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. Last Updated: 07/27/2016

Primakov Orders Merger And Sale of 3 Coal Firms




Prime Minister Yevgeny Primakov has ordered the merger and subsequent privatization of three coal companies in the Western Siberian region of Kemerovo, the government information service reported.


The measure complies with the conditions for a multimillion-dollar loan from the World Bank to restructure the coal industry.


The merged company, Kuzbassugol, will be sold with the state retaining a so-called golden share, which would give it the right to block major decisions, according to a resolution signed by Primakov last week.


The decision is an important step in privatization, which hasn't been among the Primakov government's priorities, said Pavel Kuznetsov, head of the industry restructuring department of the government's Working Center for Economic Reform. "There have been no such decisions in the past few months," Kuznetsov said. "This is a very serious step."


By merging the three companies in Russia's largest coal-producing region, the state will increase its control of the industry and make Kuzbassugol more attractive for investors, Kuznetsov said.


The last coal privatization auction was held in late 1998, when the government sold 26 percent stakes in two large Kemerovo mining companies.


The government has been accused of dragging its feet on restructuring the coal sector, and the World Bank said in January that Russia's inaction may keep it from disbursing $400 million to finance the program.


However, two months ago the bank grudgingly approved the disbursement of the loan, which will be broken into two $100 million and four $50 million tranches.


Vadim Voronin, World Bank deputy director for Russia, said Wednesday no concrete time frame has been set for the disbursement of the funds, which will depend on the state's performance. All installments should be handed out by next spring.