MOSCOW, July 27 (Reuters) – Russia plans to sell $29 billion worth of assets on the open market, a senior government official said on Wednesday, allaying investors fears about the transparency of the biggest privatisation since the 1990s.
The planned asset sale is designed to fill budget holes that Russia is to battle for the next few years.
“We will sell significant stakes in state companies on the market. We plan to keep controlling stakes,” Finance Minister Alexei Kudrin told a press briefing ahead of a government meeting on Thursday, which will debate key budget parameters and privatisation plans.
“(Assets) will be valued publicly, in line with market prices and tenders will be open,” he said. “We are fully ruling out a situation when somebody sells something to someone at an artificially low price.”
He said the government wanted to earn around $10 billion next year from asset sales but did not name the companies that would be auctioned off. The government will meet on Thursday to approve draft budgets for 2011-2013 and asset sales.
If approved, the sale would become Russia’s most ambitious since President Boris Yeltsin’s era, when well-connected tycoons snapped up some of the biggest oil and metals firms at low prices.
Investors have applauded the plan to sell minority stakes in major state firms in the next three years but have said they are keen to see how transparent the process will be and whether foreigners will be allowed to bid.
The plan could help the Kremlin plug budget holes ahead of the 2012 presidential election, which will require the authorities to maintain high social spending to guarantee good approval ratings.
Sources told Reuters over the weekend the government wants to sell minority stakes in firms such as Russia’s biggest oil producer Rosneft (ROSN.MM), lender VTB (VTBR.MM) and oil pipeline monopoly Transneft (TRNF_p.MM). [ID:nLDE66P0S0]
The plan could offer the government an alternative to higher taxation in its battle to reduce budget deficits.
On Tuesday, Kudrin said Russia was unlikely to balance its budget deficit until 2015 and on Wednesday Prime Minister Vladimir Putin said Russia may not be able to reduce the deficit below 5 percent — or $80 billion — this year. [ID:nLDE66R1YA]
The plan ensures Russia will keep control of the firms in a clear signal the Kremlin is not moving away from the resource nationalism it has developed over the past decade of high commodity prices.
The sales plan would undergo a final review as part of budget debates on Sept 7, and then filed to parliament.
Speaking of taxes Kudrin said the government had approved a decision to increase mineral extraction taxes on gas producers by 61 percent from next year.
For a factbox on the proposed asset sales, please click on [ID:nLDE66P1DU]
(Reporting by Gleb Bryanski, writing by Dmitry Zhdannikov, Editing by Lidia Kelly, Ron Askew)