Delhi: India has a couple of lessons to learn from
the sell-off of the Russian oil and gas company Slavneft,
especially the lightening fast speed at which
the decisions are taken and executed, says Infraline Technologies
director Yogesh Garg. Infraline (www.infraline.com)
is a leading consulting and information company in the
India the saga of divesting BPCL and HPCL does not seem
to conclude ever, but the Russians are all set to auction
their ninth largest oil company through an open auction
in just four months, he adds. The Russian method
of an efficient, transparent and sensible disinvestment
process should be emulated by the Indian government.
October 2002, the Russian government announced its plans
to sell its controlling share in Slavneft. Prime Minister
Mikhail Kasyanov signed an order for the privatisation
of the oil and gas company, one of Russias top 10
oil producers, by the end of this year.
has called for the sale of the states entire 74.95-per
cent stake, which is likely to become the largest ever
privatisation deal in Russias history. By selling
its stake in Slavneft the government hopes to fill up
budget holes, while analysts assume that after the sale
is made, the balance of power in Russias oil industry
will shift substantially.
the government said it was planning to sell 19.68 per
cent of its shares in the company at an open auction.
The sale would have brought some $300 million to the countrys
budget. But the ministry for property relations submitted
a draft plan to the government calling for the sale of
the states entire stake in Slavneft. The document,
which was reviewed and endorsed at lightening speed, was
signed by the PM.
order calls for amendments to the 2002 privatisation plan
by adding Slavneft to the list of enterprises for sale
this year. At the same time, Kasyanov ordered Slavneft
be excluded from next years privatisation programme.
Kasyanov instructed the ministry for property relations
to prepare the sale of the states share in Slavneft
at an auction with open bidding, and to choose the buyer
money raised by the sale is to be transferred to the federal
budget no later than 15 February 2003. The minimum price
at which the state can sell its stake in the oil company
is estimated at $ 1.3 billion. Experts assume the stake
will be sold in the region of $1.5-$ 2 billion, making
the Slavneft sell-off the largest privatisation deal in
auction will attract a number of bidders and the price
could go up to $3 billion. Slavneft is the ninth largest
oil company in Russia with crude oil reserves of over
700 million tonnes and an annual production of more than
13.5 million tonnes. It owns two crude oil refineries,
600 retail fuel stations in Russia and 21 in Belarus.
It is also the last major integrated oil asset
being privatised by Russia, which is keen to sell a 75-per
far, Roman Abramovichs Sibneft is considered the
most likely buyer. Sibneft has already purchased a minor
stake in Slavneft and was planning to purchase the 19.68-per
cent stake that the government was to put on sale this
year. Earlier this year the companys owner Roman
Abramovich won a power struggle for control over Slavneft,
which resulted in the former Sibneft executive Yuri Sukhanov
being elected Slavnefts new president.
it would be wrong to say that the results of the December
auction are already pre-determined. Other oil giants,
including Yukos, the Tyumen Oil and Surgutneftegaz, have
also expressed interest in Slavneft, and undoubtedly they
will be able to raise $1.5-$ 2 billion, if need be. Perhaps,
the only passive participant in the forthcoming events
will be the Belarusian government. It still has a 10.83-per
cent stake in Slavneft, but Minsk is in no position to
influence the companys fate.
governments reluctance in the disinvestment process
is adversely affecting the potential Indian bidders. The
Khemka group, after getting disenchanted with poor response
in the Indian oil and gas sector, has decided to focus
its efforts in just Russia. The group has capitalised
on some remarkable opportunities in the Russian oil and
gas sector in the recent past.