With the fall of crude prices , which happens to be Russia's main export to $30 per barrel from more than $80 that it has always being sold for over five years, the Russian government is in dilemma over ways to raise funds to finance budgeted projects. This is mainly due to the fact that, the 2016 budget is to be implemented with a $50 crude product price benchmark. What this entails is a 3% deficit of GDP and this will only be revised in March.

To this end, foreign investors have been invited to participate in the privatisation of certain government firms which have not been performing to it's maximum capacity due to lack of funding. There is speculation that such move is another way to sell off these firms to rich oligarchs the same way it was done in the 1990s. This is because , Russia is perceived anti-Western and are presently struggling with sanctions over it's diplomatic tussle with Ukraine and it's long history of disputed property rights.

The bad news is that these rich well connected oligarchs may be convinced to invest a fraction of their fortune in these ailing firms to resuscitate the Russian economy but in the long run , they gain in multiple folds , because these assets will be then sold at cheap prices which could be termed "Sweetheart Deals". Even at that, senior government officials insist only about 50-80% of the trillion rubles will be realised which may not be enough .

The affected firms include oil companies Roseneft and Bashneft, Sovkomflot(shipping company ), Alrosa (diamond miner) and state-controlled bank VTB.

While sanctions will not stop the shares selling of these firms, however it might discourage potential buyers/investors who are not guaranteed of security and stability .

Till date many Russians still spite privatisation , while Putin is seen as an advocate of state control, hence the sale of these firms might cause uproar ahead of the 2018 Presidential election and may cost him dearly at the polls. Also, not to be excluded is the motive and timing of the sales . Putin has never hidden his joy in seeing Russia's super- rich business magnates bring back their money from abroad to revive the Russian economy . Thus, it is possible he is trying to de-offshorise in order to see these magnates bring money back in Russia and in return get good deals at cheap prices . Another reason might be to enrich people connected to Him and make stock prices so affordable to these billionaires.


Time will surely tell the real motive and if such plans yielded the needed positive.

Source

http://mailtelegraph..com.ng/2016/02/russia-set-to-sell-privatise-oil.html?m=1

Another petrioska and glasnost... A privatisation policy borne out of neccessity.