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Russia: Billions In State Assets May Be Sold Next Year

  • Stephanie Baker

Moscow, 27 August 1997 (RFE/RL) -- Russia's new privatization chief Maxim Boiko plans to sell thousands of millions of dollars worth of state assets next year.

The government's program, submitted to the State Duma late Monday, lists 37 companies to be sold next year in an attempt to speed up privatization and make the process more open.

Boiko yesterday urged the Duma to approve the plan, saying: "This will put privatization on a solid legal footing, which means that it will be governed by laws, not merely by presidential decrees and resolutions."

The program was drawn up in line with a new law that went into effect August 2, requiring the government to submit a list of state assets up for sale to the Duma. In the past, the government has organized most sell-offs on the basis of haphazard presidential decrees.

The government is currently in the midst of a high-profile sell-off of state assets in a bid to plug up holes in the federal budget, which has been squeezed by a shortfall in tax revenues. Recent auctions have sparked rivalries among Russia's once-tightly knit bankers, who are competing for property still in state hands.

Under the program, several major enterprises are slated for sale next year, including telecommunications holding company Svyazinvest (25 percent minus one share), state oil company Rosneft (96 percent), oil giant Lukoil (6 percent), state airline carrier Aeroflot (51 percent), and pipeline operator Transneft (50 percent minus one share).

Boiko said the government is currently working out the sale terms for Svyazinvest and Rosneft, which means those stakes could be sold off already this year. In the past the government has discussed selling off only 24 percent of Svyazinvest.

A quarter stake in Svyazinvest was sold at a cash auction in July, fetching nearly $1.9 billion in what was deemed one of Russia's most successful privatizations ever. But the losing bidders launched a bitter media campaign to discredit the winning consortium, led by Russia's Uneximbank.

Other companies slated for privatization in 1998 include Moscow airport Sheremetyevo and a series of oil and transportation companies. The program calls for most of the companies to be privatized by commercial tenders or auctions, with the government keeping a controlling stake in many of the firms.

The list appears so extensive and the stakes so huge that it reads like a catalogue of the government's final privatization plans. But analysts said many of the enterprises have been mentioned previously in the government's privatization plans. Nevertheless, the program is in line with past statements by Boiko, who has called for selling off state assets as quickly as possible.

Boiko said the combined value of the stakes is about 30 trillion rubles ($5.2 billion), well above the government's forecast of 6.1 trillion rubles in privatization revenue for 1998. Boiko said the number of companies to be privatized had been expanded in order to give it room to maneuver in negotiations with the Duma.

It is not clear whether the plan requires parliamentary approval. But Boiko's statements indicate he wants the Duma's blessing in an attempt to put his own signature on the privatization process after replacing Alfred Kokh, who left his post earlier this month amid an uproar over Svyazinvest.

As one analyst put it: "You could see some horse-trading between three key pieces of economic legislation before the Duma now: the tax code, the 1998 budget and the privatization program."

The opposition-dominated Duma in the past has blasted the government's privatization record as a failure, with communist deputies complaining state assets have been sold for a song. Analysts said it is unlikely the 1998 program will sail through the legislature without a political fight.

In an interview in yesterday's "Izvestia," Boiko acknowledged that the government could have handled privatization better in the past by speeding up the number of sell-offs. But he defended the 1995 loans-for-shares program, which handed major stakes in prized companies to insider banks at discounted prices.

"I don't think loans for shares was illegal. It's another thing to discuss whether it was the best means of privatization," he said.