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. Last Updated: 07/27/2016

Initial Bid in Gazprom Sale Set by Kremlin at $1.65Bln

The Russian government has set the initial price for selling a 5 percent stake in the gas monopoly Gazprom at a forthcoming auction at $1.65 billion, a Gazprom source said Thursday.

"The [government] commission made the decision yesterday to set the starting price for the stake at the ruble equivalent of $1.65 billion," the source said.

The Gazprom auction, which the government is counting on to replenish budget coffers this year, has not yet been officially announced. Under Russian legislation, the auction can take place no earlier than 45 days after it is announced.

President Boris Yeltsin signed a decree Tuesday that increased the limit on foreign ownership in the company to 14 percent from 9 percent to allow foreign participation in the auction.

The 5 percent from the government's 40 percent stake in Gazprom will be offered in a single lot at the auction.

But if the stake is bought by a non-Russian entity, the buyer will not be allowed to sell the stake for five years or issue derivatives backed by the shares for the same period.

The text of Yeltsin's decree said the measures had been made with the aim of securing terms for fulfilling the federal budget in 1998.

Russia is selling off or offering for sale state-owned stakes in a number of energy sector companies as it tries to raise urgently needed cash for the budget during a period of economic turmoil, while struggling to meet existing debt commitments.