UPDATE 4: Official: Russia to focus on Rosneft sale after Bashneft delay

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MOSCOW, Aug 17 (PRIME) -- The Russian government will consider the privatization of oil company Bashneft again only after the sale of a stake in major oil producer Rosneft, First Deputy Prime Minister Igor Shuvalov told reporters on Wednesday.

“The sale of Rosneft is now coming to the foreground. We must focus on this. After selling the stake in Rosneft, we will come back to the sale of Bashneft because we already have a presidential order on privatization of the company,” Shuvalov said.

Late on Tuesday, press secretary of Prime Minister Dmitry Medvedev Natalya Timakova said that the head of the government had decided to postpone the privatization of a 50.08% stake in Bashneft past 2016 and President Vladimir Putin was supportive of the decision.

Shuvalov said that the sale preparation has revealed a significant investor interest in the asset and that some real contenders have shown up. “There are real contenders and we understand what is the price they want to buy Bashneft for. We are studying the position of the Bashkortostan republic so that this asset can be sold more successfully.”

Rustem Khamitov head of the Bashkortostan republic, which holds 25% in Bashneft, said that the regional government is not considering selling its interest in Bashneft due to a range of market reasons but mainly because of an unpopularity of this measure.

“But there is the main reason as well. In fact, the citizens of the republic were excited by the comeback of a significant stake of 25% to the ownership of the republic and we are really grateful to the president of the country that he returned it back to republican ownership. And people have an ambiguous approach to any options of sale of this stake,” Khamitov said, referring to an earlier nationalization of the asset from multi-industry holding Sistema.

“It seems to me that we must wait until dust settles down in all economically unstable areas and of course, the economy must set itself on the right track. After that, we can discuss privatization options if there is such a need,” Khamitov said.

Deputy Finance Minister Sergei Storchak said that the government does not plan to raise borrowing because of the postponement of Bashneft privatization

Business daily Vedomosti reported that the 2016 Russian budget includes an assumption that Bashneft will be privatized and without it budget reserves will be depleted by the end of December.

Storchak said, “This is not connected in any way.”

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