Coalition Talks 'Unhealthy and Counter-Productive" Suva Fiji Sun text in English 19 Feb 06

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Unattributed report: "Labour coalition talks 'unhealthy'"

The National Federation Party has reiterated that talks with the Fiji Labour Party for the General Elections are unhealthy and counter-productive. NFP president Raman Pratap Singh said looking at the election preparation, FLP leader Mahendra Chaudhry was only posturing and grandstanding purely to hoodwink the Indo-Fijian electorate. "The FLP leader is deliberately twisting facts and this shows he is not genuine when he says that he wants to talk to NFP," Mr Singh said. He said in the last few months the NFP could have indulged in the same tactics as Mr Chaudhry but did not because it would harm the interests of the Indo-Fijian community and the entire nation. Mr Singh said despite bearing the brunt of criticism from the FLP and its leader, the NFP's doors are open for dialogue. "The choice now lies with the FLP and its leader to decide whether they want to negotiate electoral arrangements through the media or with the NFP in accordance with our two letters of invitation," he said.

Editorial - Comments on Political Mergers and Coalitions Suva Fiji Sun text in English 19 Feb 06

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Unattributed report: 'Editorial - Political mergers"

With so many political parties - 25 at the last count - registered for this year's general election, a series of mergers would probably be beneficial to all concerned. The ballot papers, for example, would be much simpler to prepare - and understand - if there were fewer parties chasing the quite limited number of votes. Similarly the seemingly impenetrable system of preferences transfer and swapping would be rendered almost comprehensible if there were, say, five rather than 25 political parties. The Grand Fijian Coalition concept has much to commend it. Most of the small parties are Fijian and their presence will serve only to confuse the Fijian voters while their Indian colleagues have basically only two choices. The CAMV and the SDL have led the way with their own merger, which was not completely unexpected. This does not, of course, mean that all members of the newly merged body see completely eye to eye on every issue. The Unity Bill and the proposed freeing of the coup convicts will continue to cause friction. But political parties are - or should be - broad churches with room for constructive criticism and even dissent among people of similar objectives, something the Fiji Labour Party might care to consider. On the other hand, those CAMV members who will now stand for election under the SDL banner will now be subject to party discipline and, assuming they are returned to Parliament, they cannot change their colours without submitting themselves to a by-election. Now there is talk of further mergers.

The Fiji Labour Party and the New Alliance Party look like natural partners at the present time. Both embrace multiculturalism, both stand for equality of opportunity and both want a multiracial government. Negotiations on the leadership of any merged body would, however, be delicate. Yet the New Alliance would bring to the FLP a significant Fijian presence, presenting a body along the lines of the electoral success of the People's Coalition of 1999. Why the Party of National Unity has not already sought a merger with the FLP is something of a mystery, being as it is the FLP's Fijian arm. Also, we see the development of an alliance between the SDL and the NFP through a preference sharing agreement. Whether that would ever grow into a merger, however, must be deemed doubtful at this stage. We may-see more political parties merging either formally or informally in the run-up to the election and such moves can only be positive. We can preserve and encourage diversity of opinion without leaving the voters totally confused.

Labour Party (FLP) Promises to Solve Squatter Problem, If Elected Suva Fiji Daily Post Times text in English 19 Feb 06

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Unattributed report: "FLP promises to solve squatter problem"

The Fiji Labour Party is promising to implement major policies, which would resolve the squatter settlement problem in the country once it forms the next government. Speaking at the party's Vuda constituency meeting in Saweni at Lautoka last Saturday, Labour Member of Parliament Krishna Dutt also promised that appropriate policies would be in place to ensure that all students who are entitled to tertiary education and are financially incapable of doing so receive proper grants from the state. Mr Dutt told a large number of party supporters gathered at Saweni that these two issues would be the highlight of the party manifesto for the 2006 general election, which would be launched soon.

"Our party manifesto is ready and just needs a bit more work on it and we will try to release it in all languages so that you can see it and know the policies we will implement when we form the next government," Mr Datt told party supporters The FLP whip said current legislations said it was the right of every person to have adequate housing and he said the government should have that feeling. "It is your constitutional right of every citizen of this country that they be provided adequate shelter and housing," Mr Datt explained. "Since 1997 if we had worked to resolve the squatter problem then some arrangements could have been made for all the squatters today who don't have any to build their houses."

"But not all the government worked on this. Our government which lasted for a short time tried very hard to resolve this issue." People spend so many years repaying their loans on housing but because interest rates are so high, most people only manage to repay the interest on their loans. Mr Datt said interest rates should be reduced.

Labour to Voice Concern to President Over Possibility of 'Rushed' Elections Suva Fiji Times text in text in English 19 Feb 06

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Unattributed report: "Labour to voice concern"

The Fiji Labour Party and coalition members will seek an audience with the President Ratu Josefa Iloilo to voice concerns over a rushed general election. Party leader Mahendra Chaudhry said there was speculation that the election would be held by the end of April. Addressing coalition party supporters in Saweni, Lautoka, on Saturday night, Mr Chaudhry said rushing the elections would cause a lot of complications. He said the result could mean an unfair election. "It will be a rushed election," he said.

Mr Chaudhry said a lot of dialogue about the election had been planned but nothing was being done about it. He said he had raised his concerns with the Elections Office and would also raise the issue with Ratu Josefa if possible. He said there was not much time left before the country went to the polls. "We've got to prepare for this election," he said. Mr Chaudhry said the provisional rolls were out last week with hundreds of people not registered. He called supporters not to sit back and neglect their duties in electing their own government. "Each of us has an obligation where you do your bit and we will do ours," he said. Mr Chaudhry called on supporters to make sure that they made it to the polls during the elections. "You don't have to wait for the party bus to come and pick you up," he said. "You must at least make it there, it's just one day in five years where you are expected to do this," he said. "You have to do your duty as voters."

Land Owners Want Qoliqoli Bill Passed by Parliament Suva Fiji Times text in text in English 19 Feb 06

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Unattributed report: "Land owners want qoliqoli"

Owners of traditional fishing grounds are frustrated that the Customary Fisheries Bill has not been tabled in Parliament. Otherwise known as the Qoliqoli Bill, the legislation was to return ownership of fishing ground in Fiji waters to landowners, 100 years after it was given to Britain. Viti Landowners and Resources Association president Ratu Osea Gavidi made the comment after the second session of Parliament. "We are considering alternative ways of dealing with the Bill if the Government does not stick to its promise," he said. "We ask the Government to get on with the legislation. If it doesn't, we'll go to court because past governments have failed to honour a promise which was made 125 years ago."Four Cases of HIV/Aids Detected in Prisons Last Year Suva Fiji Times text in text in English 19 Feb 06

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Unattributed report: "Respect dignity, rights: Taoka"

Testing prisoners for HIV/AIDS would rob them of their dignity, says Commissioner of Prisons Aisea Taoka. "I think the rights of prisoners should be respected just as any other person outside the prison walls," Mr Taoka said. Mr Taoka said when a person was sent to prison he only lost his liberty and not his dignity. He said people outside prison were protected under the Ministry of Health's patient confidentiality act and the same should be practiced in prison. Though he admitted having cases of HIV positive prisoners in the past, Mr Taoka said the prisoners brought the virus with them from outside. "Last year we had four cases of HIV positive prisoners but they are no longer in prison because they have served their sentence and were released," Mr Taoka said. "Having prisoners with HIV does not really affect my officers because we have had some awareness workshops for officers and prisoners and these workshops assisted in increasing their awareness of the virus." Meanwhile, the United Nations Population Fund representative in Fiji, Najib Assifi said the UNFPA subscribed to the international human rights charter on voluntary confidential counsel and testing of all individuals, including incarcerated persons. "UNFPA works with governments of the Pacific and provides support in various areas of need as identified by respective governments. "For example, we work with the Ministry of Health in providing educational and youth counselling services in schools and youth clinics in 10 Pacific countries," Mr Assifi said. "Our work in the area of HIV awareness and prevention is expanding to address the need of various groups such as youths, workplace settings and marginalised groups and our counselling services can be extended to the prison services as well.

Australian McCosker Could Face Extradition Back to Fiji Suva Fiji Daily Post Times text in English 19 Feb 06

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Unattributed report: "McCosker extradition order from Fiji"

The Australian man who was acquitted by the Lautoka High Court last year after it found that his conviction clashed with constitutional guarantees of privacy and equality - is awaiting extradition (back) to Fiji. Victorian lecturer Thomas McCosker, 55, while visiting Fiji last year was sentenced to two years imprisonment along with Fijian Dhirendra Nadan, 23, by the Magistrates Court but it was overturned by the High Court.

The Director of Public Prosecutions Office had indicated that it will fight the case to have the magistrate courts' conviction reinstated. Radio Australia reported that Mr McCosker was waiting to hear whether he will be extradited back to Fiji. The DPP's office has indicated that no decision has been made over Mr McCosker's extradition. Both McCosker and Nadan were found guilty of consensual gay sex in April and sentenced to two years' imprisonment by a magistrate who called their behaviour "something so disgusting it would make any decent person vomit". It was this comment and the sentencing plus the subsequent release that sparked media frenzy over what people perceived as a right enshrined in the 1997 Constitution under the Bill of Rights while others condemned an unholy act according to the scriptures.

