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State-controlled companies banned to buy out federal property

October 26, 2012, 15:48 UTC+3

Russia’s government considered a privatization plan for 2011-2013

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On Thursday Russia’s government considered a privatization plan for 2011-2013 and confirmed its readiness to put aside state-run companies from participating in privatization. Despite the proposals of the Economic Development Ministry that was ready to ease terms of participation in privatization for state-owned companies Prime Minister Dmitry Medvedev demanded an urgent ban on such deals.

The government at its meeting did not cut its privatization plans for 2013 equaling 428 billion rubles, the Kommersant daily wrote. But the most probable deals selling big state-owned stakes next year will yield much lower revenues than planned – 260-270 billion rubles. This result should be achieved without state-run companies’ funds.

The government named eight state-run companies the shares of which will be put on sale next year. Economic Development Minister Andrei Belousov said on this list are Russian shipping line Sovcomflot, VTB, Alrosa, Rosneft, Arkhangelsk Trawler Fleet, TGK-5, “Siberia” Airlines and Mosenergostroy.

“It is real to get a total of 260-270 billion rubles from these deals,” Belousov said. According to the Economic Development Ministry’s materials to the Cabinet meeting, the maximum “indicative price” of these enterprises even without the deal on Sovcomflot is estimated at 315.2 billion rubles. Nevertheless Andrei Belousov named the sale of Sovcomflot as the biggest deal of 2013.

Privatization of state property is gaining pace – in 2010 shares worth 23 billion rubles were sold off, in 2011 this figure increased to 121 billion rubles and this year the government plans to get 223 billion rubles, the Moskovsky Komsomolets daily wrote. Although the privatization plan for 300 billion rubles failed once again, the progress is evidently seen. Until the end of the year the government plans to sell its stakes in seaports and a 10 percent stake in Russian corporation Rosnano. Next year this process will become more active – only eight biggest deals will yield 270 billion rubles.

Possible participation of state-controlled companies in privatization was separately debated at the Cabinet meeting. The head of government determined his position long ago. Medvedev considers it wrong when state-run structures buy core and non-core assets. “Privatization should remain privatization and not be an attempt to remove state property from one pocket to another. This yields no result,” he said.

“From time to time state-run companies try to run into privatization deals, stop them – sometimes even in law suits,” First Deputy Prime Minister Igor Shuvalov said.

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