Bashneft privatisation postponed as Rosneft sale moves up agenda

Bashneft privatisation: The Russian government is considering putting its 19.5% stake in the Rosneft oil giant up for sale, it  emerged yesterday, after Prime Minister Dmitry Medvedev announced that the Kremlin was indefinitely postponing the privatisation of Bashneft, its smaller competitor.
The sale of Bashneft had been planned for this autumn and had been  meant to help plug gaps in Russia’s budget caused by an oil price slump and Western sanctions imposed over the country’s actions in Ukraine;  but the privatisation has become mired with controversy after Rosneft defied the authorities by asking to be included  in the bidding process, despite a ruling from the government that, as a state-run enterprise, it was ineligible to take part.
Rosneft’s management has been claiming that a legal loophole gave it the right to participate and two sources familiar with the situation are quoted in the Financial Times as suggesting that there was now  “too much noise” around the deal, prompting Medvedev’s spokeswoman Natalia Timakov to announce that the sale – which was expected to raise well over $4bn  –  was to be postponed for an unspecified period of time. Medvedev may also have been disappointed by the likely return on the sale. “The stake valuation was too high at current oil prices,” said Andrey Polischuk, an analyst at Raiffeisen Bank in Moscow. “Perhaps only Rosneft was ready to pay that much, but it doesn’t suit everyone as a bidder and probably this issue has yet to be discussed by the government.”
The sale had also been opposed by Rustim Khamitov, Head of the Republic of Bashkortostan, where many  of Bashneft’s oil fields are located. 
While it is unclear if Moscow’s decision to look at selling Rosneft instead has been prompted by its disagreement with the company’s defiance over the Bashneft privatisation process, it has not come out of the blue; earlier this year, Russian Finance Minister Anton Siluanov told CNBC that it was hoping to divest its 19.5% stake in the second half of the year and would be expecting to raise just under $10bn.

Source: reuters