Investment Board (FTIB) Says Many (Unsuitable) Foreign Investors Turned Away Suva Fiji Daily Post Times text in English 19 Feb 06

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Unattributed report: "Many foreign investors turned away: FTIB"

Close to half a million dollars in revenue earnings and hundreds of job losses were recorded last year alone when the Fiji Islands Trade and Investment Bureau (FTIB) declined 32 investment applications by foreign investors. And the FTIB reasoned the applications were declined because applicants did not meet requirement of the Foreign Investment Act. "These amounted to revenue loss of $4,856,800 and a loss of 185 employment opportunities," its chief executive officer, Lailun Khan said. Responding to questions by the Fiji Daily Post, Mrs Khan said another 45 foreign investment registration certificates were also cancelled last year for non-compliance. "Some businesses were found to be doing businesses they were not supposed to be doing, for example under the Restricted Activities list. Some others were not doing business at all," she said. Mrs Khan said some investors did not have genuine reasons for investing. "They had other ulterior motives, some of which were to gain citizenship only in Fiji, however, under the amended Foreign Investment Act, investors are now given only 12 months to start a business." She said any extension of time required must have FTIB's approval. Mrs Khan highlighted a loophole saying the reason this was happening was because organisations who they were supposed to be interlinked with were working in isolation. "One of the loopholes is because agencies are all working in isolation when our work is very much interlinked like FTIB, Immigration, Company's office, FIRCA, the Reserve Bank of Fiji and so forth," she said. "These relationships require an open communication policy, dialogue and sharing of information to enable us to be aware of what's going on in investment interests, the background of people, and other information that could be used to assist their own work and hasten the approval processes," Mrs Khan said.

Editorial - Reform him (Commodore Bainimarama) rather than remove him Suva Fiji Daily Post Times text in English 19 Feb 06

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Unattributed report: "Editorial: Reform him rather than remove him"

The Honourable Poseci Bune has hit the unofficial campaign trail like a pig taking to slops. As a politician, that is his right. Last weekend he made the unremarkable claim that the SDL has as its ultimate objective the removal of Commodore Bainimarama. That may or may not be the case - we are not privy to SDL policy, as Mr Bune seems to be. But who could be surprised if it were their aim to replace the commander with someone better? Who, in their right mind, would find that so objectionable in the wake of the 'past year of political instability emanating from the commander's unruly public comments?

It might be overstating the SDL's position to claim they are for a deposed or removed commander, but every right thinking citizen would certainly be for a better behaved or reformed commander. One not given to impulsive comment, one not grandstanding to his own troops as though he were running for elections, one not imbued with a dangerous messianic complex. Indeed, the commander reminds us that there are a great number of personal problems from which we can all be reformed or healed. We may be shop-aholics, alcoholics, drug-addicts, people with eating disorders, sexaholics, and so forth. In this respect, compulsive foot-in-mouth disease has been a symptom of our commander's deeper problem hitherto. But will a little help from all of us, including the Acting President and the Prime Minister (and perhaps even Benny Hinn), he can be reformed. That too is what the Honourable Bune ought to be striving to do rather than wasting time, second guessing his political enemy's, position, real differences or just theatrical mush?

Speaking of political enemies, with the election only a matter of months away, we will have the scenario repeated, as in 2001, where political parties will hit the stumps engaging in the rough and tumble of accusation and counter-accusation, claim and counter-claim. Diametrically opposed versions of reality will be presented to us. Every positive put by one group will be negated by the other. What one party calls white, the other will call black. The diagnosis of the economy will be greatly and sharply contended. According to one side we will be on the road to heavenly prosperity; the other will say we are on the road to hardship and hell. Policies for national unity and security will also be divisively contested as each side tries to make the other look self-interested and without morals. And then the electioneering will be over and once we sort out the winners and losers, the constitution will take over. And we are to expect these dialectically hostile and implacable campaign foes to work together in government for the sake of satisfying Section 99?! Come again? All the philosophical polarities of the campaign trail are to be forgotten by a Section 99-invoked government of national unity?

Whoever dreamt up such nonsense by this unworkable constitutional provision was clearly not living in the real world. We hope rather that the parties actually do mean what they say they mean when they campaign against each other and that they have the integrity to stand by their claims once the outcome of the election is clear. The alternative is that Section 99 will just retrospectively reduce it all to theatre, charade and wishy-washy politicking. In which case, better to not have policies - just go straight to the vote and forget about holding and campaigning from principled positions about anything.

Labour Party (FLP) alleges plot to remove President Suva Fiji Sun text in English 19 Feb 06

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Unattributed report: "FLP alleges plot on President"

There are plans in place by the Government to remove the president, Ratu Josefa Iloilo, when members of the Great Council of Chiefs meet next month. Fiji Labour Party vice president Poseci Bune said this is because the SDL-led government did not accept the request made by the President for the Government to withdraw the Tolerance and Reconciliation and Unity Bill soon after it was introduced. "The President asked the Prime Minister, Laisenia Qarase, soon after it was introduced in Parliament to withdraw the Bill because of the opposition from all the different races in our country," said Mr Bune. He added that individuals and many non-governmental organisations opposed the Bill. He said that was the reason why Mr Qarase sought the opinion of the provincial councils. "The Government has been working in opposition against the commander, who is also against the Bill. They are trying to oppose the reelection of the President, which is also the only way to remove the commander," said Mr Bune. Mr Qarase earlier said that if there is an early General Election, the Bill would be dropped altogether but if it is still far off, there is a possibility of re-introducing the Bill. The RTU Bill will give way to those involved in the upheaval of 2000 to be released under another tribunal, which is separate from the normal court system and procedures. Mr Bune said the Government should not interfere with the choosing of the next President but to leave that decision to members of the Great Council of Chiefs.

PM Asked to Explain to Electorate Failure of the Lands Bill Suva Fiji Sun text in English 19 Feb 06

OSB Transcribed text

Unattributed report: "Explain failure of Bill, MP tells PM"

The United People's Party believes there is still one point that Prime Minister Laisenia Qarase has yet to explain to all the citizens of this country and his supporters. Party president Mick Beddoes said the SDL party leader had not explained in full how his Native Land Tenant Act (NLTA) Bill was defeated in Parliament. "The Prime Minister has forgotten to explain to the citizens of this country and in Parliament why seven members of his party were not present at the time of the first vote on the Bill was taken," said Mr Beddoes. He said if Mr Qarase had thought that it was a crucial and important Bill, he should have ensured his members were present. The NLTA Bill was defeated after some members of the SDL-led government in Parliament were absent on the two days of voting. "In the second vote, less than five members of his party were absent. If he had said that it was a critical vote for his government, he should explain how his so-critical Bill was defeated," he said. Mr Qarase was against the re-introductiol1of the ALTA (Agricultural Landlord and Tenants Act) land lease method and was for NLTA.

The following report draws on two articles from the Indonesian online media of 20 February 2006 dealing with the Indonesian parliament's debate of two international anti-terrorism conventions.

Translation of article:

Quote:

"DPR Debates International Anti-terrorism Conventions"

Jakarta (Antara News): The DPR (People's Representative Council) and the Department of Foreign Affairs have commenced discussions on the ratification of two international conventions on the eradication of terrorism.

During the meeting between (DPR) Commission I and Foreign Minister Hassan Wirajuda, presided over by commission chairman Theo Sambuaga at the parliament building in Jakarta on Monday 20 February, party factions voiced their positions on the proposed ratification of the two conventions.

The two conventions are the International Convention for the Eradication of Terrorism of 1997 and the International Convention for the Eradication of Terrorism Funding of 1999.

Debate regarding the ratification of the two conventions will lead to the formulation of a draft bill.

All party factions agreed that debate of the draft bill would result in it being passed into law.

Golkar Party spokesman Antirini Malik said the war on terrorism would only be effective if there was cooperation at all levels of the community.

Golkar rejected the suggestion that terrorism was connected to one group within the community.

The party also stated that terrorism could be defeated if its roots were destroyed, particularly social imbalance, both in Indonesian society and throughout the international community.

Consequently, cooperation in the economic and social welfare sectors was a strong strategic measure in combatting terrorism.

"We appreciate Indonesia's cooperation with other countries which has assisted in developing our security and law enforcement agencies. We hope the cooperation can be intensified," said Malik.

Cooperative initiatives include (training in) the flow of funds, (the handling) of explosive materials, and the exploitation of sophisticated technology.

Spokesman for the Indonesian Democratic Party of Struggle (PDIP), Effendy Mara Sakti, said that acts of terrorism were the result of social inequality and imbalance. He added that inequality existed between developed nations and poor nations.

However, he said his party rejected the notion that terrorism was linked to religion. (passages omitted on unconnected detail).

Unquote.

The weekly magazine carried comments on the issue by the Chairman of the Muslims Legal Defence Team (TPM), Mahendradatta, who said that the ratification of the anti-terrorism law in Indonesia only had the objective of marginalizing the Islamic community. "Of the hundreds of cases handled by TPM to date, all have been tried under the Anti-terrorism Act," he said.

As an example, Mahendradatta referred to a recent case in Ambon where two Muslims were tried under the Anti-terrorism Act for their part in an attack on a housing complex in February 2005, whereas non Muslims involved in the same incident were tried under the Code of Criminal Justice and the Civil Emergency Act. "Whatever the indications are, as soon as it is a Muslim who has committed a crime, they are immediately processed under the Anti-terrorism Act," he said.

