BOFIT Weekly Review 2016/41
Russian government sells Bashneft to Rosneft
The state’s 50.08 % stake in the Bashneft oil company has been on this year’s privatization list. Russian government decided this week to sell the stake directly to oil company Rosneft in which state also has majority ownership. The stake was sold for 330 billion rubles (€4.7 billion), which was slightly higher than analysts expected. The money from the sale will go to covering this year’s budget deficit. The government is also still planning to sell this year a 19.5 % stake in Rosneft to cover the budget deficit. Chinese and Indian oil companies are among those interested in acquiring Rosneft stakes. Rosneft also recently said it might be willing to buy back its own shares.
There has recently been considerable criticism in Russia of the state’s disproportionately large role and the lack of competition in the economy. Russia’s Federal Antimonopoly Service has found that the share of economic activity involving state or state-owned enterprises has increased substantially over the past decade, seriously impairing competition and hampering the operations of private companies. The CBR says that high level of monopolisation across many industries materially complicates the use of monetary policy channel in managing inflation. The finance ministry has stated that reducing the role of state companies in the economy should be a central policy goal in coming years, noting that state-owned firms consume economic resources inefficiently and crowd out private firms in financial and labour markets.