Russia is lining up seven major state companies, including Aeroflot, Alrosa, the diamond miner, and Rosneft, for potential privatisation as the Kremlin debates drastic options to replace dwindling oil revenues. The decision to consider the first such comprehensive push in years comes as the latest slide in crude prices is expected to drive Russia into a second year of recession and has ripped a gaping hole in its budget. Moscow has continuously sold small state company stakes over the years, but progress has slowed since Vladimir Putin’s return to the presidency in 2012. Memories of the privatisation wave with which Russia’s liberal economic policymakers tried to force a transition from the Soviet economy in the 1990s remain traumatic as it vastly enriched a small number of people, creating the country’s oligarch class.
The heads of Alrosa, Rosneft and fellow oil company Bashneft, Russian Railways, state bank VTB, Aeroflot and Russia’s largest shipbuilding company Sovcomflot were summoned on Monday to a meeting where Mr Putin discussed privatisation plans for this year with his economic team. “Previously, privatisation was mainly driven by the intention to adjust the structure of the economy and make it more efficient,” said Oleg Kouzmin, Russia economist at Renaissance Capital. “Now, the issue of raising cash as we see a big drop in oil prices has become one of the reasons that privatisation is back on the agenda,”