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. Last Updated: 07/27/2016

Rosneft Stake Sale Canceled

Russia's new government on Thursday tore up its plans to sell a controlling stake in the oil conglomerate Rosneft, conceding that the economic crisis had rendered the privatization futile.

First Deputy Prime Minister Vladimir Bulgak told a privatization task force Thursday that the collapse of the ruble had hammered the last nail in the Rosneft sell-off coffin, Russian news agencies reported.

The plan to privatize a 75 percent stake in the holding company next month would thus be scrapped altogether, having already twice been postponed due to a lack of bidders.

Instead, Bulgak tasked his aides with speeding up efforts to sell off a stake in the Slavneft oil company. Consultants will be invited to evaluate the stake up for sale, originally planned to be 20 percent of the company.

But the admission that Rosneft, a loose grouping of companies bound together in a state holding company, is unsalable marks the end of an inglorious year of efforts to drum up vital funds for the budget.

After tinkering with the stake size and investment conditions, the government finally decided earlier this year to put up 75 percent plus one share in Rosneft for a starting price of $2.1 billion plus $400 million in investment conditions.

But with the equity market plummeting, investors leaving Russia in droves, and global oil prices diving, the parties that had initially expressed an interest in Rosneft melted away.

After a first sell-off failed in May, the government slashed its asking price to $1.65 billion, but a second auction in July also failed.

Other oil sector sell-offs have met with similarly inauspicious results, and the only privatization still in the pipeline is a 25 percent stake sell-off in communications giant Svyazinvest, for which a tender closes on Oct. 13. The planned sell-off of a 5 percent stake in Gazprom has also been shelved indefinitely.