IN THIS ISSUE:

- ARMENIAN DEFENSE MINISTER AND SECURITY COUNCIL SECRETARY SPOKE AGAINST OVER-DRAMATIZING SITUATION SURROUNDING SEARCH FOR COMPROMISE IN NAGORNO- KARABAKH CONFLICT

- GEORGIA IS PROMOTING DEMOCRACY AND FREEDOM, RATING OF PRESIDENT IS RATHER HIGH - SAAKASHVILI- HALF OF KAZAKHS SUPPORT AKHMETOV'S SECOND TERM AS PRIME MINISTER- KYRGYZ SPEAKER TEKEBAYEV RETAINS HIS POSITION- PUTIN TELLS CABINET TO AVERT PRICE HIKES DUE TO CROP LOSS- NIYAZOV ORDERS CHECK OF GAS SETTLEMENTS WITH UKRAINE- UKRAINIAN PRESIDENT ORDERS BIRD FLU MEASURES

ARMENIA

ARMENIAN OFFICIAL BLAMES BAKU FOR THWARTING KARABAKH TALKS

Azerbaijan refused to support a document at negotiations aimed at advancing a settlement of the conflict over Nagorno-Karabakh between Armenia and Azerbaijan held in France on February 10-11 which had earlier been approved by the OSCE Minsk Group, a team of international mediators dealing with the problem, said Armenian Defense Minister and Security Council Secretary Serzh Sarkisian.

Commenting on what he called a failure at the Armenian-Azerbaijani negotiations on Nagorno-Karabakh, Sarkisian said at a Friday press conference that the talks had ended with "an unexpected result."

"In fact, the sides were offered a document approved of by the co- chairmen of the OSCE Minsk Group representing Russia, France, and the U.S., and it is the Azeri side that did not support this document," Sarkisian said.

Nevertheless, he spoke against over-dramatizing the situation surrounding the search for a compromise in the conflict.

It was earlier reported that Azerbaijan accused Armenia of thwarting the negotiations. Meeting with journalists in Baku last week, Azeri presidential adviser Novruz Mamedov described Armenian President Robert Kocharian's decision to cut short his meeting with his Azerbaijani counterpart Ilham Aliyev as "irresponsible".

"Probably, there was a need for some pretext for this. He (Kocharian) either failed to endure the pressure or felt unconfident during the negotiations. Therefore he made a statement to withdraw from the negotiations," Mamedov said.

"Of course, this was wrong. A statesman should be serious in his actions and feel responsibility," Mamedov said.

Armenian Foreign Minister Vardan Oskanian disagreed with this interpretation. "Reports that the Armenian delegation, particularly the president of Armenia, left the negotiations at Rambouillet earlier than due are absurd. We negotiated as long as it was planned and left Rambouillet at the planned time," Oskanian told journalists in Yerevan.

Oskanian admitted that the February 10-11 negotiations between Kocharian and Aliyev, sponsored by French President Jacques Chirac, passed without any significant result. "The question facing the Armenian and Azeri presidents at Rambouillet was quite complicated. Unfortunately, no agreement was reached, but this was predictable, because it's impossible to reach an agreement on such a difficult issue immediately," he said.

"However, this should not overshadow the previous achievements in the Nagorno-Karabakh settlement process," Oskanian said.

The Armenian minister said he believes that the two countries made substantial progress in settling the Nagorno-Karabakh conflict in 2005.

The leadership of the self-proclaimed Nagorno-Karabakh Republic believes it would be premature to talk about deploying peacekeepers to the conflict area.

"A peacekeeping contingent could be brought in only as a guarantor of agreements reached between the conflicting parties. There are no agreements yet, and therefore it is premature to talk about peacekeepers," Nagorno-Karabakh Prime Minister Anushavan Danielian said at a roundtable meeting on Friday.

"The people's security in this territory is currently guaranteed by Armenia and Nagorno-Karabakh," he said.

Danielian also said the authorities in Nagorno-Karabakh have managed to double its GDP in the past three years. A total of about $70 million in investment has been received in the past two years from France, the U.S., Russia, Belgium, Australia, and a number of other countries. Nagorno-Karabakh's yearly budget is about $60 million, he said.

ARMENIAN PARLIAMENT ELECTS HUMAN RIGHTS COMMISSIONER

Armenia's parliament has elected a new human rights commissioner: Armen Arutyunian, the head of the State Governance Academy.

He was elected at an extraordinary parliamentary session on Friday.

Arutyunian, a candidate representing the pro-government parliamentary coalition, received 87 votes in a secret ballot. He needed the votes of 79 deputies out of parliament's total of 131.

Arutyunian's rival, Grant Khachatrian of the opposition parliamentary group Justice, garnered 28 votes.

The elected ombudsman told journalists following the voting that he is determined to be independent in his work and defend people's rights regardless of their social status and political preferences.

BELARUS

DESPITE VIOLATIONS, BELARUSSIAN OPPOSITION CANDIDATE WON'T BE BARRED

The wife of opposition candidate Alexander Milinkevich did not declare income of 900,000 Belarussian rubles (about $415), but he won't be barred from the election campaign, Belarussian Central Elections Commission Secretary Nikolai Lozovik told Interfax on Monday.

"A verification of income declarations supplied by Alexander Milinkevich showed that his wife, Inna Kuley, did not declare income of 900,000 Belarussian rubles from sale of a Mazda vehicle," he said.

"Similar violations resulted in the annulment of parliamentary mandates" in the previous campaign, Central Elections Commission Chairman Lydia Yermoshina said. "But the stakes are too high this time - this is the presidential election. Nearly 200,000 signatures were collected in Milinkevich's support, and we cannot fail the trust of voters," she added.

GEORGIA

GEORGIAN RESOLUTION ON RUSSIAN PEACEKEEPERS FLEXIBLE - SAAKASHVILI

The resolution adopted by Georgia's parliament demanding the replacement of Russian peacekeepers is flexible, Georgian President Mikheil Saakashvili said.

"This document provides all parties, including Russia, with the chance to sit at the negotiating table and resolve the problem through negotiations," Saakashvili said at a security conference in Tbilisi on Saturday.

The resolution calls for replacing the Russian peacekeeping contingent in the South Ossetian conflict zone with an international force.

Georgia's peace plan for South Ossetia is supported by the U.S. and the European Union, "and also by Russia, although the Russian side later refused to acknowledge that it had supported this particular plan," Saakashvili said

"This Russian approach is manifested everywhere," he said.

The Georgian leader called Abkhazia and South Ossetia, the breakaway republics that were earlier parts of Georgia, "enclaves of KGB men, where the dreams of Dzershinsky, Beria, and Yury Andropov are being put into practice without any control."

Meanwhile, Saakashvili emphasized that he never directly accused Russia of culpability in the serious energy crisis Georgia recently suffered. The crisis, which lasted for nearly two weeks, was the result of explosions in January on the trunk gas pipeline and at the Kavkasioni high-voltage power transmission line through which Russia supplies Georgia with gas and electricity.

"However, as these acts of sabotage occurred in Russian territory, Georgia expected a proper response from Russia at least in the form of apologies," Saakashvili said.

"But we received quite a different response," he said.

"Questions that Georgia would like to ask Russia on this account are absolutely legitimate, but Georgia is not going to gamble on this," Saakashvili said.

"Georgia views the diversification of energy supply sources and the construction of new alternative gas pipelines as the only way to ensure its energy security," he said.

In addition, Tbilisi is pursuing NATO membership, Saakashvili said. "Georgia is not only a consumer of the security system, but we are also an important component of the global security system," he said.

Saakashvili claimed that not a single country has ever made the kind of progress Georgia has on its way to joining NATO.

The president said he is indignant at the pronouncements by South Ossetian leader Eduard Kokoity on the replacement of Russian peacekeepers in the conflict zone.

"Eduard Kokoity said that his supporters would destroy any peacekeepers but Russian," Saakashvili said. "This statement sheds light on the actual situation in the Georgian-Ossetian conflict zone, where Russia has usurped peacekeeping rights and obviously plays into the hands of separatists, thus trampling upon the interests of Georgia."

"They do not want to make the peacekeeping process international. The idea is so repulsive that they are ready to kill peacekeepers from Lithuania, Latvia and other countries," he said.

"This is another confirmation that the problem of South Ossetia exceeds the limits of Georgia," he said.

Georgian authorities have defeated corruption with the support of the people, Saakashvili said.

"Georgia has stopped being a corrupt country, which is proven by the fivefold enlargement of the state budget and new hospitals, roads and other facilities," he said.

Georgia is promoting democracy and freedom, Saakashvili said. "People support our policy, and the rating of the president and the ruling party is rather high - 70%," he said.

Saakashvili said they would not export the Rose Revolution to other countries. "I am not a Fidel Castro, and there is no Che Guevara in our government. Such claims are insulting," he said.

GEORGIA TO ROTATE PEACEKEEPERS IN S. OSSETIA CONFLICT ZONE

Georgia is to rotate its peacekeeping battalion in the Georgian- South Ossetian conflict zone on Sunday and Monday, Prime Minister Zurab Nogaideli announced on Saturday.

The rotation of the peacekeeping forces is to become more frequent and the number of servicemen rotated is to more than double, he said.

