Translated material
Petrov's plan
Privatization in Russia should end with the emergence of 30-40 state holdings
There are at least three more years left until the end of privatization, Svyazinvest will not be sold this year, and it is desirable to create 30-40 large state holdings in strategic industries in the country. Yuri Petrov, who headed the Russian Federal Property Fund (RFFI) two weeks ago, announced this at his first press conference in his new capacity.Privatization in the country, according to Yuri Petrov, will not be completed next year, as previously planned, but only in 2009-2011. “Many objects that were included in the privatization plan were never privatized; the privatization period is also required by the corporatization of federal state unitary enterprises,” he explained. The problem of illiquidity of state-owned shares, according to Mr. Petrov, can be resolved no earlier than amendments to the privatization law are adopted, which would facilitate the mechanism of privatization transactions.
The RFBR expects that legislation will sooner or later give the fund the right to independently determine the method of privatization, and not use the current mandatory scheme, according to which all state stakes, even illiquid ones, must first be put up for auction, and only then can be sold at a special auction or through a public offer .
The state should also reconsider its attitude towards property, which it does not yet intend to sell. To effectively manage state property, according to the head of the Russian Federal Property Fund, the state must create holdings with a stake of 50% plus one share and hire professional managers. There may be 30-40 such holdings under state control, Mr. Petrov believes.
One of the most promising privatization deals of this year, it seems, will not take place at all. The Russian Federal Property Fund does not consider it advisable to sell the entire 75% state stake in Svyazinvest, but proposes to retain 50% plus one share of the holding in state ownership and put up for sale a small stake for now. This announcement came as a surprise. The privatization of Svyazinvest was scheduled for the second half of the year. But now, according to Yuri Petrov, this is practically impossible due to lost time. In order to sell Svyazinvest this year, a government order must be signed no later than the end of May or beginning of June, he urged. But there is still no agreed position on this issue in the government. Svyazinvest will most likely be assessed by two foreign appraisers and one Russian.
The RFFI may also take over the sale of Gazprom's non-core assets. Previously, the responsibilities for their implementation were assigned to the RFBR, but the fund did not fulfill them. “At one time, we received instructions from the government to sell Gazprom’s non-core assets, but Gazprom’s lawyers noticed that this type of activity was not recorded in our charter; thus, our sales may be incomplete and controversial,” said the head of the Russian Federal Property Fund. According to him, the new edition of the RFFI charter, which has been undergoing approval by the government for about two years, includes a provision allowing the fund to sell non-core assets of the gas monopolist. The new charter will also give the fund the right to receive additional income in the form of interest on transactions.
The Russian Federal Property Fund did not announce any other new plans for the privatization of large assets in 2006. This year it is planned to sell, in particular, a stake in Siberia Airlines OJSC (25.5%), which was not sold last year due to the fact that the appraisal company attracted by the Russian Federal Property Fund was unable to evaluate the state stake. Privatization plans still include Samara Airlines (46.49% of shares), Transcreditbank (100%), Central Telegraph (20%), Uralsvyazinform (4.6%), Centertelecom (7.2% ) and "Railways of Yakutia" (50%).
On foreign stock exchanges, shares of Russian state-owned enterprises, it seems, will only be sold with the consent of senior officials. “I realized that now the state policy is to focus on domestic sales in order to promote the development of its own stock market,” the head of the Russian Federal Property Fund said innocently. “In particular, it was planned to sell shares of the Far Eastern Shipping Company on the New York and London exchanges, but the government did not support this decision.”
True, in the personal opinion of Yuri Petrov, it would still be more profitable for the state to sell shares abroad.