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Putin calls for honest privatization in Russia’s fuel & energy sector

July 10, 2012, 18:07 UTC+3

Russian President set five priorities for developing Russian fuel and energy sector

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MOSCOW, July 10 (Itar-Tass) — Russian President Vladimir Putin said on Tuesday that privatization campaign in the fuel and energy sector should be economically and systemically advantageous.

“Privatization in the energy sector should be clean, transparent and honest with regards to ordinary people. It should result in economic, fiscal and systemic profit,” Putin said at a meeting of the presidential Commission for strategic development of the fuel and energy sector.

Putin pledged to continue a course towards privatization of state assets.

The president recalled that almost 25% of Russian fuel and energy sector were in the hands of foreign investors.

“Far from all countries with strong and developed energy industries are faced with such a situation,” Putin said, noting that Russia had significantly liberalized its policy in this sphere.

The president stressed the need to develop new hydrocarbon shelf deposits in Russia.

“We will have to expand the geography of extraction of mineral resources. We need to be more active in searching for shelf deposits and raise the efficiency of geological prospecting,” Putin said at a meeting on Tuesday.

Putin said that Rosneftegaz shouldn’t be the only company to participate in the forthcoming privatization.

According to Russian Energy Minister Alexander Novak, there were two ways for the state-owned oil and gas companies to go private: through additional emission of shares and direct selling of their stakes. The first option is believed to be more expedient for electric power enterprises because it will help attracting direct funds for the companies’ investment development. All privatization revenues will go to the state budget if stakes are sold directly.

President Vladimir Putin set five priorities for developing Russian fuel and energy sector.

First, it’s necessary to expand the geography of extraction of mineral resources and step up exploration of new shelf deposits.

The second priority is to apply high technologies in the fuel and energy sector.

Putin stressed the need to expand international cooperation, which is economically attractive and will become even more attractive after Russia joins the WTO.

The Russian head of state called on power engineers to be more active in attracting foreign capitals, exchanging assets and paying more attention to interaction with CIS countries.

The fourth priority mentioned by Putin was the ongoing privatization of state assets. The president called for a well-considered market approach, which should result in an economic and systemic profit.

Putin said that Russian oil and gas companies should attract foreign capital and share assets with foreign companies. He added that stable rules of the game should be established in relations with foreign partners.

Putin believes that fiscal profit from selling state property should be obvious and expedient.

He called for a market approach to privatization of fuel and energy companies, proceeding from the real economic situation at home and abroad.

Putin urged the heads of Russian fuel and energy companies to increase dividend payouts to shareholders, if possible, but didn’t insist on the move.

Putin set an example of Rosneft which said it was ready to increase dividend payouts.

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