Install

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

. Last Updated: 07/27/2016

Putin Slams Lebed's 'Privatization' Bid




Acting Prime Minister Vladimir Putin on Friday slammed Krasnoyarsk Governor Alexander Lebed's plans to flout a World Bank-sponsored privatization scheme and retain control of his region's coal mines.


"The Krasnoyarsk administration sees the aim of the privatization of the region's coal industry as keeping the controlling stake," Putin said in Tomsk, where he was meeting with members of the Siberian Accord association of regional leaders.


"From the point of view of international financial organizations, such privatization cannot raise the effectiveness of the region's coal industry," Putin said in remarks reported by Prime-Tass.


The State Property Ministry has also weighed in on the fray, issuing stern statements to the effect that it will oppose Lebed's attempt to interfere with the sale of the Krasugol holding by diluting its stake in three open-pit mines, Borodinsky, Beryozovsky and Nazarovsky.


"The Property Ministry will not allow the stakes to be diluted," Deputy Property Minister Yury Medvedev said in a statement. "If this happens, this will be considered unlawful and those who allow this will be held responsible."


The three coal mines plan to vote through share emissions to dilute Krasugol's stakes in them and then hand those shares over to the Krasnoyarsk administration, Svyatoslav Petrushko, Lebed's deputy governor in charge of the economy, said earlier this week.


However, Lebed may not need to alienate the government by following through with the plan, since the state is likely to agree to privatization terms proposed by the administration that make the company an extremely tough sell.


The State Property Ministry said Friday that two different plans for Krasugol's privatization have been drawn up and that the ministry was in the final stage of negotiations with the Krasnoyarsk administration.


Lebed's main condition is setting the investment terms of the tender for Krasugol at $370 million, which analysts said is well above what any investor would be willing to pay for the holding company.


It was not clear how significantly the Property Ministry's estimates differ from Lebed's, but Sergei Klimov, deputy head of Rosuglekomitet, another agency participating in drawing up the terms of the tender, said it has already accepted the size of the investment proposed by Lebed.


"This sum is incompatible with the real worth of the company," said a government source close to the negotiations.


"If the investment terms are set at this level, the tender will fall through. Maybe this is the ultimate objective of the Krasnoyarsk administration."


Petrushko made it clear in an interview this week that it is. "It's clear that no investor will pay this much for Krasugol today, so why not wait and sell the company later at a fair price?" he said.


Apparently assured that the tender will fail, Krasnoyarsk seems to be putting its plans to dilute Krasugol's stake on the back burner.


"Everything has ground to a halt, there has been no progress" in preparing extraordinary shareholders' meetings scheduled to vote on the motion in mid-September, said Yury Vazhov, chairman of the board of directors of the largest and most valuable mine, Borodinsky.