Economic Development Ministry proposed additional privatization transactions in 2013

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(Business New Europe – bne.eu – April 16, 2013) The Economic Development Ministry of Russia proposed another five large privatization transactions in addition to the sale of 14% of ALROSA and an additional issue of VTB worth RUB100bn, Minister Andrei Belousov said, Vedomosti reported.

The Ministry proposes to privatize in 2013 up to 19% of Rosneft, state-owned stakes in Aeroflot (51.17%), Sheremetievo (83.038%), the United Grain Company (50.1%) and united Rostelecom in which Rosimuschestvo is expected to have over 50% after the consolidation with Svyazinvest.

The privatization of 19% of Rosneft is needed to offset the shortfall of budget revenues which arose from the decision to leave with Rosneftegaz RUB150bn received from the sale of 5.66% of Rosneft to the British BP, Andrei Belousov said.

19% of Rosneft are worth over $14bn even at the current low quotations.

About $5bn may be gained from the privatization of the government-owned stake in Rostelecom (after its consolidation with Svyazinvest), according to Communications Minister Nikolai Nikiforov. A sale at a premium to the market is also possible. However, the decision to privatize Rostelecom is not final, Nikiforov admitted: the President’s decree is required. The company is a strategic one which requires approval with security ministries.

None of the transactions proposed by the Economic Development Ministry have been agreed upon so far, the probability of their carrying out this year being very low, two government administration officials said, cited by Vedomosti.

The proposals are related with the budget deficit, another federal official explains, “The Economic Development Ministry promised six months ago that the privatization would bring RUB420bn to the budget in 2013. A month ago, the estimate was decreased to RUB60bn. But the Prime Minister made it clear that the plan of RUB420bn must be fulfilled.”

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