Arab Today, arab today russia rosneft in expanded selloff drive
Last Updated : GMT 03:11:22
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Russia Rosneft in expanded sell-off drive

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Arab Today, arab today Russia Rosneft in expanded sell-off drive

Moscow - AFP

Russia on Wednesday announced a broadly expanded privatisation plan through 2017 that will see such national champions as the Rosneft oil giant go fully private and the state retain only veto rights.The office of First Deputy Prime Minister Igor Shuvalov told news agencies that the new government plan would see the state give up stakes in companies that also include the diamond giant Alrosa and the flag carrier Aeroflot.The proposal would see the government only retain what is referred to as the \"golden share\" -- essentially a tiny stock holding that allows the state to have the ultimate say in how the company is run.The decision appears to mark a fundamental shift in economic strategy following years in which the state drafted protectionist measures that guaranteed its ownership of the country\'s biggest Soviet-era firms.Rosneft\'s inclusion in the programme is especially striking because the government had previously only spoken of privatising up to 50 percent minus one of its shares by 2014. Russia\'s largest oil company is currently seeking a Western partner for an ambitious plan to develop Arctic oil fields that could potentially turn it into a global energy powerhouse for decades to come.Other big names on Shuvalov\'s list include Russia\' power generating company RusHydro and the state-run grain trader United Grain Company (OZK).President Dmitry Medvedev\'s privatisation drive -- an effort that started small and has thus far remained largely on paper -- is one of the world\'s largest and is expected to fetch Russia just under $60 billion.But one analyst\'s estimate said the revised programme being discussed this week could theoretically double the size of state sales to $120 billion.The Kremlin\'s top economic adviser Arkady Dvorkovich said earlier Wednesday that Medvedev had already approved the revised plan.\"The president approved this government proposal,\" Interfax quoted Dvorkovich as saying. Analysts said the privatisation drive highlights a recognition in Russia that it needs Western investment and know-how to fill the technological gap that has developed since the Soviet Union\'s collapse two decades ago.\"The Russian economy is hollow and lags not just years but decades behind in technology,\" Stratfor Global Intelligence said in a research note.\"This is where the privatisations come in. This is where giving strategic stakes in very attractive companies becomes the trade for foreign groups to come in and invest and bring in their technology.\"Stratfor noted that foreign involvement in Russian national champions also \"creates a lever... Russia can use against these countries should relations go sour.\"The government said it also wanted to lower its stake in other companies in a drive that under the right global market conditions could erase Russia\'s budget deficit and help shake up management at state-controlled behemoth.Analysts caution that financial jitters in Europe earlier this year produced a disappointing sale in February of a 10 percent stake in Russia\'s second-largest bank group VTB.The sale was conducted at a 33 percent discount to a similar offer made in June 2007.But \"far from being discouraged by the difficult VTB sale, the state is taking the optimistic view about global market conditions and investor demand for Russian assets,\" said ING strategy Chris Weafer.\"To be successful, the government will have to succeed in changing the currently poor investment climate and equally poor foreign strategic investor perception of Russia,\" Weafer added.He noted that Russia\'s ability to win membership in the World Trade Organisation this year after a 17-year campaign would help guarantee international interest in the state sales.

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