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. Last Updated: 07/27/2016

Voucher's Value Too Low, Chubais Says

While the market rate of the privatization voucher languishes at less than 5, 000 rubles. Deputy Prime Minister Anatoly Chubais said Tuesday its actual value was pegged at 74, 000 rubles.

"The price is much lower than is realistic", said Chubais, who presented the results of his privatization campaign at a press conference. Chubais blamed parliament for scaring brokers into dumping their vouchers by attacking privatization.

The face value of government property had been set before inflation skyrocketed last year, he said, so a voucher with a face value of 10, 000 rubles could actually buy privatized government property worth 74, 000 rubles.

After dipping below the 4, 000-ruble mark last week, the voucher edged up to 4, 863 on Tuesday from 4, 504 rubles.

On average, privatization vouchers, also called checks, were exchanged in January auctions for 3. 7 shares each, with a nominal value of 1, 000 rubles per share. That means that the average share price, determined by the number of bids for the shares, was pushed up to 2, 700 rubles.

The optimism of Chubais is partly a response to months of attacks from conservative politicians, who claim that the privatization drive will sell out Russia to criminals and Western investors, and have proposed that all enterprises be given directly to the workers. Chubais hit back at Tuesday's press conference, accusing conservative deputies such as Sergei Polozkov and Igor Muravyov of sacrificing the interests of their constituencies by holding up the privatization program.

Chubais announced that the Russian government plans to auction off 174 large enterprises this month, more than double the total in January.

"Everything is ready", said Chubais, who chairs the State Property Committee that runs the privatization campaign.

He said that nearly all Russian citizens have received their privatization vouchers, enterprises scheduled for auctions are ready to emit shares, and close to 1, 000 investment funds have registered to help Russians invest their vouchers into privatized government property, Chubais said.

Seventeen enterprises were auctioned off in December, and 75 in January, Chubais reported. By the end of April, 700 mid-size and large enterprises are planned to be auctioned.

Major firms up for sale this month include the Perm motor factory and the Volgograd tractor factory. Even the politically sensitive energy and military sectors would not escape privatization, Chubais said, although outside ownership in the energy sector will be limited and no final decision has been taken on how to privatize large military enterprises.

He admitted however, that the program still faced many practical obstacles too, such as regional opposition, inaccurate bookkeeping and legal problems. His deputy, Dmitry Vasilyev, added that "we lack the legal basis for large-scale foreign participation in auctions of state-owned firms". He blamed the Central Bank for holding up the necessary regulations.

Although a law on bankruptcy has been adopted, the regulations on how to declare enterprises insolvent have not been written yet, Chubais said. Workers of loss-making factories may be loath to privatize and risk instant bankruptcy, but Chubais said that even such factories would be sold off. Chubais added that 10 to 15 percent of Russia's industry was doomed to go bankrupt.

The military, once a bastion against reforms, is now anxious to get its vouchers. The Russian defense, security and interior ministers met with Chubais last weekend to press for the distribution of vouchers to Russian soldiers stationed abroad, which Chubais said had been delayed by Central Bank opposition to bringing vouchers out of the country.

They also expressed concern about the parliament proposal to give all shares to the employees of each enterprise, because it would rob government employees of the chance to get their share of privatized property, Chubais said.