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. Last Updated: 07/27/2016

Cabinet Lists Privatization Stakes

Prime Minister Mikhail Kasyanov has signed off on a list of state companies the Cabinet wants privatized in the first half of this year, the Property Ministry said Monday.

Among the chosen are four oil and gas enterprises, including Orenburggeologia, Nizhnevartovsk-nefte-gaz and Slavneft-Megionneftegazgeologia, of which the state hopes to sell 15.5 percent, 4.73 percent and 3.28 percent, respectively.

Also listed are coal producers Kuzbassugol, Kuznetskugol and Khakassugol, where 79.73 percent, 80.67 percent and 43 percent of shares are planned to be sold.

Moscow River Shipping Co.'s 21.3 percent, Kovdorsky Alumina Plant's 24.8 percent, Yuzhuralnikel's 23.35 percent and Novokuznetsky Aluminum Plant's 14 percent will also be put on the block.

A stake of 50 percent minus one share of Rosgosstrakh — the former Soviet insurance monopoly now fully owned by the state — is also for sale.

It is not clear, however, whether the list is going to be approved by the State Duma, as required by the Law on Privatization.

A spokeswoman for Kasyanov told Reuters on Monday that the government didn't need the Duma's approval. For years, the Property Ministry has effectively been selling state stakes without the Duma's official consent.

But Yevgeny Ishchenko, deputy head of the Duma's property committee, told Interfax late last year the government was violating the law by doing so.

"For the last three years the government has promised to provide the Duma with a draft privatization plan along with a list of stakes it intends to sell, but it never gives it," Ishchenko said.

In March, the Duma revolted: It approved a special article in the 2001 budget that forbids the sale of any stake in a state enterprise — including subsidiaries and affiliated companies — with assets of more than 50 million minimal salaries, or $350 million.

Property Ministry spokeswoman Natalya Skorodumova could not say Monday how much money the sales are expected to raise or how many of the 19 enterprises will be affected by the article.

The stake in Rossgosstrakh might fall under restrictions: Its managers said at the end of 1999 that if privatized, it could bring $1 billion to $1.5 billion.

But Viktor Mayevsky of the Renaissance-Insurance Group said those figures are unlikely.

"We don't even have a market capacity of $1 billion," he said.

According to the 2001 budget, the state expects to raise 18 billion rubles, or $600 million, from privatization for the whole year. Last year's budget forecasted 15 billion rubles, but raised twice as much.

"We hope the Duma will abolish that article soon, while we are still preparing the stakes for sale," Skorodumova said.

The article is already losing its force with each rise in the official minimal salary.

In December, when the minimum salary was set at 84.5 rubles, enterprises with assets of about $150 million were restricted.

That level rose to $350 million in January, when the minimal salary level was boosted to 200 rubles.

The numbers are set to change again this summer, when the government plans to boost the minimum salary to 300 rubles, which would raise the restriction level to $500 million.

This level would automatically allow the government to sell stakes in nearly all its companies except major ones such as Gazprom and LUKoil.