The battalion is part of a peacekeeping force stationed in Georgian-South Ossetian conflict zone, which also includes Russian and South Ossetian troops.

"At the start of the year it was decided that the Georgian peacekeeping battalion in the conflict zone would be rotated every three months. This decision was made despite protests from the Russian and Ossetian sides, who demanded that rotation be carried out once every six months," Nogaideli told a briefing in Tbilisi.

"Whereas in the past (the battalion) was comprised of 130 servicemen, there will now be 300 people who are able to ensure security for the Georgian population in the region," he said.

He also called for a meeting between the Georgian and South Ossetian interior ministers.

"Ministers Vano Merabishvili and Mikhail Mindzayev should draw up a plan of joint measures to ensure the security of the population in the conflict zone. Our police forces should work in coordination," Nogaideli said.

Both Tbilisi and the South Ossetian capital Tskhinvali are acceptable as possible venues for such a meeting, he said.

Georgia plans to demilitarize the zone along its border with the separatist region of South Ossetia and hopes the breakaway province will make similar moves, Nogaideli announced on Saturday.

"The first thing the Georgian side will do as soon as the snow starts to melt is to dismantle the trenches that have been dug on the territory controlled by Tbilisi," Nogaideli told a briefing in Tbilisi after a meeting of the Georgian government coordinating council for the South Ossetian conflict.

"Not a single Georgian serviceman will enter the conflict zone without special permission from the Defense Ministry and approval from the commander of the Georgian peacekeeping force," he said.

"Lists of all Georgian servicemen who will be in the conflict zone will be handed over to the observer mission of the OSCE (Organization for Security and Co-operation in Europe)," the premier said.

Georgia plans to unilaterally begin the implementation of a peace plan aimed at settling the conflict in the Tskhinvali region, a statement by the Georgian Foreign Ministry says.

"The Georgian government is ready to begin unilateral actions to demilitarize the conflict zone in order to reduce tension and to further the peace process," and urges South Ossetia to take similar measures, the statement says.

Georgian military police will be withdrawn and no servicemen except peacekeepers will remain in the conflict zone, the statement says.

After the snow melts, Georgia will fill in all its trenches. Georgian military police will allow legal goods to cross its territory without hindrance, the Georgian Foreign Ministry said.

Georgia plans to increase its peacekeeping contingent by another 100 soldiers, bringing the number of Georgian soldiers in the conflict zone to 330.

Tbilisi is ready to cooperate with the de-facto Tskhinvali authorities in order to fight crime and is prepared to hold a meeting between interior ministers in Georgia or Tskhinvali, the Georgian Foreign Ministry said.

Georgia was barred from Moscow meetings of the Joint Control Commission for the Georgian-Ossetian Settlement deliberately, Georgian State Minister for Separatist Conflicts Giorgi Khaindrava said.

"I visited Moscow on Friday, but the letter of invitation (to the Moscow meeting) was sent to Tbilisi. Obviously, that was a trick - they sent the letter on Friday and the meeting started on Monday. It was impossible for me to fly to Tbilisi and go straight back to Moscow," he told Interfax on Monday.

Moscow said it regretted the absence of Georgian representatives from the February 20-21 meeting of the Joint Control Commission.

This statement by the Russian Foreign Ministry "perplexed Tbilisi," Khaindrava said.

"The meeting started on Monday, and it was clear that they did not want me there. I am very much perplexed by the Russian Foreign Ministry's expression of regret," he said.

"It would be more logical to hold the Joint Control Commission meeting in Tbilisi," Khaindrava said. "We suggested this and our proposal still stands. We are ready to hold the Joint Control Commission meeting in Tbilisi or, should it prove necessary, in Tskhinvali. I think that would have been much better than holding the meeting in Moscow," he said.

KAZAKHSTAN

HALF OF KAZAKHS SUPPORT AKHMETOV'S SECOND TERM AS PRIME MINISTER

Almost half of Kazakhs (49.5%) surveyed in a poll conducted amongst more than 1,700 Kazakhs on February 1 - 7 across 17 Kazakh cities by the Association of Sociologists and Political Experts support Danial Akhmetov being appointed prime minister for a second time.

According to the poll, Kazakh Foreign Minister Kasymzhomart Tokayev enjoys the highest approval rating (44.4% of respondents), followed by Kazakh Defense Minister Mukhtar Altynbayev (39.1%), Education and Science Minister Byrganym Aitimova (34.4%), Industry and Trade Minister Vladimir Shkolnik (34.2%), Emergency Situations Minister Shalbai Kulmakhanov (32%) and the only deputy prime minister in the new government Karim Masimov (30.4%), Culture, Information and Sports Minister Yermukhamet Yertysbayev (29%), Labor and Social Protection Minister Gulzhana Karagusova (28.8%), Justice Minister Zagipa Baliyeva (28%), Interior minister Baurzhan Mukhamedzhanov (26.6%) and Transport and Communications Minister Askar Mamin (25.2%).

Agricultural Minister Akhmetzhan Yesimov and Environment Protection Minister Kamaltin Mukhamedzhanov enjoy the support of 24.8% of respondents, 24.4% back Finance Minister Natalia Korzhova, 22.6% approve of Energy and Mineral Resources Minister Baktykozhi Izmukhzambetov's activity, while chief of the prime minister's chancellery Altai Tleuberdin received support from 22% of respondents.

Kazakhs believe that the new government will be able to fulfill presidential order and will be able to place Kazakhstan amongst the 50 most competitive countries of the world.

SIX ARRESTED IN MURDER OF KAZAKH OPPOSITION POLITICIAN

Six people have been arrested on suspicion of murdering Kazakh opposition politician Altynbek Sarsenbayuly, his driver and bodyguard, Interior Minister Baurzhan Mukhamejanov told a Monday press conference in Almaty.

He said they had detained the murder organizer and five perpetrators.

All the arrested people have pleaded guilty, the minister added.

The organizer hired the killers for $25,000. The opposition politician, his bodyguard and driver were found dead near Almaty on February 13.

Sarsenbayuly, 43, used to be the media minister, the information and public accord minister and the Security Council secretary. He was the Kazakh ambassador to Russia in 2002-2003. At the end of 2003 he joined the opposition and chaired the Ak Zhol party. In 2004 he briefly took a governmental position and headed the information ministry for three months.

Last year Sarsenbayuly joined the opposition bloc For Fair Kazakhstan.

KYRGYZSTAN

KYRGYZ SPEAKER TEKEBAYEV RETAINS HIS POSITION

Kyrgyz Parliament Speaker Omurbek Tekebayev will retain his position, as a Monday vote on his resignation failed, a house source told the press.

Tekebayev offered to resign on February 13, but a majority of lawmakers on Monday voted to keep him in the post. He was supported by 34 out of 62 deputies.

Tekebayev was elected as the speaker last April. Kyrgyz President Kurmanbek Bakiyev strongly criticized the parliament early this February, and the reaction of Tekebayev was highly negative.

In fact, the speaker insulted the president, Prime Minister Felix Kulov said. "The speaker's words were insulting, and all the rest was an attempt to give the situation a political flavor," Kulov said.

Kyrgyz Prosecutor General Kambaraly Kongatiyev said that he would sue the speaker, and the speaker promised to resign if parliament did not have confidence in him.

In voting down the parliamentary speaker's offer to resign, Kyrgyzstan's parliament endorsed his policies, Kubatbek Baybolov, parliament deputy and leader of the Union of Democratic Parties, told Interfax on Monday.

"Their refusal to support the resignation of Speaker Omurbek Tekebayev shows that they need his policy rather than Tekebayev himself," he said.

"The parliament favors the Tekebayev policy, which aims at reforms and the suppression of crime," Baybolov said.

At the same time, "executive authorities may try to force Tekebayev into resignation," he said. "They may make these attempts through deputies or rallies."

Baybolov thinks that "any campaigns for replacing the speaker would be erroneous."

"Not a single serious politician could be interested in dismissing parliament," he said. "Dismissing parliament would inevitably cause destabilization, and modern political players should be aware of that."

"The parliamentary refusal to support the resignation of Tekebayev is the parliament's internal affair," presidential press secretary Nadyr Momunov told Interfax.

RUSSIA

PUTIN NOMINATES MUKHU ALIYEV FOR DAGESTANI PRESIDENT

Russian President Vladimir Putin has nominated Mukhu Aliyev for Dagestani president in conformity with article 18 of the federal law on general principles of the formation of regional executive and legislative power bodies, the Kremlin press service said.

Mukhu Gimbatovich Aliyev was born in the village of Tanusi in the Khunzakh district of Dagestan on August 6, 1940. He graduated from Dagestani State University in 1962.

Aliyev was a member of the 9th, 10th and 11th Supreme Councils (parliament) of Dagestan. He was elected as a deputy chairman of the Dagestani Supreme Council on December 21, 1991, and the chairman of the Dagestani Economic Council in 1992. He became the Supreme Council Chairman in July 1994.

In March 1995, Aliyev was elected as a deputy of the Dagestani People's Assembly and, later on, as the Assembly chairman. He also was a member of the second Federation Council.

Aliyev was re-elected as a member of the Dagestani People's Assembly in March 1999, and again held the position of the Assembly chairman.

