Russia Unlikely to Sell Stakes in Big Companies in 2010, Nabiullina Says

The Russian government may not sell large state assets in 2010 as it’s still discussing the list of companies that may be put on offer, Economy Minister Elvira Nabiullina said.

“It’s unlikely that we’ll manage to put any of the major companies up for sale this year,” Nabiullina told reporters in Moscow today. The government may raise 72 billion rubles ($2.4 billion) from this year’s asset sales, she said on June 18.

The government may raise between 600 billion and 700 billion rubles from asset sales in 2011-2013 as it tries to reduce a budget deficit, with 200 billion rubles coming next year, Nabiullina said. Finance Minister Alexei Kudrin late yesterday said the sales may bring in 883 billion rubles during the three-year period, including 298 billion rubles in 2011.

Russia posted a budget deficit of 5.9 percent of GDP last year, its first shortfall since 1999, as the economy contracted a record 7.9 percent. In addition to asset sales, the government may increase taxes on oil and natural gas extraction and some metals exports, and tap bond markets to narrow the gap.

Nabiullina said the government will continue to discuss the list of companies in which state stakes may be offered to investors. Kudrin said a stake in OAO Rosneft, Russia’s largest oil producer, may be sold in three to five years.

Minority Stakes

The Finance Ministry has proposed selling minority stakes in companies including Russia’s two largest lenders OAO Sberbank and VTB Group, OAO Russian Railways, shipper OAO Sovcomflot, the OAO RusHydro utility, Russian Agricultural Bank and OAO Agency for Housing Mortgage Lending.

Sales of stakes in Russian Railways and the Agency for Housing Mortgage Lending may be delayed for two to three years, Kudrin said yesterday. He declined to name other companies in which the government plans to sell stakes, saying the list hasn’t been completed. The asset sales plan should be clarified in September, with the list finished by year-end, he said.

The state will retain controlling stakes in any major companies offered, Kudrin said.

To contact the reporters on this story: Ekaterina Shatalova in Moscow at eshatalova@bloomberg.net; Maria Levitov in Moscow at mlevitov@bloomberg.net

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