Russia approves £20bn plan to privatise assets

RUSSIAN Prime Minister Vladimir Putin yesterday approved a plan to sell 1 trillion roubles (£20bn) in state assets over the next three years to help plug a gap in the budget and lure investors.

Russia’s leaders need cash as they struggle to get the country out of its worst recession in 15 years and ratchet up growth ahead of the 2012 presidential election, in which Putin, a former president, has hinted he may stand.

Russia ran a budget deficit of 2.1 per cent in the first 10 months of the year, the finance ministry said last Friday. Analysts polled by Reuters have forecast a 4.4 percent deficit for 2010 while the government expects 5.4 percent. Economy minister Elvira Nabiullina said a cabinet meeting chaired by Prime Minister Putin approved the privatisation plan – which includes stakes in the country’s two biggest banks, main oil producer and railways monopoly.

The sale will be Russia’s biggest privatisation drive since the rigged sell-off of former Soviet Union assets in the early 1990s, which saw multi-billion dollar companies and assets fall into the hands of a small number of individuals. The first asset to be sold is almost certain to be a 10 per cent stake in lender VTB to US private equity group TPG for at least $3bn.