Putin not ready for ‘real privatisation’ in Russia despite Rosneft-Bashneft deal

Russia’s president Vladimir Putin is not yet ready for a full-scale privatisation drive despite the sale of the government’s stake in oil firm Bashneft to the country’s largest producer Rosneft, an analyst says on Thursday.

Rosneft paid 329.69 billion rubles ($5.30 billion) for a 50.08 percent stake in Bashneft. Putin hailed the deal as one that could give a boost to the country’s privatization drive.

“The main thing is that we don’t stop the privatization process,” Putin said at the VTB Bank Russia Calling investment summit on Wednesday, adding that the deal will help obtain “maximum gain” from the point of view of the budget and fiscal interests.

But many have questioned if this is real privatization given that Rosneft, the buyer of the stake, is backed by the Kremlin. Analysts said that Putin knows that it wasn’t “real privatization” and are not convinced that the country will see a large drive in this area.

“I think the signal was he kind of knows that this isn’t real privatization,” Christopher Granville, managing director at Trusted Sources, told CNBC in a TV interview on Thursday.

“In fact, I personally do not believe he is ready to privatize outright majority controlling stakes in large companies to the private sector, but I think he meant small minority stakes which are interesting to the equity market.”

Granville pointed at the current sale of a stake in diamond producer Alrosa as an example. The Russian government owns a stake in Alrosa and is looking to offload about 10.9 percent in a share sale. Granville said that there will be more of these smaller sales rather than massive stakes.

“So basically (the government’s strategy is) good for macro, not so good for structural reform, private ownership and competition,” Granville said.

Source: CNBC