Medvedev says govt privatisation plans too modest, expects new proposals.

11/7 Tass 278

GOTKI, July 11 (Itar-Tass) —— President Dmitry Medvedev said the government’s privatisation plans are “very modest” and he expects new suggestions by August 1.

“The government’s privatisation proposals look very modest. I think we should act much more boldly,” the president said at a meeting with entrepreneurs on Monday, July 11.

According to Medvedev, “Everything boils down to the fact that all companies will remain under control until 2016” and “I gave instructions to draft new proposals by August 1 regarding the disposal of excess state property”.

Russian presidential aide Arkady Dvorkovich said earlier that the Russian authorities would accelerate and expand the privatisation of state-owned companies.

He said the government might sell a part of its stake in the state-owned oil company Rosneft a year sooner than was initially planned — in 2012 rather than in 2013.

“We want Rosneft to be a normal commercial public company,” he said. “The original government proposals were to start [the share sale] in 2013 but maybe now it will be brought forward to 2012.”

“It’s not up to me to say what the best timing would be. That is up to the company itself and investment banks working on this,” Dvorkovich said.

“Under previous plans, the government has talked about raising 10 billion U.S. dollars annually from such sales over five years. But Dvorkovich said that figure might now be raised by 50 percent to 15 billion U.S. dollars, meaning the Kremlin could be looking at a target of up to 75 billion U.S. dollars over five years,” the newspaper said.

“He indicated that the money-raising might happen in London but alternatively could be done in New York, Hong Kong or even Shanghai – or a combination of these. He said initial or further privatisation was on the cards for the grid operator FGC, former pride of the Soviet industrialisation programme, which quietly listed some existing shares in London three months ago,” it said.

“There are similar possible plans for the shipping group Sovcomflot, banks such as VTB and possibly some airports,” the newspaper quoted Dvorkovich as saying.

“But there are no plans currently for privatising in a similar way the giant gas group Gazprom. Dvorkovich cited the complexity of the domestic energy market, where the company is a monopoly provider. He said Russia recognised that its companies needed to attract new technology, stronger management skills and more vibrant research and development,” he said.

“Rosneft would continue to talk to companies such as Shell about Arctic drilling deals but few expect the kind of share swap that had been proposed with BP,” the aide said

Dvorkovich said he “believed Russia had made progress convincing the European Union that his country did not want to use energy as a political weapon”, The Guardian said.

Dvorkovich also accepted that “there was ongoing tension with Europe over Russia’s refusal to open its markets up to foreign competition. This was a difficult issue but he said: ‘We are trying to find a solution to this.’”

The government’s privatisation plan includes more than 850 organisations, such as VTB bank, Sovcomflot, the United Grain Company, RusHydro, Sberbank, Rosneft, Rosagrolizing, Rosselkhozbank, Russian Railways Company, and others.

Russia will continue to privatise state-owned banks after 2015, Vice Prime Minister and Finance Minister Alexei Kudrin said earlier.

According to the privatisation plans, the government intends to reduce its share in Sberbank, VTB and Rosselkhozbank to 50 percent plus one share before 2013.

“But plan further privatisation of these banks after those three years,” Kudrin said.

According to Kudrin, foreign investors are showing interest in the Russian privatisation programme that involves the sale of shares in leading international companies, such as Sberbank, VTB, Rosneft, Sovkomflot, etc.

The Russian government has suggested privatising about a thousand enterprises and will present the relevant report to the president immediately.

“The government has adopted the final decision, but we will be able to start acting upon then when the president signs relevant decrees because the majority of assets are strategic ones,” First Deputy Prime Minister Igor Shuvalov said.

“We hope that all proposals will be approved. The report will be sent to the president immediately,” he said.

“According to preliminary estimates, the state will receive 1.8 trillion roubles from the privatisation programme if the plans are implemented in full,” Shuvalov said.

“On the whole, the list includes around 900 enterprises,” he added.

“Privatisation will proceed on all fronts. In other words, we will sell companies that are directly owned by the Russian Federation, companies that belong to Russian regions, and companies that are controlled by the Russian Federation,” Shuvalov said.

“Regions have to prepare for a large-scale programme of privatisation that should generate an income as big as that at the federal level,” he said.

“We are working actively with regions so that they could determine as soon as possible a list of assets subject for privatisation up to 2015,” the official said.

Demand for Russian assets subject to privatisation will exceed supply, Kudrin said.

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