At a Friday meeting with former Dagestani leader Magomedali Magomedov, who announced his resignation last week, Putin said that he knows Aliyev well and asked the Dagestani speaker to give his reflections on the situation in Dagestan.

Aliyev did not deny the fact that the social and political situation in Dagestan remains complicated in general. This is linked to both security issues and social and economic development of Dagestan, he said. He drew attention to the need to counter unemployment and poverty, the speaker said. Resolving social and economic problems will foster the fight against terrorism, he said.

Speaking about interethnic relations in Dagestan, Aliyev said that some problems could be traced back to the Soviet times. However, some problems have appeared recently. He stressed the need to strengthen traditions of peaceful coexistence and friendship of different ethnos and confessions in Dagestan.

The president offered the former Dagestani leader to enter a commission on strengthening Russian statehood and federative relations.

I think that he (Magomedov) has contributed greatly to stabilizing the situation in the North Caucasus, has done a lot for the development of Dagestan and, without any doubts, has contributed to strengthening Russian statehood and Russia, Putin said at the meeting.

The Dagestani People's Assembly confirmed Mukhu Aliyev as the president on Monday, by a vote of 101 to one.

All 102 of those present voted. The assembly has a total of 121 members.

Aliyev said he is to focus on administrative reform and on restructuring executive agencies.

"Administration reform and the restructuring of executive agencies are priorities," Aliyev told a press conference. "We are lagging behind other areas of the Russian Federation in this respect," he said.

"The same people have been holding their positions for decades. We have plenty of young talented men and personnel should be reshuffled at all levels. The future belongs to the young. We should prepare them for their future mission," Aliyev said.

PUTIN TELLS CABINET TO AVERT PRICE HIKES DUE TO CROP LOSS

President Vladimir Putin has given the Cabinet the task of preventing farm produce shortages due to crop losses caused by this winter's severe temperatures.

"People should not have any problems from more expensive farm produce," he said at a meeting with the Cabinet.

He instructed ministers "to think how the market can be effectively filled with high quality and cheap goods in case of losses in farming."

"This can be easily done by expanding contacts with producers in CIS countries, primarily in Central Asia," he said.

The unusually cold weather in Russia this winter has resulted in the loss of up to 30% of the country's winter crops, or about 3.5 million-4 million hectares, Agriculture Minister Alexei Gordeyev told Russian President Vladimir Putin.

In addition, about 10% of the crops at the country's gardens and vineyards have been destroyed, he said.

PUTIN APPROVES MEMBERS OF COMMISSION FOR ARMS TRADE

President Vladimir Putin has signed a decree approving the list of members of the Commission for Military- Technical Cooperation (MTC) with Foreign States, the Kremlin press service reported on Monday.

Putin is commission chairman and Prime Minister Mikhail Fradkov is his deputy. Senior Kremlin aide Sergei Prikhodko was appointed commission secretary.

RUSSIA-CHINA PRISONER TRANSFER TREATY IN DUMA FOR RATIFICATION

President Vladimir Putin has submitted a Russian-Chinese treaty on convict transfers to the State Duma for ratification, the Kremlin press service told Interfax on Monday.

The agreement was signed in Beijing on December 2, 2002.

The treaty, under which convicts serve their prison term in their native country, is aimed at easing their return to a normal life upon release.

TURKMENISTAN

NIYAZOV ORDERS CHECK OF GAS SETTLEMENTS WITH UKRAINE

Turkmen President Saparmurat Niyazov has ordered officials in the gas and oil industry to reconcile gas settlements with Ukraine, a statement by the presidential press service says.

A meeting between the Turkmen president with Ukrainian Fuel and Energy Minister Ivan Plachkov and Naftogaz Ukrainy CEO Oleksiy Ivchenko focused on issues related Ukraine's payment obligations for Turkmen gas deliveries.

Highlighting the importance of fulfilling mutual obligations, Niyazov said that Ukraine should pay off its debt.

Sunday saw a telephone conversation between Niyazov and Ukrainian President Viktor Yushchenko, the presidential press service told Interfax.

The two presidents discussed the issues of Ukrainian debt for Turkmen natural gas and prospects for cooperation in the gas area, a source said.

The Turkmen president once again drew attention to the soonest possible debt payments. Meanwhile, Yushchenko said that he will consider the issue and will immediately inform Turkmenistan about the results of consideration.

Moreover, Yushchenko invited Niyazov to pay an official visit to Ukraine. Terms of the visit will be coordinated via diplomatic channels, the press service said.

Price parameters for Turkmen gas deliveries in 2006 were not discussed, a source from the Ukrainian government told Interfax commenting on results of the Turkmen negotiations. We have signed supplements to the existing contracts that define the terms of Turkmen gas deliveries next year, he said.

Meanwhile, Naftogaz Ukrainy's obligations for debt repayment of over $158.9 million, including $143.3 in 2005, were discussed at the negotiations, according to a Turkmen Foreign Ministry press release.

Despite Naftogaz Ukrainy's repeated assurances of full settlements with Turkmenistan, Ukraine has been unconstructive and did not take steps to settle its debt problem, the ministry said.

"Hence, we are perplexed and surprised with Naftogaz Ukrainy's numerous declarations of alleged full settlements with Turkmenistan and debt payments," the ministry said.

"In the opinion of Turkmenistan, Naftogaz Ukrainy's unconstructive position complicates negotiations on gas cooperation between Turkmenistan and Ukraine in 2007 and subsequently," the ministry said.

UZBEKISTAN

UZBEK CAMPAIGNER SUPPORTS SUSPENDED ACTIVITY OF FREEDOM HOUSE

Uzbek human rights campaigner Olga Krasnova has approved of the Tashkent city court order suspending the activity of the local office of U.S. human rights organization Freedom House.

"That is one of the rare occasions when Tashkent city court has the complete support of human rights organizations," she said.

The activity of Freedom House office was suspended for six months, from January 11 through July 11, 2006, because of a breach of national law. The Justice Ministry exposed the violations.

"Freedom House's activities have totally changed. Not only the personnel but also the goals of the organization are now different, and the activity is secret," Krasnova said. She said that the assignment of Freedom House grants was not transparent, and its activities were narrowly focused.

For instance, the Freedom House office "was interested in prison tortures, primarily for religious reasons," and paid little attention to other problems, she said.

"Last May in Samarkand representatives of the Freedom House Tashkent office provided unauthorized training to future organizers of rallies and marches with secret goals of a coup similar to Georgia's Rose Revolution," Krasnova said.

UKRAINE

UKRAINIAN PRESIDENT ORDERS BIRD FLU MEASURES

President Viktor Yushchenko has established a coordinating council for the prevention of bird flu and human pan-epidemics.

Emergency Situations Minister Viktor Boloha will head the consultative body, the presidential press service said.

Yushchenko also instructed the government, the National Academy of Sciences, and the Academy of Medical Sciences to consider establishing within a month a national institute of flu and respiratory infections and assign funds for bird flu precautions.

The president assured the people of Ukraine in his Saturday radio address that the authorities would do their best to prevent a human pan- epidemic.

"Our key task is to protect every Ukrainian from possible ailment and support agriculture and the economy that may be seriously damaged in a possible pan-epidemic," he said. "The government will concentrate on four priorities," he said.

Firstly, inoculations will be given in all regions. Ukrainian research institutes are capable of making a bird flu vaccine, Yushchenko said. "We should support our researchers, who are capable of new discoveries," he said.

Secondly, poultry companies "should help researchers and support the development of an efficient medicine against bird flu," he said.

Thirdly, Yushchenko hopes for parliamentary support for the production of medicines against dangerous infectious diseases.

Fourthly, he called for permanent monitoring and compensation to citizens, whose domestic birds had been disposed.

"The world is uniting the fight to disease. We must realize the importance of this challenge, stop any speculations and brace up for fighting the danger," he said.

YUSHCHENKO ORDERS DRAFTING OF NATIONAL SECURITY STRATEGY

Ukrainian President Viktor Yushchenko has signed a decree creating a working group for the development of a national security strategy for Ukraine, the presidential press service said.

The president ordered the creation of a working group to be headed by first deputy secretary of the Ukrainian National Security and Defense Council Vasyl Krutov in order to draft a national security strategy.

Yushchenko confirmed the composition of the working group, which unites representatives of the Ukrainian National Security and Defense Council, the Ukrainian Foreign Ministry, the Ukrainian Economy Ministry, the State Intelligent Service and representatives of parliamentary committees.

In accord with the decree, the working group will have to prepare and to present the draft national security strategy in three months.

National Security and Defense Council Secretary Anatoly Kinakh is charge of controlling the implementation of the decree.

Compiled by Karen Melikyan,

Andrei Petrovsky

A previously unreported item in Kompas on 16 Dec 05 covered the announcement of a ministerial decree stating that anyone wishing to use prepaid mobile phone cards would need to be registered. A brief summary of the item is as follows:

Everyone using prepaid mobile phone cards will need to register with the Directorate General for Postal and Telecommunication Services via a short message service (SMS) before 28 April 2006. Communications and Information Minister Sofyan Djalil issued Ministerial Decree No. 23/M.KOMINFO/10/2005, aimed at cutting down on the number of mobile numbers as many had been used for criminal offences. The SMS should include the number of one form of identification, such as a national identity card, passport, driver's licence or student card, a photocopy of which must be subsequently sent to the local telephone operator for validation. The details of suspicious individuals identified through the validation process would be handed over to law enforcers. Failure to send an SMS to No. 4444 would result on the phone number being cut off.

