October 21 2004, 18:16 Vedomosti

Cargill had to suspend construction of crushing plant in Russia because of legal collision over land plot

According to Russian newspaper Vedomosti, the transnational trading corporation Cargill has suspended realisation of the project for construction of oil extraction plant in Voronezh Oblast of Russia.

Two years ago Cargill made an agreement with Russia's federal official and the authorities of Voronezh region about construction of an oil extraction plant on the territory of the region, writes the newspaper. The corporation received a plot of land, which was transferred from regional to the federal property right for the purpose. However, when design documentation was already finalised by Cargill, construction of the plant turned out to be impossible, because the plot appeared to pertain to the lands of agricultural use (according to Russian laws, construction of industrial facilities on such lands is prohibited). The government said it was impossible to transfer the land into the "industrial" category, because procedure of such transfer was not stipulated by any of the federal laws.

"We have temporarily suspended the project, in which we planned to invest over $100 million", Cargill Regional Director for CIS Patrick Bracken has said.

He did not specify how much Cargill had already spent on construction of the plant. He said that the government asked the corporation to wait for a few months until a new relevant law had been passed.