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. Last Updated: 07/27/2016

Levitin Says Half Rail Freight to Be Sold Off

Russian Railways will move to privatize half its stock of freight cars in a sell-off worth up to 60 billion rubles ($2.3 billon), Transportation Minister Igor Levitin said Wednesday.

RZD would divide the stock between two companies and sell off one of them in a share offering by the end of 2007 at the earliest, Levitin said at a meeting of the government commission on the development of industry, technology and transport.

The company that is sold would own around 260,000 cars, Levitin said.

The announcement is a modification of earlier RZD plans to raise funds by creating a single cargo firm and selling 49 percent of it on the stock market, Levitin said.

That plan could lead to the government losing its control over the sector, he said.

Speaking after the meeting, Levitin said RZD would test the water by privatizing subsidiary company Transcontainer, Interfax reported.

Transcontainer will either be sold off directly or in an initial public offering, and the deal will be treated as a trial run for the later sale of the freight car stock, Levitin said.

While confirming that Transcontainer could go on the market by the end of this year, a spokeswoman for RZD said, however, that it was too early to name a date for the privatization of the freight car stock.

"What the minister said today is the most optimistic time frame. We first have to establish this company and then see how it works," said Natalya Akafyeva, head of RZD's press office.

"To talk about selling off a company that doesn't even exist yet is slightly hasty," Akafyeva said.

The latest moves represent the third stage in a series of structural reforms designed to modernize the country's railway system and should attract over 200 billion rubles from the sell off and private investment by 2010, Levitin said.

Since the beginning of the reform process, over 100 billion rubles have been pumped into rolling stock by private investors, Levitin said.