IKEA reached an agreement with the government on the completion of its mall in the Samara region, allowing the Swedish retailer to open the complex almost two years after construction was finished, the Economic Development Ministry said Thursday.
Company executives and government officials will hammer out a plan by Aug. 14 that would rectify construction problems, the ministry said in a statement.
“We agreed to make up a schedule to remove the deficiencies claimed by the government,” said Stefan Gross, IKEA’s director of real estate in Russia and the CIS, in e-mailed comments. “Our specialists responsible for the Samara project are working to correct them.”
The majority of the government’s claims deal with alleged irregularities in the project’s documentation, Gross said.
The deal comes just over a month since the retailer said it was halting Russian expansion because authorities would not grant it the necessary permits to open its Samara complex.
During the three years that IKEA tried to obtain the permits, the cost of the project doubled to 8 billion rubles (now $253 million), a company spokesman told Vedomosti earlier this month.
The opening of the Samara complex, IKEA’s 12th outlet in Russia, first hit a snag in April, when local officials demanded that the store be able to withstand hurricane force winds, even though such weather almost never occurs in the region.
Gross said the Samara complex complies with all safety standards.
In May, the Federal Anti-Monopoly Service alleged that the Swedish retailer pushed tenants at its Moscow mall to use the services of certain companies — a claim IKEA denied.
A month later, IKEA founder Ingvar Kamprad, whom Fortune magazine ranks as the world’s fifth-richest person, said on Swedish radio that Russian power companies had cheated IKEA out of 135 million euros ($190 million) by overcharging it for electricity and gas, linking the problem to IKEA’s policy of not paying bribes.
The company filed several lawsuits in Russian courts, some of which were thrown out because the courts said they did not comply with legal procedures.
An IKEA executive said earlier this month that the government was stepping in to solve the problem.
Analysts said the government was well-aware that the IKEA case was being watched closely by both current and potential investors into Russia.
“The authorities have a clear understanding that reaching an agreement with IKEA, a major investor, is essential for keeping a favorable investment climate in the country,” said Sabina Muhamedzhanova, an analyst at the Bank of Moscow. “The state has shown its readiness to solve problems.”
IKEA has invested about $4 billion in Russia since entering the country in 2000.
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