(The idea was first raised when it was discovered that terrorists were funding their activities from the sale of prepaid phone cards.)

(Description of Source: Jakarta Kompas in Indonesian -- Indonesia's largest daily newspaper)

Fiji May regional police meeting switched to Melbourne

Text of report by Fiji newspaper Fiji Times website on 16 February

A regional security meet scheduled for Fiji was moved to Melbourne because terrorism threats prevented Australian police commissioners from participating.

The conference of commissioners of police of Australia and the southwest Pacific was scheduled from 22 to 26 May in Nadi. Fifteen police commissioners, including every commissioner from Australia, New Zealand, Singapore, Hong Kong, Papua New Guinea, Tonga and the Solomon Islands, were to have attended the conference.

Police Commissioner Andrew Hughes said while it was disappointing that the venue was shifted, he accepted the decision made by his Australian colleagues. "I have been informed that there were concerns among some of the Australian police commissioners about all being away from Australia given the current terrorism threat there and some ongoing investigations and trials."

He said Australian Federal Police Commissioner Michael Keelty would not attend the conference because he would be attending the ASEANPOL conference but would send the deputy commissioner to the Melbourne conference.

"There is a standing agenda of law enforcement and public safety issues. But we're also theming the conference 'Future directions and challenges for policing'," Mr Hughes had said.

"And we're going to take the opportunity of meeting together to start looking at what is the future environment in which policing will be operated in our region in the socio-political, economic, globalisation - what will all these mean for police as an organization and as individual officers."

Mr Hughes said they would discuss the challenges they faced, how they could collaboratively work towards finding solutions and ensuring that they maintain public safety and public comfort in the police organization that they represented.

Greg Urwin, the secretary-general of the Pacific Islands Forum Secretariat, was to have addressed the participants on the Pacific Plan that includes looking at law enforcement and regional security.

SOLOMON ISLANDS

Police, RAMSI accused of spreading false hope over murder investigation Honiara Solomon Islands Broadcasting Corporation WWW-Text in English 15 Feb 06

OSB Transcribed Text

Unattributed report: "Relatives still waiting for police investigation finding"

The long delay in making public the outcome of a police investigations into the failed mission by ten Kwaio men believed to have been killed by former militants on Guadalcanal Weather Coast has been criticised by relatives. One relative member, Charles Karaori describes the delay as frustrating and painful. He says while they are relieved that former militants have been arrested and are awaiting trials in the High Court, they are saddened that it has taken so long for police to go public on whether they will ever make any further arrests of the possible master minders of the mission. Mr Karaori accused senior officials from the Royal Solomon Islands Police and RAMSI of propagating false hopes to the relatives during the burial of the remains of the ten men last year of the likely arrest of the master planners. He says since then it is almost a year without any sign of efforts to arrest those implicated to face justice. Police could not be reached for comment.

Money launderers target Solomons, Pacific Islands Honiara Solomon Star (Internet Version - WWW) in English 16 FEB 06

OSB Transcribed Text

Unattributed report: "Money launderers target SI & Pacific"

A number of Pacific Island states, including Solomon Islands, have been targeted by segments of the international community for their alleged vulnerability to money laundering. The Central Bank of Solomon Islands (CBSI) is concerned that money laundering could cause undesirable social and economic effects. So to educate Solomon Islanders, especially organisations dealing with money and goods, the newly established Financial Intelligence Unit in the CBSI is organising an Anti Money Laundering - Combating the finance of terrorism awareness workshop in Honiara next week.

The unit's spokesperson Michael Ha'apio explained the workshop is to educate officers from the selected organisations - commercial banks, financial institutions, immigration, departments of finance, forestry and foreign - about the activities. He said there is a need to put tough measures in place to clamp down on money laundering schemes. The establishment of the unit within the CBSI in September last year was timely to combat the financing of terrorism. Although Ha'apio did not elaborate on the topics, he said the workshop will provide participants with knowledge about money laundering and how best to fight against money laundering.

"Basically, the workshop will equip the participants with knowledge about this scheme. Money laundering is defined as illegally obtain money through legitimate businesses or foreign banks to conceal its origin. For some years now, a number of Pacific Island states have been targeted by segments of the international community for their alleged vulnerability to money laundering. The United States has long been concerned that money laundering carried out in the Pacific could have long-term security implications and the US Congress has put tough measures in place to clamp down on Pacific money laundering schemes. But now, extra help is on the way with the intended establishment of the Pacific Anti-Money Laundering Program, to be known as PALP. It is widely acknowledged that money laundering is an issue of global concern. This is because opportunities to launder money provide incentives to perpetrators of crime and corruption to 'cleanse' their ill-gotten wealth while causing undesirable social and economic effects. Worse still is the fact that money laundering facilitates devastating crimes including drug trafficking, cattle rustling, firearms trafficking, smuggling and corruption. These are the crimes that destroy the social order and moral fabric of a society."

Government collects $75m in extra revenue in 2005 Honiara Solomon Star (Internet Version - WWW) in English 16 FEB 06

OSB Transcribed Text

Unattributed report: "Govt collects $75m in extra revenue in 2005"

The Government collected an extra $75m above its estimated $550m revenue for the 2005 budget year. The Ministry of Finance said the additional $75m resulted from higher than anticipated collections by Customs and Excise and Inland Revenue. "This reflected continued growth in export duty for timber and stronger than expected growth in both company and personal taxation receipts.

"This additional revenue was channelled back into budget forecasts with a revised budget for expenditure of $699m," the ministry said yesterday. It said the revised budget was not fully utilised due mainly to delays in filling vacant positions throughout the Public Service and under capacity of ministries to meet operational goals and spending targets across a range of programmes and activities. "Consequently payroll costs were under spent by $11m and ministries under spent by around $65m. In 2005 the major expenditure by government was in the areas of education $171m; health and medical services $82m and police, national security and justice $68m. The Government also continued servicing its debts, spending $61m," the statement said. It added that over the last three years, the budget has been stabilised.

The ministry said fiscal accountability and discipline was enforced in late 2003 enabling the Government with assistance of budget support from Australia to focus on the spending mix and improving service delivery during 2004. This work continued in 2005 but without Australian budget support. The 2005 domestic budget was fully financed by domestic revenue. It said the domestic budget results do not include the budget support provided by the New Zealand Government for education funding.

Outgoing Solomons' High Commissioner to PNG comments on ethnic tension in Solomons Honiara Solomon Star (Internet Version - WWW) in English 16 FEB 06

OSB Transcribed Text

Unattributed report: "Tensions is due to 'deep rooted problems': Kapini"

The outgoing Solomon Islands High Commissioner to PNG Philip Kapini said in his farewell speech to the Government of PNG that the unprecedented ethnic conflict in SI is not something that he would randomly condemn. "In fact it must be perceived as a manifestation of some deep rooted problems that needed to be up rooted," Mr Kapini said.

Acknowledging PNG's contribution to the Regional Assistance Mission to Solomon Islands (RAMSI), he said Solomon Islands (SI) and PNG need each other to find root causes of problems and provide best possible compatible scenarios. "We need to solicit moral support from our own people who may think that they do not stand to benefit from intervention strategies like that of RAMSI. We need also to clean our own backyards and focus our attention on the structure and organisation of government machineries and apply effective methods to control corruption. The elite must integrate more with the mass of people in our rural areas."

The outgoing High Commissioner also challenged leaders against corruption. "Corruption is a disease, a cancer that eats up a nation. Corrupt people are those who have left or isolate themselves from their own people. They aspire (to a) high life profile which is normally beyond their well earned incomes and therefore resort to look else where to make up the rest. Our countries have inherited many foreign concepts such as land ownership, acquisition of land and resource allocation generally. "The colonial regimes could not foresee these before. They are the basis of some deep rooted problems." Mr Kapini will be replaced by Bernard Bata'anisia who was officially sworn-in as SI's new High Commissioner to PNG last Friday. He (Kapini) will be Solomon Islands' new High Commissioner to Australia, replacing Milna Tozaka who has resigned to contest the national elections.

POLYNESIA

French Polynesia: Auditors reject 'unbalanced' French Polynesia budget Wellington Radio New Zealand International WWW-Text in English 2040 GMT 15 Feb 06

OSB Transcribed Text

Unattributed report: "French Polynesia coalition to review US$1.3bn budget"

The ruling coalition in French Polynesia is set to review its US$1.3b budget after local auditors rejected it as unbalanced. The French High Commissioner in Tahiti, Anne Boquet, referred the 2006 budget to the audit body last month, saying it was part of her job to ensure checks on provincial government spending. The Union for Democracy (UPLD), led by President Oscar Temaru, pushed through a budget of higher spending and tax reforms as part of its policy to make the territory more financially independent from France.

The news agency Tahitipresse reports the coalition is set to call a new parliamentary session for a revised bill, but support for any new measure is not assured. The resignation last week of the Marquesas Islands representative, Jean-Alain Frebault, appears to give the ruling coalition only 28 out of the 57 votes. The high commissioner Anne Boquet, could move to repeal the budget altogether, but the UPLD would be able to contest this in a local court.

