RIVATIZATION 1998.

Privatization Programme for 1998:
More Openess.

From RIA Novosti
Rossiiskaya Gazeta
August 28, 1997
By V. Kucherenko

Vice-Premier M.Boiko has presented a draft of the state privatization programme which will then be presented to the legislators together with the draft budget for 1998.

The State Property Management Committee of the Russian Federation faces the task of securing the inflow to the treasury of 6.1 billion new roubles. This means that blocks of shares will have to be sold at least at a quintuple price compared to the one that was originally contemplated. For the first time the programme has a forecast list of open joint-stock companies attached to it, the federal blocks of shares of which are going to be sold.

These include such pearls as Svyazinvest (25% minus two shares) with the anticipated starting price of 8.9 billion roubles (or 8.9 trillion in old money). Or, 59.93 per cent of the shares of Slavneft with a starting price of 1.2 billion roubles. The auction for 6.6 per cent of LUKOIL's shares is expected to fetch at least 6 billion roubles.

The juiciest pieces, though, are the Transneft and Transnefteproduct pipeline companies which will both auction off 50 per cent of their shares minus one share (starting prices 3.6 and 3.1 billion roubles). Rosneft, too, which participates in very promising international projects and which controls more than two billion tons of the explored oil reserves is to be 96% sold off (starting price - 5.4 billion "new" roubles).

Buyers will also be offered such treasures as the Aeroflot-Russian Airlines company (51 per cent for a minimum of 1.2 billion roubles, with only the "golden share" to be retained by the state, 100 per cent of the Sheremetyevo airport shares, a quarter of the shares of the Energiya space corporation (3 billion), 14.3 per cent of the shares of the magnificent West Siberian Metallurgical Works (300 million). A special mention should be given to the plan of privatization of 26 per cent of the world-famous Izhmash arms works, the auction for which will be held with a starting price of 520 million new roubles. Altogether, there are 29 major joint-stock companies on the forecast list.

There is also a separate list of another 37 enterprises which are to be converted into joint-stock companies. Most of these enterprises are from the defence industry system.

Presenting the programme, M. Boiko said that he will seek the approval by the State Duma of a still broader list of structures for privatization, for the budget revenue assignment is very tall indeed. He will also seek a decision by the Duma to grant maximum freedom to the State Property Management Committee for the sake of collection of maximum profits. He firmly believes that he will be able to find 226 supporters in the Duma.

Among the specific features of the new programme one should mention the practically total disappearance of privileges for work collectives. The only exception will be the workers (and members of their families) of the enterprises to be withdrawn from the arms services structure, and this will be done in order to speed up the military reform. The granting procedure and the size of such privileges which are not envisaged by the law will be determined by the government. There is a special chapter in the law concerning the protection of privatization agency officials, and this is done in connection with the assassination of the head of the St. Petersburg property management committee, M. Manevich. There is also a section providing for information support for the Privatization-98 programme.

"We intend to carry out privatization in a honest and open manner and with good results, too," said M. Boiko.