ST PETERSBURG, Russia (Reuters) – Russian Economy Minister Alexei Ulyukayev said on Saturday that proceeds from the state selling a stake in the country’s largest oil producer should go to the federal budget and not to the energy holding Rosneftegaz.
Russia is considering bringing forward its plans to sell 19.5 percent in the world’s top listed crude producer. The economy and the finance ministries have been pushing for the deal, wanting cash for the federal budget.
In the past, however, selling state property in Russia did not always mean extra budget revenues, as proceeds were sometimes retained by state companies.
“It should be an all-encompassing decision that we do this deal with the understanding that as a result the budget receives the money,” Ulyukayev told journalists on the sidelines of the St Petersburg International Economic Forum.
Although the federal budget may come with a surplus of 0.5 percent of gross domestic product this year thanks to strong oil prices and a weaker ruble, government finances are vulnerable.
Russia needs funds to secure the financing of Crimea, annexed by Russia from Ukraine in March, at a time when a slowing economy and Western sanctions threaten tax revenues and access to financial markets.
The state holding Rosneftegaz controls 69.5 percent in Rosneft (ROSN.MM ) and almost 11 percent in the world’s largest natural gas producer Gazprom (GAZP.MM ).
The government is still waiting for proceeds from last year’s sale by Rosneftegaz of a stake in the oil company TNK-BP to Britain’s BP (BP.L ), worth nearly $5 billion, a part of a bigger deal in which Rosneft acquired TNK-BP for $55 billion.
“Rosneftegaz should transfer 100 percent of those proceeds to the budget,” Ulyukayev said.
Russia’s once ambitious privatization plans have been hitting obstacles, hindered both by poor financial market conditions and the reluctance of some government officials to sell state assets.
(Reporting by Darya Korsunskaya- Writing by Lidia Kelly, Editing by Jason Bush and Stephen Powell)
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