Tuesday, August 31, 2010

Russian Government Won’t Sell Interests in Natural Monopolies or Defense Firms Next Year

On Tuesday, Russia’s Economic Development Minister announced that the government would not sell its stakes in natural monopolies or defense firms during 2011. Last month, the government released a list of 11 state-run companies in which stakes would be privatized by 2013, but several companies, including state rail monopoly, Russian Railways, are no longer on that list. While it remains unclear exactly what stakes will be sold by 2013, privatization targets include two natural monopolies: the oil pipeline monopoly Transneft (which is currently 78.1% state-owned), and the Federal Grid Company (which is currently 79.11% state owned). Although Russia’s Finance and Economic Development Ministries have conceded that the planned sell-off is a way to patch budget deficits and to reduce the state’s “excessive“ role in the Russian economy, Tuesday's announcement signals the state's strong interest in maintaining control of these natural monopolies and defense holdings, at least in the short term.


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