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. Last Updated: 07/27/2016

Gazprom Plan Gets Cool Reception

A top aide to President Vladimir Putin on Thursday presented the government's long-awaited plan to liberalize the way Gazprom shares are traded, but market players and analysts were unimpressed, saying it left too many questions unanswered.

"The government and the presidential administration advocate a cautious approach," AP quoted the plan's architect, Dmitry Medvedev, Putin's first deputy chief of staff, as saying.

Under the plan there is no clear timetable for abolishing the most controversial restriction on trading the gas giant's stock -- the so-called ring fence that limits and penalizes non-Russian shareholders.

Stock in Gazprom, Russia's largest company and taxpayer, is divided into locally traded shares and American Depository Receipts, which are traded overseas at a sizeable premium. And the local market itself is heavily regulated.

The first stage of the reform is to liberalize the local market by lifting a rule restricting nominal holding of Gazprom shares to a handful of depositories.

Furthermore, Gazprom shares will be allowed to expand to several exchanges -- the most important of which is the Moscow Interbank Currency Exchange. Currently, trading is handled primarily by the Moscow Stock Exchange, which trades in little else, as well as the St. Petersburg Stock Exchange.

The second stage of the reform plan raises the amount of shares foreigners can buy from 14 percent to 20 percent -- a quota set by the government. But this increase may only be realized in a few months, and the government is not sure which method of buying shares to adopt.

The working group set up by the government "simply lists four options for partial liberalization" prepared by individual state agencies and Gazprom, the United Financial Group brokerage said in a research note Thursday. However, it "fails to agree on a commonly acceptable solution," it said.

"The government and the presidential administration advocate a cautious approach and believe that reasonable conservatism is necessary to carry out the reform in a reasonable time and with the best economic result," news agencies quoted Medvedev as saying.

Furthermore, analysts aren't sure whether the newly approved 20-percent quota for foreign holdings hasn't been filled already. Some shares were bought by foreigners before quotas were introduced in 1997, and few know how many.

The government puts the share of Gazprom stock still available to foreigners at 8.5 percent, with current foreign ownership at 11.5 percent.

Gazprom stock barely reacted to the news. "The concerns over delays in presenting the liberalization plan have been there for several weeks," said UFG analyst Dmitry Avdeyev.

Gazprom shares fell 2 percent on Russian exchanges, while ADR prices were unchanged.

Konstantin Chernyshov of NIKoil, however, said the latest developments raised hopes the government was moving in the right direction. "Any effort to improve transparency in Gazprom share trading is encouraging," he said.