Kremlin preparing for secret negotiations to sell off Russian state companies abroad
The Russian government is preparing to privatize a number of state companies, Russian Minister of Economic Development Maxim Oreshkin announced at the World Economic Forum in Davos.
The negotiations with foreign investors will be closed off to the public.
“We are working on a number of deals, working in a closed format,” TASS cites Oreshkin as saying. “When you prepare a deal, it doesn’t have to be public, we don’t need to discuss who we are negotiating with. There are a number of assets which will be positive for the Russian economy if they receive additional investments from foreign partners too,” the minister said.
No significant revenue from privatization has been included in the federal budget for 2019-21. This year, there are plans to sell state property for 13 billion rubles, for 11 billion in 2020, and there are no plans to sell any in 2021.
This amount of privatization is “not even funny”, lamented Alexey Kudrin, Chairman of Russia’s Accounts Chamber, in December.
“The president in his address set the goal of reducing the government’s share in the economy. At present, no expansion of the private sector is taking place. What’s more, our state companies are still buying up private assets,” he said.
The last major privatization deal in Russia was the sale of a 19.5% share in Rosneft to a consortium of the Swiss commodity trading company Glencore and the Qatar investment fund QIA. The sale was based on a loan from a Russian state bank and the Italian bank Intesa.
According to WSJ, the deal was initially made on condition that, if Russia does not find any parties willing to share the burden of owning the shares or lenders who will invest in the project, some of the shares will be bought back.
The bank Intesa was unable to syndicate the loan issued for the shares – not a single major bank agreed to allocate funds. Rosneft attempted to find a new buyer in the Chinese corporation CEFC, to whom VTB Bank agreed to provide funds. However, in March 2018, CEFC head and founder Ye Yanming was arrested on charges of economic crimes.
In autumn, the Qatar investment fund agreed to keep the entire shares package itself, having received €7.4 billion from VTB Bank, according to a report by Reuters. The Russian bank later denied participating in the deal.