Russia unveils 60 billion dollar privatisation drive

20th October 2010, Comments 0 comments

Russia on Wednesday agreed a huge 5-year privatisation drive worth 60 billion dollars in a dramatic return to sell-offs after a decade that saw the government increase control over key assets.

First Deputy Prime Minister Igor Shuvalov announced that the government had taken its final decision and the plan only now required the approval of President Dmitry Medvedev.

"According to initial estimates, the state could receive 1.8 trillion rubles (58.5 billion dollars) from a full realisation of the privatisation plans," he said in comments on state television, adding that 900 firms were slated for privatisation.

Under the plan, the state would sell a further 15 percent stake in Russia's largest oil company Rosneft over the next five years and even give up a controlling holding after 2015.

Other big firms set for state reductions are state banks VTB and Sberbank, the state Russian railways firm RZhD, said Shuvalov, adding a stake sale was also possible in flag carrier Aeroflot.

"Privatisation will take place on all fronts," said Shuvalov.

Russia had largely halted privatisation after the chaotic sell-offs of state-owned resources of the 1990s that critics said handed over large swathes of its huge natural wealth to a clique of oligarchs at knock-down prices.

However the government has recently reversed its strategy due to the impact of the economic crisis, which plunged the budget into deficit, and also a desire to encourage foreign investment.

The Russian lower house of parliament on Wednesday passed the 2011 draft budget in a first reading, envisaging a deficit of 3.6 percent of GDP in 2011, 3.1 percent in 2012 and 2.9 percent in 2013.

During the years of high oil prices before the economic crisis, Russia saw year after year of robust growth and budget surpluses. The tendency was to increase rather than reduce control on state assets.

"We expect that the budgetary contribution from privatisation will be important but it was not the decisive factor for the government taking this decision," Shuvalov said.

The 1990s privatisations were deeply unloved by the public and the mastermind of the sell-off plan, former deputy prime minister Anatoly Chubais, remains a hate figure for many Russians.

The jailing of one of its main beneficiaries, oil magnate Mikhail Khodorkovsky, and the auction of the assets of his Yukos oil giant to state firms, stirred no public outcry.

As well as selling a major chunk of Rosneft, Shuvalov also said that the new plan envisaged:

-- A sale of 10 percent of shares in state bank VTB in 2011 and another 10-15 percent in 2012.

-- The sale of additional shares belonging to the central bank in Russia's largest bank Sberbank.

-- The sale of 25 percent of the shares in state shipping company Sovkomflot in 2011 followed by the sale of 25 percent minus one share in 2012-2013.

-- The sale of a 7.97 percent stake in state hydroelectric operator Roshydro by 2013.

-- The possible reduction of the government stake in flag carrier Aeroflot to below a controlling holding if there is sufficient investor interest, Shuvalov said.

-- The possible sale between 2013-2015 of 25 percent plus one share in RZhD which until now remains entirely in government hands.

-- A final decision on the privatisation of Moscow's Sheremetyevo airport has yet to be taken but the government is ready to sell off a stake, Shuvalov said.

© 2010 AFP

0 Comments To This Article