Russia ready for privatization, if Putin orders

MOSCOW, Nov 5 (PRIME) -- Russia’s Federal State Property Management Agency is technically ready to privatize stakes in large companies, including shares of oil major Rosneft, if the president orders it, Director Olga Dergunova said Thursday at a meeting of the State Duma, the parliament’s lower house.

“We understand that the situation on the world markets is not improving…We express readiness, we have a class of assets ready for privatization if the president supports this decision. All public companies are here – Rosneft, RusHydro, ALROSA, and Aeroflot. In fact, all the assets whose shares are traded at an exchange (are ready for privatization),” she said.

The agency expects 2016 privatization to bring 19.6 billion rubles to state coffers, less than the 33.2 billion rubles included by the Finance Ministry in the budget draft for the year.

She also said that First Deputy Prime Minister Igor Shuvalov ordered the Economic Development Ministry to prepare sales proposals in November and submit them to President Vladimir Putin.

The agency is also ready to sell a stake in fully state-owned shipping company Sovcomflot in March 2016 at current prices if the government approves the decision, she added.

But the country does not plan to privatize Russian Agricultural Bank. “Russian Agricultural Bank was crossed out of the privatization program and remains in state ownership as of today,” Dergunova said.

Deputy Finance Minister Tatyana Nesterenko said that the ministry’s 2016 budget draft includes revenue of 15.76 billion rubles from the sale of the agency’s option to sell a 17.14% stake in Sistema Shyam TeleServices, Indian cellular operator which is 56.68% owned by multi-industry holding AFK Sistema.

Sistema’s payments on the option to Russia’s budget in five years will amount to about U.S. $750 million. “And now we have reached an agreement…to reschedule this debt for 5 years, with the first amount of 25%, then 20% and then downward,” Nesterenko said.

In 2014, Prime Minister Dmitry Medvedev signed a ruling to privatize a 19.5% stake in Rosneft at a price no lower than U.S. $8.12 per share, the price of Rosneft’s public offering in 2006. Economic Development Minister Alexei Ulyukayev said in August 2015 that the stake may be privatized in 2016, but the budget draft for the year does not include proceedings from the sale.

In March, Vitaly Sergeichuk, head of the agency’s department for property relations and privatization of largest companies, said that the government plans to sell 25% in the shipping company at the first stage of the privatization, half of which will comprise existing shares, and the other half will be new shares to raise 24 billion rubles.

In September 2015, Dergunova said that privatization of Sovcomflot is the only privatization included in the 2016 draft budget with no sale of 19.5% in Rosneft or flagship carrier Aeroflot foreseen due to the poor economic situation.

(63.8525 rubles – U.S. $1)

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