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. Last Updated: 07/27/2016

State May Sell Stake in Sheremetyevo

MTWorkers putting the final touches on the Sheremetyevo-3 terminal. The building will be completed by next year.

A lack of funds could push officials to privatize Sheremetyevo Airport.

Sheremetyevo is one of the state assets that could be sold under the government’s 2010 privatization plan, a source close to the airport’s board of directors told Vedomosti.

The Transportation Ministry, through an aide to Minister Igor Levitin, who is on Sheremetyevo’s board of directors, confirmed that the airport could be put up for sale. Two sources in the government said the state had already received documents to that effect.

Funds are needed for the construction of a third runway and the development of a new terminal, said Svetlana Kryshtanovskaya, a spokeswoman for the Transportation Ministry. Sheremetyevo’s airfield can only be owned and financed by the government, she said.

Finding funding from within the state’s budget — which, according to the Finance Ministry, is running at a 3.2 trillion ruble ($106 billion) deficit for 2009 and will have a 2.9 trillion ruble deficit for 2010 — is difficult. But it can be obtained through privatization.

Russia will restart privatizations in order to plug the budget deficit, First Deputy Prime Minister Igor Shuvalov said last month. Ten years ago, when Shuvalov was the head of the Federal Property Management Agency’s predecessor, he said the airport could be sold “at a very high market price.” Since then, officials have returned to the idea from time to time.

In 2004, Alfa Group won an auction for the management rights to the airport, but was never confirmed in that capacity.

In 2005, privately owned Domodedovo surpassed Sheremetyevo as the country’s busiest airport.

The time frame for a privatization and a potential price have not yet been discussed, Kryshtanovskaya said.

It would be more logical to do a deal in 2011, when the new Sheremtyevo-3 terminal will start working at full capacity, a Transportation Ministry official said.

The terminal is being built by Aeroflot and is expected to be fully operational by the beginning of next year.

It would be necessary to exclude the airport from the government’s list of strategic assets prior to privatization, the official said.

The process can take anywhere from “years, or just one week,” he said.

Sheremetyevo officials refused to comment.

It is doubtful that the government would part with its controlling stake in Sheremetyevo, said Yevgeny Shavo, an analyst an Ingosstrakh.

Vnukovo Airport co-owner Vitaly Vantsev said Sheremetyevo could fetch up to 1.5 billion euros in a sale.

Infrastructure projects require a great deal of investment and take a long time to earn a profit, which could limit interest in Sheremetyevo to only the industry’s largest players, Vantsev said.

He said he was not against participating in the airport’s privatization.

“The most important thing is finding the money,” he said.

The business has potential, since the number of passengers using Moscow’s airports will go back to precrisis levels in 2010, Vantsev said.

Passenger numbers will grow by 5 percent to 7 percent per year, and double in 15 years, he said.