Russia to cut state participation in economy
2010-11-26 11:24:01
The state is planning to reduce its role in the economy. The Russian Economic Development Ministry has published a state property privatization plan for 2011-2013. After a long debate, it was decided that the state will retain the blocking shareholding in all companies. The only exception is the United Grain Company. 100% of its shares are to be sold in 2012.
The government is ready to sell shares of the country’s largest banks, almost 8% of Sberbank and 35% minus one share of VTB. There are also plans to sell 25% minus one share of one of the largest transport companies in the world, Russian Railways, and Rosneft, the leading player in oil extraction. The privatization of these two companies may track a new arrangement. Their shares will not only be sold but also exchanged for investors’ assets. This is connected with their strategic plans to enter the infrastructure of the neighbouring countries. Sergey Hestanov, the executive director of the Finam Management company, explained to “The Voice of Russia” how this asset exchange pattern can be used.
“For Russian Railways, the main trend of development is building special hubs for the transportation of goods, especially in the East-West corridor. The most important thing is that, because the Russian railway track is historically wider than the European and the larger part of the Asian tracks, Russian Railways is interested in extending the wide track both to the west and to the east. This will allow creating an East-West integrated freight traffic infrastructure. Naturally, these projects are very capital-intensive and one of the ways to attract investments is to exchange assets with foreign partners.
Meanwhile, Rosneft is interested in attracting both investments and technologies for the exploration of the Arctic shelf. In this case, exchange of assets with potential western partners could be a great help.”
In all other companies, privatization will follow market mechanisms. Among the assets on sale is an almost 8% stake in RusHydro, a large energy supply company, 25% of the shares of Sovcomflot, a leading shipping company, and 50% minus one share of Rosagroleasing, the leader in agroindustrial leasing. The main aim of privatization is increasing management efficiency. The state is likely to look for investors who would commit themselves to sending money into the real sector of the economy, believes economist Alexander Osin.
“The state is not so much interested in topping up its coffers as in finding long-term investments. In my opinion, it is important to attract partners who would invest in the Russian market for many years”.
At the same time, these sales will make money for the state. Privatization is expected to bring $10 billion annually.