UPDATE2: Putin: Russia must maintain control over strategic assets

(Rewrites headline, lede, adds details in first seven paragraphs)

MOSCOW, Feb 1 (PRIME) -- Russia must not lose control over companies of strategic importance as a result of their privatization, Russian President Vladimir Putin said at a meeting with the CEO of banking group VTB, oil major Rosneft, oil company Bashneft, flagship airline Aeroflot, uncut diamond mining giant ALROSA and shipping company Sovcomflot on Monday.

“The state must not lose control over strategic companies as a result of privatization. And I will stress that the state must keep a controlling stake in state-run systemic companies at least today,” he said.

Russian authorities must define parameters of privatization in 2016 and develop a list of state companies which can be sold to private investors, the president said. Private investors which may take part in the privatization must be under Russian jurisdiction, he also said.

NO SALES FOR A SONG

State assets may be sold only to private investors with development strategies for state companies to be privatized, Putin said.

“We must pay more attention to the quality of investors, their business reputation and experience. The shares may be transferred to private ownership only if the buyer has a development strategy for the company on sale,” he said.

The privatization must take into account market conditions, Putin said adding that state assets cannot be sold for a song.

“The sale of state assets must be economically sound, viable. We must take into account market conditions and tendencies… We must avoid selling shares for a song. It will not be profitable for the budget, and moreover the companies may be acquired by competitors and this is not the best thing for the market ultimately. It must be avoided,” he said.

Business daily Vedomosti reported that Putin can approve the sale of stakes in Rosneft, Aeroflot, oil pipeline monopoly Transneft, telecom operator Rostelecom and Sovcomflot. The government is willing to sell the companies because the budget needs money badly, a source cited by the daily said.

Prime Minister Dmitry Medvedev, presidential aide Andrei Belousov, First Deputy Prime Minister Igor Shuvalov, Deputy Prime Minister Arkady Dvorkovich, Finance Minister Anton Siluanov, Economic Development Minister Alexei Ulyukayev and Director of the Federal State Property Management Agency Olga Dergunova were also invited for the meeting.

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