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. Last Updated: 07/27/2016

Kazakov Pick Sparks Gazprom Speculations

The surprise appointment of deputy prime minister Alexander Kazakov to head the board of directors of RAO Gazprom, Russia's largest corporation, has fueled speculation the company may accelerate both its efforts to collect consumer debts and its tentative openings to outside investors.


A government source said Kazakov's appointment by Gazprom's board last Friday was the first instance of a government minister of such seniority heading the board of directors of a major Russian joint-stock company


According to the Commersant Daily newspaper, the logic behind Kazakov's appointment is to lend increased muscle to the gas monopolist's attempts to regain some of the 43 trillion rubles it is owed by consumers.


Meanwhile other reports in the Russian press have suggested that the star of Gazprom's powerful president Rem Vyakhirev is on the wane and Kazakov was put in place to secure a possible succession.


Although Vyakhirev ceded the position of board chairman to Kazakov, he remains the company's chief executive and president.


Analysts and officials interviewed Wednesday said the move would be unlikely to have any immediate impact on the company's privatization plans.


"When a company is in the process of privatization and the government holds a major stake, as in the case of Gazprom, where it holds 40 percent, it is natural to have one or more representatives of the government on the board," said Igor Plotnikov, a spokesman for the State Property Committee. One of the tasks of the state representatives would be to prepare the future sale of stakes in the company, he said.


A Yeltsin decree signed in April this year secured government control over the 40 percent stake until 1999, while a 9 percent stake has been reserved for sale on the international markets to raise capital for investment programs.


"That stake is likely to be sold soon, for example in the form of an ADR program," Plotnikov said, referring to American Depositary Receipts which allow trading of Russian shares in foreign markets. The proceeds of the sale would go to the company and would not count as part of the target 12.4 trillion rubles budget revenue from privatization this year, he said.


It was Kazakov himself who touched off speculation about a partial sale of thedstate's stock in Gazprom. At a press conference following the shareholders' meeting he said, "it is not compulsory for the state to hold a 40 percent stake to keep control" over the company's activities, the Segodnya newspaper reported. But most analysts contacted Wednesday were skeptical about any immediate changes in the prospects for Gazprom privatization.


"It is pretty complicated to privatize a natural monopoly such as Gazprom," said Pavel Teplukhin, chief economist with the Troika-Dialog investment house. He added that the time-consuming process of creating "a mechanism for regulating the prices of the monopoly" would have to precede any privatization of the state's holding.


Most analysts agreed that Kazakov's appointment reinforces Gazprom's traditional strong links with the government, headed by its former boss Prime Minister Viktor Chernomyrdin, but said it was unclear if it would help to rein in consumers' debts.


According to Teplukhin, the bulk of consumers' debts are either owed by large Russian manufacturers "that cannot pay anyway" or by consumers in other CIS republics, in which case "there is a lot of politics involved," he said.