Methamphetamine smuggling syndicate sentenced Papeete Tahitipresse WWW-Text in English 14 Feb 06

OSB Transcribed Text

Unattributed report: "Leader of 'ice' trafficking ring sentenced to 5 years in prison"

The Papeete Criminal Court sentenced the confessed leader of an 'ice' trafficking ring Tuesday to five years in prison, while eight others convicted of using or trafficking crystal meth received varying sentences.

One user received a 12-month suspended prison sentence. Eight persons were fined a collective FF8.5m (US$87,090/(euro)71,300). The sentences were heavier than what the prosecutor had requested two weeks ago for the members of the trafficking ring.

The nine persons were found guilty of illegally importing between 500 and 700 grams (17.6-24.7 ounces) of 'ice' from Los Angeles. The court estimated the 'ice' had a street value of FF19-50m (US$194,672-$512,295/(euro)159,220-(euro) 419,000).

Samoa: Trial of alleged drug ring begins in Supreme Court Wellington Radio New Zealand International WWW-Text in English 2040 GMT 15 Feb 06

OSB Transcribed Text

Unattributed report: "Samoa Supreme Court begins hearing cases of drug ring accused"

Only six of eight people arrested by police in simultaneous drug raids earlier this month have appeared in the Samoa Supreme Court. Those charged are Semisi Lafi, Joseph Faurknar also known as Joseph Palagi, Francis Matthis, Patrick Chan Chui, Tofele Tavui, and Duncan Ah Hi. The defendants' ages range from 27 to 49.

The Samoa Observer newspaper reports that the men have been charged with possession of narcotics, possession of utensils associated with drug use and possession of unlawful weapons. Mr Faurknar was allegedly found in possession of two pistols, live ammunition, 17 small branches of marijuana, 600 marijuana seeds, nine glass tubes, an air pressure hose, and unnamed narcotics weighing 180 grams. At the time of his arrest Mr Faurknar was awaiting trial for possession of ice. No pleas were taken.

The men have been held at Tafaigata prison and will appear in court again today for bail hearings. Police believe they were part of a drug syndicate with overseas ties. It's not yet known why one man and a woman who were also arrested have not been charged.

Tokelau: Final round of voting in Tokelau referendum underway Wellington Radio New Zealand International WWW-Text in English 2124 GMT 15 Feb 06

OSB Transcribed Text

Unattributed report: "Final round of voting in Tokelau referendum on nationhood"

The last round of voting is under way in the referendum which is asking the people of Tokelau whether they want to become an independent state. Counting of the votes is to take place after the vote on Fakaofo atoll, and a result is due to be known tonight. Sara Vui-Talitu reports live from Fakaofo:

"There are about 200 voters registered to vote here on Fakaofo atoll, so far there's been 100 per cent turnout for voting, and it's hoped to be the same here. There's a lot of anticipation as to the result of the referendum, and the counting of all votes will begin when voting closes officially at 5pm. The UN is also closely monitoring the process. Tokelau will need a two-thirds majority of registered voters if it's to exercise self-determination in free association with New Zealand. In Fakaofo for Radio New Zealand International, I'm Sara Vui-Talitu."

Tonga: Report on the resignation of Tongan PM Prince 'Ulukalala Lavaka Ata OSB Report in English 16 Feb 06

Report compiled from 15 Feb 06 editions of Radio New Zealand International WWW-Text in English, Pacific Islands Report WWW-Text in English, and the 16 Feb 06 edition of PACNEWS2 in English.

Tonga's acting Prime Minister, Dr Fred Sevele, says his appointment shows that the political reform process is continuing. He is the first MP elected by the people to be appointed to the position upon its vacancy, although other commoners have previously held the post but not any who were popularly elected. Dr Sevele says he doesn't know if, or when, he'll be confirmed in the post because that's a decision taken by the king. But, he says there's been a slow process of change in the kingdom and this is another step in that direction. Dr Sevele says he expects changes to continue but they won't be achieved overnight.

"I have made my views known and I've always said that change is inevitable and that people will have more say in the running of government. And, I have no reason to change my stance on that, and the recent events confirm, I think, that political changes are moving forward."

Tonga's Acting Prime Minister, Cabinet Minister Fred Sevele, says his appointment following the resignation of Prince Ulukalala Lavaka Ata on Saturday indicates a turning point in the politics of royal power in the Kingdom.

"It indicates their willingness and their readiness to look at the ability of people in cabinet because of their ability rather than because of whether they are conservatives or from the nobility," Sevele said in an interview Monday on Radio Australia's Pacific Beat program. "That, I think, is the message."

Sevele, elected as a People's Representative to the Tongan parliament, last year was named a member of cabinet - largely the province of a class of nobles and members of the royal family.

Asked if Sevele's pro-democracy leanings would push the country's monarchy towards a fully elected form of government, he said that change is inevitable.

"As you know, there is currently a national committee consisting of parliamentarians, representative from cabinet, people's representatives, nobles' representatives and Tongans from outside of government and parliament," Sevele said. "So, that is a clear message that things are moving that way. My views on changes, on more democratic form of government, haven't changed.

The former Prime Minister, His Royal Highness, Prince Ulukalala, has made no statement since his abrupt 11 February 2006 resignation, which offered no explanation for the dramatic move. The departure of the 46-year-old Ulukalala, respected abroad but criticized in his own country, leaves a vacuum in Tongan politics at a time when major pro-democracy initiatives are under way in the Pacific's last ruling monarchy. The prince resigned not only as prime minister but also as Minister of Telecommunications, Minister of Civil Aviation, Minister of Marine and Ports, and Minister of Disaster Relief Activities.

The tall, well-educated Prince Ulukalala is the third son, and fourth child, of King Taufaahau Tupou IV. Well-spoken and diplomatic, Ulukalala was selected by the king as Prime Minister in 2000, over his older brother, Crown Prince Tupoutoa.

While most of the Pacific has followed the path of Western democracy - a legacy of nineteenth century colonialism - Tonga escaped the full attention of American and European imperialists. "The Friendly Islands" - a scattering of 169 islands south of Samoa, were united as a kingdom in 1845 by Ulukalala's ancestor, King George Tupou I. Tonga became constitutional monarchy in 1875 and a British protectorate in 1900. Full independence came 1970 and, as a member of the British Commonwealth, Tonga remains the only monarchy in the Pacific.

Tonga's 87-year-old ruler, King Taufaahau Tupou IV, was last reported in Auckland, New Zealand, undergoing medical checks.

Under Tonga's current system of government, a 30-seat Legislative Assembly reserves 12 seats for cabinet ministers, nine for nobles selected by the country's 33 nobles, and nine elected by popular vote, as People's Representatives.

According to Professor Ian Campbell, Head of Pacific History and Politics at the University of the South Pacific, the last time a "commoner" held even a temporary post as prime minister in Tonga was 100 years ago.

Sevele in 2004 was among a group of People's Representatives calling for the resignation of Prince Ulukalala as prime minister, saying they were "disappointed that the Prime Minister's lack of action as chairman of the failed Royal Tongan Airlines has caused millions of dollars of the people's money to be frittered away."

The Tongan Government has denied international media reports that Dr Feleti Sevele will be confirmed to the position of Prime Minister later this week. Chief Government Secretary, 'Eseta Fusitu'a told that government was not aware of such a move. She said government was only aware of the official statement made on Monday 13 February 2006 by the Minister of Lands, Survey and Natural Resources, Hon. Fielakepa. According to the statement, the Prince Regent appointed the Minister of Labour, Commerce and Industries, Dr. Feleti Sevele as acting Prime Minister. Dr Sevele was also quoted in an international media outlet that he does not know if, or when, he would be confirmed in the post because the decision was up to the king

Sentencing of former Tonga Speaker postponed Wellington Radio New Zealand International WWW-Text in English 0322 GMT 15 Feb 06

OSB Transcribed Text

Unattributed report: "Sentencing of former Tonga Speaker put off until tomorrow"

The sentencing of the former speaker of parliament in Tonga has been adjourned until tomorrow morning. Chief Justice Robin Webster who presided over the hearing this morning told the court that he needs time to consider the submissions made by the defendant which includes a medical report saying that he is physically unfit to serve a prison sentence. A jury found Siosifa Fatafehi Fuatakifolaha guilty last month on two counts of bribing a Government servant and tax evasion. Mr Fuatakifolaha was stripped of his noble title of Veikune, and his estates, as a result of his conviction. Mr Fuatakifolaha's lawyer asked the Chief Justice to consider a fine to be paid in instalments instead of imprisonment.

PNG & BOUGAINVILLE

PNG: Funding shortfalls hamper implementation of overseas police initiatives Port Moresby Post Courier (Internet Version-WWW) in English 15 Feb 06

OSB Transcribed Text

Unattributed report: "Funding woes hamper police"

Papua New Guinea police cannot fully implement concepts it learns from meetings and conferences overseas due to funding problems. National Capital District/ Southern Commander and Assistant Police Commissioner Tony Wagambie said this after attending a global policing meeting in London on 8 February 2006. Mr Wagambie, who arrived yesterday, said the meeting involved officers going out in full force into communities. He said he witnessed during the exercise how effective funding support worked. He said about 600 officers in London went around the communities. "The idea behind it is when we put traditional policing in the vehicles in sector patrol, we are cutting down the serious crime but the nuisance at the back of the streets are still going on," Mr Wagambie said while comparing the London policing concept to PNG's concept. "We can (implement it) but...it may be impossible. For them, they have the financial backing. "Here (PNG) at the moment given the financial situation of the country, we can not do it to that full extent but in a small way we can try." He said if it was to be done in PNG it would start with one of the four sectors and then spread to other sectors in the city.

