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21 Oct, 2010 08:00

Privatization returns to centre stage

Russia’s Government aims to sell stakes in around 900 companies by 2015 and gain around $58 billion to cover the budget deficit.

According to Deputy Prime Minister Igor Shuvalov, Moscow is forging ahead with an ambitious, five-year plan to sell off stakes in prized state companies including oil major Rosneft and banking giants Sberbank and VTB to raise $58 billion for state coffers.

Shuvalov said Wednesday that 900 companies could be totally or partly privatized under the plan, which also would ensure the government retains controlling stakes in most strategic firms.

Economic Development and Trade Minister Elvira Nabiullina raised the idea earlier in June, saying it would help finance the budget deficit, that currently stands at 5.4% of GDP. However, Shuvalov said privatization in Russia was primarily aimed at increasing the attractiveness of Russia’s economy and stabilizing it.

“The main goal of the asset sell-off will be to change the investment appeal of these assets – to attract private investors and therefore change the structure of ownership of the companies to make them more transparently stable and reliable.”

Talking about Russia’s energy sector, Shuvalov said that in 2012 – 2015 the State could sell around 15% of Rosneft shares, which will reduce the Government stake to 60%. However, the final decision about the company’s destiny depends on the market environment, Shuvalov added.

Rushydro is another company on privatization list, with the State aiming to make public 8% of the Company before 2013. However, the offers to sell stakes Transneft and Zarubezhneft were rejected.

Among banking assets are Sberbank, VTB and Rosselkhosbank, with Russia’s government offering to the market 9.3%, about 20 – 25% and 25% accordingly. The state is also ready to sell a controlling stake in VTB, provided that “serious portfolio investors are there and the bank’s capitalization increases,” Shuvalov said.

The Government also plans to sell some assets in the agricultural sector, with 100% of the United Grain Company and 50% less one share of Rosagrolising likely to go private, the Deputy Prime Minister added.

Further stakes slated for privatization include Sovkomflot, Russian Railways, Sheremetyevo airport and Aeroflot.