Putin expands list of Russian companies that cannot be privatized
Russian President Vladimir Putin expanded the list of Russian Strategic Enterprises on Monday 21 May, 2012, to include companies previously entered in the 2011-2013 privatization plan.
State-owned shares of companies listed as strategic cannot be privatized. Putin added to this list Rosneft, the Russian state enterprise and leader in the petroleum industry, and RusHydro the Russian hydroelectricity company to the list of strategic enterprises on May 21, 2012. The two companies were previously on the privatization plan for 2011-2013. FSK EES and MRSK Holding, two state monopolies controlling the power grid, RusHydro, and Systemnyji Operator, the power grid system operator, were also added to the list.
Following this decision, 60.38 percent of Rosneft, 79.55 percent of RusHydro and 100 percent of Systemnyji Operator cannot be privatized.
Further on May 22, 2012 Igor Sechin, Putin?s close ally from the days of their KGB, secret services work, was delegated by the President to chair Rosneft.
The Russian Strategic Enterprises list was created by a Presidential decree on August 4, 2004 during Putin’s first term in office. The list compromised over 500 companies engaged in the production of goods, works and services, of strategic importance for national defense and security, morals, health, rights and lawful interests of Russian citizens. The list includes
R&D institutes, mineral, metal and resources exploitation enterprises, airports, automobile and aviation manufacture serving the military.
The list was revised in 2010, during President Dmitry Medvedev’s term in office. More than 240 enterprises were removed from the list and a privatization plan for 2010-2011 was created. The excluded companies included many in which the state did not have a controlling stake, and companies in various stages of bankruptcy. These included regional airports, R&D institutes, construction companies.
In November 2010, the government announced the privatization plan for 2011-2013. Elvira Naibiullina, the Minister for Economic Development announced 7.97 percent of RusHydro would be privatized, 4.11 percent of FSK EES, 50 percent minus 1 share of Sovkomflot, the state airline, 7.58 percent Sberbank, and 35.5 percent of VTB, the two largest state banks, 25 percent of Rosneft and 100 percent of the United Grain Company, Russia’s largest grain production. A controlling stake in Aeroflot and Sheremetevo airport was also to be sold. Naibullina expected the privatization plan would bring over RUB 1 trillion to the state budget.
