Russia is planning a major sell-off of stakes in state-owned firms in a new privatization drive planned to rake in $29 billion for the government, reports said on Monday. “The whole point about privatisation programs is that they never happen, so what is important here is whether anything happens at all – something or nothing,” said Christopher Granville, a Russia analyst at London-based emerging market investment research firm Trusted Sources. “This initiative by the Finance Ministry suggests that at least something will happen,” he said. Large stakes would be sold in Russia's largest oil producer Rosneft, its biggest bank Sberbank and national pipeline owner Transneft, the reports said. However the state would keep a controlling stake in all the firms. “The ministry of finances is proposing to sell stakes in state firms and banks, keeping control in them,” a source told the RIA Novosti news agency. “For the moment, the final decision has not been made.” The plan set out by the finance ministry envisages selling 27.1 percent of Transneft, 24.16 percent of Rosneft and 9.3 percent of Sberbank. All these companies have already been part-privatized but the privatization drive would also see the sale of 25 percent minus one share in railways operator RZhD, currently 100 percent owned by the government. RIA Novosti said that the sale was expected to bring in around 300 billion rubles ($10 billion) each year between 2011-2013 for a total of 883.5 billion rubles ($29.1 billion) over the next three years. Other big firms involved in the sale - expected to include a total of 10 state-owned companies - include state bank VTB and hydro-electric power operator Rushydro. Business daily Vedomosti said the proceeds from the sale would be used to shrink Russia's budget deficit, which ballooned during the economic crisis after years of surpluses in the good times. Prime Minister Vladimir Putin has earmarked cutting the deficit as a priority for the government and Finance Minister Alexei Kudrin is targeting public deficits equal to four percent of Gross Domestic Product in 2011, three percent in 2012 and two percent in 2013. Russia largely halted privatization after chaotic sell-offs of state owned resources of the 1990s which critics said handed over large swathes of its huge natural wealth to a clique of oligarchs at knock-down prices. However, officials have over the last year have indicated a rethink of Russia's strategy, partly due to the impact of the economic crisis which hit its hydrocarbon-dependent economy hard. If approved by Prime Minister Vladimir Putin, Russia's most ambitious asset sale plan since the rigged privatisations of the 1990s could help President Dmitry Medvedev plug a hole in the budget ahead of the 2012 presidential election. Finance ministry sources told Reuters on Saturday that minority stakes in 10 firms – including Russia's biggest oil producer Rosneft , lender VTB and oil pipeline monopoly Transneft – would be sold off. Ministry sources said on Saturday the asset sale idea had been discussed and judged realistic at a preliminary meeting chaired by Putin, Russia's most powerful politician. A Finance Ministry spokesman on Monday confirmed that a shortlist of companies had been drawn up but gave no figures and said no final decision had yet been made on the sales. It was also unclear whether the sales would involve foreign investors, be through open stock market tenders or targetted deals. The plans have also been devised to ensure that the state keeps control over major companies, a step that could ensure support from many of the powerful clans in the Kremlin who are eager for state control of assets deemed strategic.
