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. Last Updated: 07/27/2016

Industry Privatization Quickens Pace

The historic Felix Dzerzhinsky Tractor Factory, which was the site of some of the worst fighting during the Battle of Stalingrad, will be sold to the highest bidder from Feb. 8.


The Russian State Property Committee announced Thursday that the privatization of large Russian state firms like the tractor factory will grow from a trickle into a flood, with 500 firms employing millions of workers, to be placed under the hammer before April.


Auctions will be held in the Volgograd (formerly Stalingrad) district, starting Feb. 8 and will last for six weeks. Twenty large and medium enterprises, including the tractor factory and its 27, 000 workers, a beer factory, construction and chemical plants and a trucking company will be on sale for privatization vouchers.


Dmitry Vassiliyev, a deputy chairman of the State Property Committee,


said 13 other regions across Russia. including Moscow, would take part in this first wave of privatization before April.


"We are widening the process now. Once it is set up, it will have its own momentum", he said.


Lists of firms and auctions will be announced for the Nizhny Novgorod, Tomsk, Novosibirsk and Chelyabinsk districts by Jan. 25.


Big state firms are privatized in two stages. First, workers are allowed to buy some shares on special terms in a closed subscription. In the second stage, the remaining shares, usually less than 50 percent, are sold to the public at auction for privatization vouchers.


Trial auctions for shares in five large state firms, including the Bolshevik biscuit factory in Moscow, an electrical components firm, an aluminum smelter and a trucking company, were held in December and early January. The French firm Ciment Francais bought a 15-percent stake in a cement factory at an auction in Perm.


After climbing in the lead-up to the first auctions, the price of privatization vouchers has languished under 6, 000 rubles. Thursday's announcement, however, could push up the price of a voucher, even beyond its nominal 10, 000-ruble value.


Vassiliyev said privatization vouchers have now been distributed to 90 percent of those eligible to receive them. He said 2, 500 firms had already completed the first step in the privatization process, conversion to joint-stock corporations.


Parliament is now discussing a new privatization program for 1993 but Vassiliyev said this would not alter the main direction of the process.


Auctions in five districts, including Volgograd, will be supervised by the International Finance Corporation, a division of the World Bank that has advised on small-scale privatization and the truck auctions in Nizhny Novgorod.


Anothon Doran, the corporation's Russian director, said the pace of small-scale privatization process was clearly gathering momentum. The number of privatized enterprises grew from 22 in the spring, to 10, 000 in mid-November and 31, 000 today.


He said the corporation expected to privatize about 400 large and medium firms in the five districts it was working in, with prospectuses to be issued tor hundreds of firms by the end of March. This would create a real stock market and the corporation. would help design a national share deposit-and-registry system and sharetrading mechanisms.


At the moment buyers must be physically present to participate in an auction, but the State Property Committee is currently working on an electronic link for district auction centers that would change this.