Economy minister Elvira Nabullina is moving ahead with preparation of privatizing energy giants Rosneft, Transneft, FSK and Rushydro, despite opposition from Russias energy tsar, deputy prime minister Igor Sechin. The ministry of transport is also pushing to privatize container shipper Transglobal, against opposition from Russian Railways. According to business daily Vedomosti, Nabullina held a meeting preparing for the privatization of the energy companies in the period 2012-2016. In December, deputy prime minister with oversight of the energy sector, Igor Sechin wrote a letter to prime minister Vladimir Putin requesting postponement of privatization of these companies until their valuations recovered sufficiently, for instance to the level of IPOs where applicable.
Nabullina's economy ministry, which former finance minister Aleksei Kudrin recently named the last bastion of liberalism in the government, is bitterly opposed to Sechins proposal, according to Vedomostis sources. According to one source, the ministry will continue preparing for privatization, but the exact time will depend on the markets.
The state companies themselves had three requests to the government according to Vedomosti: that the state provide a stable customs and tariff framework for the respective sectors; that the law on the Arctic shelf be revised (which reserves licences for state-owned companies, and thus would exclude a privatized Rosneft); and that consideration be taken of the increase in debt burden of companies after ending of ownership by the sovereign.
In terms of more immediate privatisiaton plans, Deputy Transportation Minister Andrei Nedosekov was quoted January 25 saying a stake in container shipper Transcontainer would be sold in 2012. State-owned Russian railways holds a 50% stake in the company, and Nedosekov said it was unclear whether the whole 50% stale or only 25% would be sold.
Russian Railways boss Vladimir Yakunin has backed selling only the smaller stake and only after 2013. Nedosekov said the ministry was in favor of the entire stake being sold, according to Prime newswire. Privatisation was originally slated for late 2011.
"We see several key implications from the news," write VTB analysts. "First, the government acknowledges the necessity of having stable regulation in the Russian energy sector, which is positive for Russian oil companies and allows them to make more assured long-term plans."
"Second is the potential opening up of the Russian offshore for oil companies which are not controlled by the state, which is positive for the sector fundamentals as it increases competition. Last, but not least, the companies in the privatisation list (Rosneft and Transneft) will have to improve their corporate governance further and increase transparency, which will be reflected in the selling price, in our view."
Keywords: Russia, Economy, Business - Russia News - Russia
Economy minister Elvira Nabullina is moving ahead with preparation of privatizing energy giants Rosneft, Transneft, FSK and Rushydro, despite opposition from Russias energy tsar, deputy prime minister Igor Sechin. The ministry of transport is also pushing to privatize container shipper Transglobal, against opposition from Russian Railways.
According to business daily Vedomosti, Nabullina held a meeting preparing for the privatization of the energy companies in the period 2012-2016. In December, deputy prime minister with oversight of the energy sector, Igor Sechin wrote a letter to prime minister Vladimir Putin requesting postponement of privatization of these companies until their valuations recovered sufficiently, for instance to the level of IPOs where applicable.
Nabullina's economy ministry, which former finance minister Aleksei Kudrin recently named the last bastion of liberalism in the government, is bitterly opposed to Sechins proposal, according to Vedomostis sources. According to one source, the ministry will continue preparing for privatization, but the exact time will depend on the markets.
The state companies themselves had three requests to the government according to Vedomosti: that the state provide a stable customs and tariff framework for the respective sectors; that the law on the Arctic shelf be revised (which reserves licences for state-owned companies, and thus would exclude a privatized Rosneft); and that consideration be taken of the increase in debt burden of companies after ending of ownership by the sovereign.
In terms of more immediate privatisiaton plans, Deputy Transportation Minister Andrei Nedosekov was quoted January 25 saying a stake in container shipper Transcontainer would be sold in 2012. State-owned Russian railways holds a 50% stake in the company, and Nedosekov said it was unclear whether the whole 50% stale or only 25% would be sold.
Russian Railways boss Vladimir Yakunin has backed selling only the smaller stake and only after 2013. Nedosekov said the ministry was in favor of the entire stake being sold, according to Prime newswire. Privatisation was originally slated for late 2011.
"We see several key implications from the news," write VTB analysts. "First, the government acknowledges the necessity of having stable regulation in the Russian energy sector, which is positive for Russian oil companies and allows them to make more assured long-term plans."
"Second is the potential opening up of the Russian offshore for oil companies which are not controlled by the state, which is positive for the sector fundamentals as it increases competition. Last, but not least, the companies in the privatisation list (Rosneft and Transneft) will have to improve their corporate governance further and increase transparency, which will be reflected in the selling price, in our view."