Russia, bowing to budget pressures, revives oil firm sell-off

Mon Oct 3, 2016 5:54am EDT
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By Darya Korsunskaya

SOCHI, Russia (Reuters) - Russia said on Friday that it was resuming the shelved privatisation of oil firm Bashneft, in a sign of how anxious the Kremlin is to raise money to fill holes in the budget left by the economic slump.

The Bashneft privatisation, the most significant sell-off of Russian state assets in years, had been postponed indefinitely in August.

Sources close to the government and the bidding process said at the time the postponement was ordered by the Kremlin to staunch infighting among rival clans over who would be the eventual buyer.

But in a U-turn, Deputy Prime Minister Igor Shuvalov said on Friday steps to resume the privatisation would be taken immediately.

He said that Rosneft - the state oil giant whose ambition to acquire Bashneft triggered the infighting - would be free to take part. A spokesman for Rosneft said the company would be lodging a bid.

Shuvalov also said the government would proceed immediately with the sale of a minority stake in Rosneft itself, an acquisition of potential interest to international oil majors who covet a share in Russia's massive crude reserves.

"Money is needed urgently," a source in the government said, when asked what brought about the government's U-turn on its privatisation plans.

A second source in the government said: "The sale of Bashneft to Rosneft is a done deal."   Continued...

People walk past the headquarters of Russian state-owned oil producer Bashneft in central Moscow, Russia August 17, 2016. REUTERS/Sergei Karpukhin/File Photo