Privatization in Russia

Russian President Dimitry Medvedev recently announced that the Government’s privatization plan is too modest and has given instructions to draft a new project by August the 1st.

He also said the government could sell part of its shares in State oil company Rosneft ahead of schedule, meaning in 2012 instead of 2013.

Other Russian officials have given details about the privatization plan of the State.

Arkady Dvorkovich, the Head of Economic Policy Advisors of President Medvedev said Russia will try to sell 85% of its holdings in the oil group Rosneft, which the government resign the control level of 50%.

Dvorkovich announced that the government’s privatization plan comprises more than 850 entities, including the bank VTB, Sovcomflot, United Grain Company, RusHydro, Sberbank, Rosneft, Rosagrolizing, Rosselkhozbank, Russian Railways Company, and perhaps some airports. But he added that there are no similar plans for the gas giant, Gazprom.

He said that company has a monopoly on an internal energy market that is very complex and acknowledged the company needs to attract new technology, staff with management skills and to advance in research and development.

He believes that Russia has made ​​progress in convincing the European Union that the country does not want to use energy as a political weapon and that there remains some tension with Europe by the Russian refusal to open up some sectors of its market to foreign competitors, but Russian authorities are studying a solution to that problem.

On the other hand, Finance Minister Alexei Kudrin discussed plans for further privatization of Russian State assets since the nineties. He said they include the sale of minority proportions in the 10 major State companies, which could represent approximately U.S. $ 30,000 million between 2011 and 2013; sum that can help to reduce the State budgetary deficit and the restrictions of fiscal financing.

According to Kudrin on August the 1st will be known the details of the companies offered for sale.