Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Kazakov: Sell-Offs Must Meet Cash Aims

State Property Committee Chairman Alexander Kazakov said Wednesday that privatization would bring in its budgeted 12 trillion rubles (about $255 million) this year, but did not give clear details as to how this would be done.


"The budget is the budget and the law is the law," Kazakov said at a press conference, referring to the 12 trillion ruble budget target from state selloffs, which he has said will slow to a trickle this year. "We have to search for non-traditional paths to decide these problems, which we can realize rather successfully."


At a press conference last week Kazakov said he would discuss lowering the revenue target with lawmakers. But Prime Minister Viktor Chernomyrdin said at a government meeting Thursday that the privatization program's budget obligations should not be scaled back.


Officials have said stakes in 13 to 14 enterprises would be sold off this year, including chunks of the oil company Rosneft and the utility United Energy Systems. Most would be after the June presidential elections.


Kazakov said additional money would be raised by implementing a number of procedural changes, including new charges for allocation of state property to citizens, technological improvements, and a review of loans to former Soviet republics.


If those measures do not succeed in raising the 12 trillion rubles, he would consider holding revised "loans-for-shares" auctions as a means of raising more money. He did not specify how those auctions would differ from those conducted last fall, which have attracted heavy criticism from the State Duma and others for seeming to hand control of valuable state stakes to banks at bargain-basement prices.


But Kazakov insisted that the state would not seek to overturn the results of the auctions and hang on to the companies by repaying the loans.


"That is not being considered," he said.


One Western analyst was skeptical of the government's ability to raise the projected revenue.


"This is simply the same old company line," said the analyst, who declined to be named. "It makes no sense to think the government will raise more money than last year given the upcoming presidential elections."


Privatization last year brought in about 5 trillion rubles, against the budgeted 9 trillion rubles.Kazakov also said that negotiations with the Italian company Stet over its bid for a 25 percent stake in the Svyazinvest telecommunications network would restart in mid-March, but he did not say when a new tender would occur.


Stet's bid collapsed in December when it could not agree with the Russian government on terms for payment.


The privatization chief said the state would hold on to a 37 percent stake in troubled aero-engine manufacturer Rybinsk Motors after a potential buyer had withdrawn. The proposed selloff has been the subject of an on-again, off-again battle with Rybinsk wanting to remain in government hands.