UPDATE 1-Russia plans $29 bln asset sale -ministry sources

* State to sell minority stakes in 10 major companies

* Money needed to plug budget gaps around elections

* List includes oil, banking majors

* Sales would be biggest privatisation since Yeltsin era

By Dasha Korsunskaya

MOSCOW, July 24 (BestGrowthStock) – Russia plans its biggest
sell-off of state assets since the early 1990s as it seeks to
raise over $29 billion to plug budget gaps over the next three
years, finance ministry sources told Reuters on Saturday.

The sources told Reuters the plan to sell minority stakes in
10 major companies in 2011-2013 had been discussed and approved
at a preliminary meeting chaired by Prime Minister Vladimir
Putin.

The sales would include 27.1 percent in state oil pipeline
monopoly Transneft (TRNF_p.RTS: ), 24.16 percent of Russia’s
largest oil producer Rosneft (ROSN.MM: ), 24.5 percent of Russia’s
No.2 bank VTB (VTBR.MM: ), 9.3 percent of largest lender Sberbank
(SBER03.MM: ), 25 percent minus one share of rail monopoly RZhD.

Russia wants to cut its budget deficit to 4 percent of GDP
in 2011 and 2.9 percent in 2012 from around 5 percent — or $80
billion — this year, but a presidential election in 2012 also
puts pressure on the government to keep social spending high.

“The finance ministry has made proposals on possible
privatisations in 2011-2013, which will allow (us) to collect
some 300 billion roubles ($9.88 billion) a year,” one of the
sources told Reuters.

“The biggest companies will be up for sale in such a way
that the government keeps controlling stakes,” he added.

“The proposals were reviewed and judged realistic,” he said.

Putin’s spokesman Dmitry Peskov declined to comment.

The proposals see Russia reducing its stakes in most of the
companies to 50 percent plus one share, which allows the
government to still exercise full control over the
decision-making process.

Other firms on the list include 28.11 percent of power grid
FSK (FEES.MM: ), 9.38 percent in hydro power generator RusHydro
(HYDR.MM: ), 49 percent in mortgage agency AIZhK, 49 percent in
agricultural bank Rosselkhozbank and 25 percent minus one share
in shipping major SovComFlot.

BILLIONS MORE

Reuters calculations showed that sales of stakes in only six
listed firms from the list could generate over $30 billion and
if combined with unlisted majors such as RZhD and SovComFlot the
privatisations could yield billions of dollars more.

Russia’s first wave of chaotic privatisations in the 1990s
under President Boris Yeltsin resulted in major state oil and
metals assets being sold for cheap to a group of well-connected
businessmen, known in Russia as the oligarchs.

Putin, who was Russia’s President between 2000 and 2008, has
repeatedly criticised the sales and brought some of the assets
back under state control, including through the bankruptcy of
oil major YUKOS, whose oil fields were sold mostly to Rosneft at
state-forced auctions.

A second source said the stake sale in rail monopoly RZhD
was likely to happen later than other privatisations as the
company was undergoing substantial restructuring. The sale of
the stake in the mortgage agency is also unlikely to happen in
the near future, he said.

Stock Report

(Reporting by Dasha Korsunskaya, writing by Dmitry Zhdannikov;
editing by Patrick Graham)

UPDATE 1-Russia plans $29 bln asset sale -ministry sources