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Unfavorable Time for Privatization in Russia
World Economy

Unfavorable Time for Privatization in Russia

Getting revenue of up to a trillion rubles through privatization of government-held assets is rather a strategic plan than a realistic prospect for 2016, Mikhail Zadornov, the CEO and President of VTB24 bank told the RBK business television channel on Tuesday.
“It’s too difficult to believe in all that talk about revenues from privatizations in the current situation,” he said. “Quite naturally, they can sell (the shipping line) Sovcomflot, as it is demonstrating high performance results and its privatization may work well enough,” Zadornov said, Tass reported.
“But if we talk about a broader range of companies, the time for privatizing them is far from the best one if you take the span of privatization discussed now,” he said. “Getting the 0.5 trillion to 1.0 trillion rubles ($13.8 billion) is much more on the side of strategic plans than a realistic prospect for 2016.” He indicated that the federal budget deficit would be covered in 2016 by eating into the Reserve Fund assets.
Economic Development Minister Anton Siluanov said earlier on the same day that the government was drawing up proposals to privatize the oil corporations Transneft and Bashneft and a number of other companies. “This will help replenish the federal budget and reduce the pressure on the Reserve Fund,” he said.
President Putin said in the course of the major annual news conference in November that Rosneft and the national flag carrier, Aeroflot, were among the companies that could go public.
According to the State Property Fund, the Russian government received 5.0 billion to 5.3 billion rubles from privatization this year and the forecast for possible privatization revenues in 2016 is 33.2 billion rubles. In the meantime, the finance ministry surmises that the privatization of a 19.5% stake of Rosneft may bring in 500 billion rubles as a minimum.
The State Property Fund said Sovcomflot is the only company, a package in which has been scheduled for privatization next year. It will hopefully yield about 12 billion rubles. Along with it, the agency is prepared to speed up the privatization of Rosneft, Aeroflot, and the operator of hydropower plants, OAO Rushydro, if it gets appropriate instructions from President Vladimir Putin.

 

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