Kudrin Slams Russia for ‘Creeping De-Privatization’

MOSCOW, December 18 (RIA Novosti) – Former Russian finance minister Alexei Kudrin on Tuesday slammed the authorities for allowing “creeping de-privatization” of the economy despite the government’s commitment to sell state-run companies in order to raise their efficiency and lure much-needed foreign investment.

“Despite the declared goals of privatization, we are witnessing creeping de-privatization,” Kudrin said at a press conference in Moscow.

Kudrin cited as an example the recent deal signed by state-run oil major Rosneft to buy 100 percent of TNK-BP from its two co-owners: BP and Russia’s AAR consortium.

“The deal will require [Rosneft] to spend about $53 billion, including the Rosneft shares BP will receive. About $40 billion – that is the amount of renationalization,” Kudrin said.

“This considerably exceeds all of the government’s privatization plans.”

Under the deal, Rosneft will pay $17.1 billion in cash and shares representing a 12.84 percent stake for BP’s 50-percent interest in TNK-BP. BP will later buy 5.66 percent of Rosneft shares from the Russian government for $4.8 billion.

Once the transaction is completed, BP will have acquired an additional 18.5 percent of Rosneft shares and net cash totaling $12.3 billion.

“This would result in BP holding 19.75 percent of Rosneft stock, when aggregated with BP’s 1.25 percent current holding in Rosneft,” BP said in a statement earlier.

AAR’s Soviet-born billionaire shareholders will sell their 50 percent stake in the joint venture “for cash consideration of $28 billion.”


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