Enga Governor threatens roadblocks over poor state of highway Port Moresby The National (Internet Version-WWW) in English 16 Feb 06

OSB Transcribed Text

Report by Andrew Alphonse: "Ipatas threatens to lead highway impasse"

Enga Governor Peter Ipatas had this week publicly threatened to personally lead his people and prevent supply trucks from reaching the Porgera gold mine. Mr Ipatas said the action was necessary to protest the poor state of the Wapenamanda and Wabag section of the Highlands Highway, and for the Government to take the necessary steps to repair the highway.

Addressing a huge crowd at Wabag on Tuesday, Mr Ipatas also called on the National Executive Council (NEC), which is meeting in Milne Bay, to instruct repair work on the highway. Mr Ipatas had always been vocal on this section of the road, and the Highlands Highway in general, on numerous occasions on the floor of Parliament. His persistent questioning had led to a visit by a ministerial delegation to the Highlands to see for themselves the state of the highway. He said the people are fed up with the NEC's empty promises to repair the road, which is the lifeline of much of PNG's economy

The comments by Mr Ipatas were met with applause from the crowd. The people had gathered for the presentation of several cheques for five major projects in the Enga province. One of the cheques, for K1m, was for the sealing of the Wabag town road. It was presented to the provincial Works division for work to start. Speaking to The National after the gathering, Mr Ipatas said the state of the Wapenamanda and Wabag roads and the continuing refusal by the National Government to have them repaired were "appalling". The mobilisation of the Engan people to stop the huge trucks from ferrying supplies to the mine was one gesture that might work to pressure the Government into action, he added. On another matter, Governor Ipatas said he is planning to make a special submission to the Leadership Tribunal for his referral case to be heard in Wabag and in front of his people, and not in Port Moresby.

Man charged for transporting ammunition, aviation authority vows to increase security Port Moresby The National (Internet Version-WWW) in English 16 Feb 06

OSB Transcribed Text

Report by James Apa Gumuno: "Police charge ammo carrier, detain woman"

Mt Hagen police have charged a man with transporting more than 1,500 rounds of ammunition on board an Air Niugini flight from Port Moresby on Tuesday. A female companion has also been detained for questioning. Three other persons waiting to pick up goods at the Mt Hagen airport were released yesterday after giving statements to the police. Police identified the suspect as Eerick Lak from Rukili village in the Mul district. He was charged with carrying dangerous goods on an aircraft in breach of the Civil Aviation Act and with possession of unauthorised ammunition.

The 1,546 bullets for AR15 and M16 semi-automatic rifles were packed in boxes and could be sold in the black market for between K30,000 and K60,000. A senior police officer said each bullet could sell for between K20 and K40. Police sources said they were still investigating and more charges could be laid against Lak. On Tuesday, Lak reportedly told police that he was given the boxes by a man he did not know. He said the man told him that some people would pick up the boxes at the Mt Hagen airport. While police believe the bullets were meant for warring tribes in the Mul/Baiyer and Nebilyer districts, they have not ruled out the possibility of an arms build-up for next year's general election.

Meanwhile, the Civil Aviation Authority (CAA) is also investigating how the ammunition got past the metal detectors at the Port Moresby airport. Deputy chief executive officer Collin Kuchel said yesterday that steps would be taken to ensure it did not happen again. "We will vigorously apply necessary checks and scrutiny towards eliminating this problem," he said in a statement. Moresby North East MP Casper Wollom also called on the PNG Defence Force to investigate. "It is hard to believe that such high-powered ammunition could end up in the possession of a civilian, and in such numbers," he said. He added that break-ins into armouries were becoming common.

7,000 HIV/AIDS patients to get antiretroviral drugs by 2010 Port Moresby The National (Internet Version-WWW) in English 16 Feb 06

OSB Transcribed Text

Report by Llinda Silkeno: "ARV to go nationwide over the next five years"

The antiretroviral (ARV) drugs for HIV/ AIDS, which can help patients restore their health and live longer, will be used nationwide over the next five years, a senior medical official has told the National AIDS Council. Dr Joachim Pantumari said it was expected that some 7,000 AIDS patients throughout PNG will use ARV drugs by 2010. The National Health Department, as the responsible government agency, would decide which patients meet the treatment criteria to access the ARV drugs, Dr Pantamari said.

This year, about 1,500 people will receive the treatment with numbers increasing to 3,000 in 2007, 4,500 in 2008 and 6,000 by 2009. Dr Pantumari said current clinical records showed that more than 12,000 patients were being treated for HIV/AIDS. He said it was likely that more than that number of people were infected with the virus and figures could double or triple. Doctors are being trained as ARV "prescribers" for the four regional hospitals in Port Moresby, Rabaul, Lae and Mt Hagen. Training of physicians was in the initial stages and scaling up, he said. Training and capacity building for staff who will oversee the ARV is also taking place and registrations and data bases of the ARV drug are being developed.

Currently there are 300 patients at the Heduru clinic in the Port Moresby General Hospital receiving the ARV drug treatment and they are being closely monitored. The ARV drugs will be purchased from global funds and distributed nationwide by the Health Department with the assistance of the World Health Organisation (WHO). Dr Pantumari said the ARV drug does not kill the AIDS virus but prevents it from suppressing the patient's immune system and allows people to recover their general health. AIDS patients on ARV drugs can live as long as a healthy person provided they do not get reinfected with new mutant and resistant strains of HIV. Survival also depends on the compliance in taking the drug and positive attitudes towards life, Dr Pantumari.

Senior police officer wanted for corruption still on the run Port Moresby The National (Internet Version-WWW) in English 16 Feb 06

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Unattributed report: "Wanted senior cop goes into hiding"

The senior police officer who was supposed to have been arrested and charged on Tuesday for official corruption and abuse of office is still on the run. According to the Assistant Commissioner of Police (crimes), Raphael Huafolo, the suspect is nowhere to be found in Port Moresby. Mr Huafolo told The National yesterday that police in other centres where the officer, a Chief Superintendent by rank, is likely to appear have been told to be on the lookout. He said information reaching his office was that the suspect may have gone to Alotau by ship.

The Assistant Commissioner said he was also told by other officers that the suspect wanted to talk to Police Commissioner Sam Inguba. However, Mr Huafolo said he saw no relevance in the suspect wanting to talk to the Commissioner when there were already three warrants of arrest out for him and from the court. The suspect's official vehicle has been impounded and locked up. The warrants of arrest are for one count of abuse of office and two counts of official corruption where he allegedly obtained a free car and free accommodation.

Western Highlands leaders attend course on HIV/AIDS Port Moresby The National (Internet Version-WWW) in English 16 Feb 06

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Report by James Apa Gumuno: "Leaders on course to fight AIDS"

Thirty-Six leaders including councillors, village court magistrates, and community and church leaders from Nebilyer district in the Western Highlands province are currently attending a week-long training on basic information on HIV/AIDS. The training, which is the first of its kind in the country, was an initiative of the Provincial Aids Council (PAC) aimed at engaging leaders to play a proactive role in the fight against the deadly virus and minimise its spread.

According to Provincial Reponses Coordinator Joshua Meninga, the training began on Monday and ends tomorrow (Friday 17 February 06). Mr Meninga said the leaders had more influence in their respective communities and they would make a big impact when they went out and talked about HIV/AIDS. He said when leaders talked, their people would listen and that was why they were targeted. He said this was the third course conducted for the leaders in the province. The first two training courses were conducted in Dei and Tambul districts. Mr Meninga said the PAC's office planned to cover all the 14 local level government areas in the province. He said this project was funded by the provincial government at the cost of K100,000.

Community Coalition Against Corruption to hold regional seminars Port Moresby The National (Internet Version-WWW) in English 16 Feb 06

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Unattributed report: "Anti-corruption group to hold info campaign"

The Community Coalition Against Corruption (CCAC) will be holding four regional seminars this year starting early next month. The seminars will focus on the program CCAC endorsed and committed to at the CCAC National Workshop last November.

Those areas are:

- Electoral civic awareness;

- Strengthening the political party system;

- Endorsing the principle that the country's democracy needs more women in public office;

- Co-operating with and supporting the parliamentary authority of any candidate who legitimately wins an election;

- Laying the groundwork for the Independent Commission Against Corruption (ICAC), and;

- Campaigning against laws that threaten the integrity of the public life in the country.

According to CCAC, the main focus of these seminars will be electoral reform and awareness in connection with the coming national election next year. "Using the partnership that Transparency International PNG (TI PNG) now has with the PNG Electoral Commission (PNGEC), a program for the seminars which concentrates on sharing knowledge and discussing issues in regard to the elections has been put together," CCAC stated in an email yesterday. The first seminar will be held in the NGI region (Rabaul) on 10 March and would bring together CCAC members and like-minded people in that area. Seminars will also be held in Mt Hagen on 2 June 2006, Lae on 1 September, and Port Moresby on 1 December. CCAC members in these regions and like-minded people have been urged to attend these important and informative seminars.